Internet advertising by UK firms

Abstract

This research used survey data on 843 UK-based firms for investigating the determinants of the use of the Internet as an advertising medium. More than half of the firms in the survey that advertised at all also advertised on the Internet and a majority of the remainder reported that they planned to do so within 2 years. Over 25% of managers viewed the Internet as one of the most important advertising media for their firm. Using a Heckman selection procedure the research found that conventional advertising and Internet advertising are complementary expenditures for firms. Further,the probability of using the Internet is higher for firms that have a main line facing a high level of competition, for firms that have a main line in the services sector and for firms that have a main market that is international rather than national or regional. Firms that have a main line produced for final consumers spend less on Internet advertising than others, whilst those producing in fast-growing markets have a relatively high Internet spend. These results suggest that there are significant differences between the determinants of Internet advertising and conventional advertising.