Evaluating the Business and Owner Characteristics Influencing the Adoption of Online Advertising Strategies in the U.S. Green Industry

Abstract

Online advertising is becoming a mainstay business practice to reach firms’ customer bases. Yet, the adoption and use of online advertising in the green industry are topics that have not been adequately researched. Using a national survey of green industry firms conducted in 2019, this research uses a double-hurdle model to investigate factors that impact firms’ adoption of, and amount spent on, online advertising. Our results show that one-third of the companies invested in online advertising. Of those investing in online advertising, the average percentage of online advertising as a share of all advertising expenditures was 46%. Small businesses were less likely to invest in online advertising compared with larger businesses; however, once they invested in online advertising, the percentage of investment was 25% higher among small firms when compared with their larger counterparts. Increasing years in operation as well as trade show participation was related to a 3% decrease in likelihood to use online advertising. Business owners who perceived hiring competent employees as a barrier to business growth invested 19% less of their advertising budget in online channels, which may indicate a lack of human resources to advertise online. We also compared the industry results with data from a 2014 survey and found the amount invested in online advertising increased ≈3% to 5% between studies. The percentage in wholesale sales influenced the amount spent on online advertising in 2014 but not in 2019. Being a small firm in 2014 increased the amount spent on online advertising, but the effect was 14% lower in 2019. In 2014, firms located in the Pacific, Southcentral, and Southeast U.S. regions invested more in online advertising compared with other regions, but in 2019, the only geographic difference was that firms in the Great Plains spent less on online advertising. Despite their lower adoption rates, the increased expenditures on online advertising implies that smaller firms that implement online advertising receive value through that channel and are willing to allocate more resources to leverage its reach. Firms contemplating adopting and investing in online advertising should consider their resource availability and marketing goals related to reaching different customer groups through online advertising.