Marketing Spending Research Articles

Can Words Speak Louder Than Actions? Using Top Management Teams’ Language to Predict Myopic Marketing Spending

Myopic marketing spending—curtailing marketing and research and development expenses to boost earnings—damages firms’ long-term value. Despite this, top management teams are often myopic, and by the time investors or boards detect such short-termism, it is too late to react or intervene. This research introduces a novel prediction method by analyzing the language top management teams use in earnings calls, specifically focusing on marketing and earnings emphasis, to predict future instances of myopic marketing spending. Through linguistic dependency parsing of almost 11 million sentences extracted from nearly 25,000 quarterly earnings call transcripts of 1,197 firms between 2008 and 2019, the authors demonstrate that the proposed approach can predict myopic marketing spending at a quarterly frequency for up to one year in advance. They find that an increase of one standard deviation in earnings emphasis is associated with a 23.68% increase in the likelihood of future myopic marketing spending. Investments based on the proposed approach produce 1.61% additional annual abnormal returns compared with models that exclusively use known predictors of myopic marketing spending, while offering earlier foresight and more frequent opportunities for intervention. This reduces information asymmetry for investors and boards of directors.

Navigating Oman’s Digital Landscape: The Impact of Demographics on SME Marketing

Purpose of the study: This study aims to investigate the influence of demographic factors such as the Employment sector, Education, and Designation on Digital Content Marketing dimensions such as Brand awareness (BA), Customer Engagement (CE), Customer Retention (CR), and Customer Information (CI) from Oman's leading SMEs. Methodology: This study used a deductive research approach to test hypotheses. A survey of 155 Omani SME managers in middle and senior roles was conducted. Demographic variables were analyzed using one-way ANOVA statistical analysis to compare their influence on the research findings. Main Findings: This study found significant influence of content marketing on the Hospitality, Technology, and Service sectors, which use websites, blogs, and social media. In contrast, Engineering, Real Estate, Education, and SME managers focus more on customer engagement and retention. Education level also impacts brand awareness, customer retention, and engagement. Applications of the study: The results of this study will help SMEs and businesses target audiences more effectively, create content that appeals to their interests, select the best distribution channels, and optimize their marketing spending. This study advances knowledge of efficient marketing strategies in Oman's developing digital environment. Novelty of the study: The study provides a fresh perspective on how geographical and demographic variables influence digital content marketing strategies of SMEs in Oman, presenting original empirical data from this understudied region and sector.

DYNAMIC RELATIONSHIPS: E-COMMERCE SALES AND KEY EXOGENOUS VARIABLES IN THE PHILIPPINES

This study delves into the complex and evolving landscape of e-commerce in the Philippines, focusing on the relationship between E-Commerce Sales as the endogenous variable and a set of influential exogenous variables, including Digital Marketing Spending, GDP Growth, Internet Penetration, and Mobile Phone Ownership. This research employs a flexible spline modeling approach, uncovers non-linear associations, and offers significant implications for academic understanding and practical applications. The findings underscore the growing impact of Digital Marketing Spending on E-Commerce Sales, revealing the paramount role of online advertising and promotional strategies in the digital marketplace. Moreover, the study explains the intricate interplay between GDP Growth, Internet Penetration, Mobile Phone Ownership, and E-Commerce Sales, highlighting the non-linear nature of these relationships. As the Philippines continues its economic expansion and technological integration, these associations exhibit insightful implications for policymakers, businesses, and e-commerce stakeholders.<p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0075/a.php" alt="Hit counter" /></p>

CEO overconfidence, customer satisfaction, and firm value: An investigation of mediating and moderating effects

Drawing from the upper echelons theory and the balanced scorecard theory, this study investigates potential associations between CEO overconfidence, customer satisfaction, and firm value. Using a dataset of US public firms spanning from 1994 to 2019, we first examine the relationship between CEO overconfidence and customer satisfaction, focusing on the mediating role of R&D and advertising expenditures, and the moderating role of CEO equity-based compensation. We find that CEO overconfidence positively influences customer satisfaction, and this positive impact is partially mediated by R&D and advertising. In addition, moderated path analysis indicates that CEO equity-based compensation increases the indirect effect of CEO overconfidence on customer satisfaction. We next examine and document that CEO overconfidence moderates the positive impact of customer satisfaction on firm value. Our results contribute to the extant literature by highlighting that CEO overconfidence not only positively affects shareholder value, but also links to the consequences of strategic marketing decisions, such as customer satisfaction. Our study provides implications for boards of directors, who may need to align CEO and firm marketing spending decisions. It also raises shareholders’ awareness of the presence and impact of CEO overconfidence.

Digital Marketing Dynamics in the Indian Context: A Journey through Time

Digital marketing encompasses all marketing efforts that leverage electronic devices or the Internet. It involves the use of electronic media by marketers to promote their products or services. The primary objective of digital marketing is to attract consumers to various brands through technology on the internet. Often referred to as 'online marketing,' 'internet marketing,' or 'web marketing,' digital marketing has gained popularity over time, especially in some countries. The rise of digital marketing is closely tied to the integration of advanced technologies into businesses. This transformation has completely revolutionized traditional marketing methods, compelling marketers to engage with their buyers or customers through the internet to sell their products and services. In India, digital marketing has witnessed significant growth, spanning across all business sectors, including e-commerce, online transactions, banking, online tracking, and more. Communication has become more seamless and rapid in a country like India, known for its vast and rapidly growing economy. In 1996, Business to Business (B2B) commerce made its debut in India, marking a significant milestone. Notably, digital marketing spending amounted to $0.57 billion in 2013, a figure projected to surge to $2.17 billion by 2019. This paper commences with a historical review of the evolution of online marketing. It delves into various types of internet marketing, shedding light on the significance of digital marketing and the opportunities and challenges that lie ahead. Emerging issues in marketing, such as security and privacy concerns arising from the creation of virtual spaces, are also addressed. Finally, we conclude by offering insights and potential solutions to address the forthcoming challenges.

Increasing Return of Marketing Investment (ROMI) Case of an Indonesian Fintech Startup Company

During 2023 global economic recession, economic growth is forecasted to decrease from 6% in 2021 to 2,7% in 2023, causing higher inflation and decreasing consumers buying power. Therefore decreasing investors’ appetite for the private market. The Venture Capital (VC) investors are avoiding risky start-ups and opt a more secure investment, making start-ups are struggling to raise funds and expected to survive at least for the next few years. PT ABC is an Indonesian fintech start-up company, providing payment system that offers free interbank transfer service for more than 7 million users and hundreds of companies and SMEs to date. As a start-up company funded by Venture Capital investors, PT ABC is impacted directly by the decreasing of investor appetite to fund. The survival strategy of PT ABC is to shift the business goal from “market growth” to “revenue growth”, with the implementation of cost cutting and increasing revenue. The functions that get the most of cost cut is Marketing, as employee layoff is not an option in PT ABC. Currently, PT ABC’s CMO does not an existing method to justify the marketing spending and how it ties with annual revenue goal, therefore does not have any insight of which marketing channels are productive and unproductive to revenue gain, which is the basis to determine where the cost should be cut from. Marketing Mix Modelling (MMM) is a multilinear regression with time series analysis that uses spending of each marketing channel as independent variable and sales revenue as dependent variable, with the purpose to determine the Return on Investment (ROI) as a measure of profitability, added with the Economic Value Added of Marketing (EVAM) as a measure of the production of shareholder value. This research is supported with AARRR framework to understand in which stage of the customer journey flow that requires the most support from marketing and sales. The solutions from MMM analysis are in the form of marketing budget proposals to boost revenue, also the implementation of MMM dashboard. From the AARRR framework, obtained the insight that PT ABC’s users took a longer time to understand the product value, however, once the users are activated, they tend to be loyal user. Therefore, the stage between Acquisition to Activation requires the most attention and support from the marketing and sales team.

Changes in opioid marketing practices after release of the CDC guidelines.

After the release of the CDC guidelines in March 2016, the rate of opioid prescriptions decreased. How or whether pharmaceutical companies changed their opioid marketing practices post release of the CDC guidelines is unknown. Our objectives were to (1) evaluate whether the release of the guidelines was associated with changes in total monthly marketing spending received per physician, monthly marketing encounter frequency per physician, and spending per encounter during opioid marketing; and (2) evaluate whether such changes in marketing differed between specialist physicians and primary care physicians (PCPs) and between urban and rural primary care service areas (PCSAs). Retrospective observational cross-sectional study using opioid marketing spending data from the CMS Open Payments database between August 2013 and December 2017. Single-group and multiple-group interrupted time series analyses were used to evaluate differences in the immediate changes in level and trend over time in opioid marketing practices post release of the CDC guidelines. Post release of the CDC guidelines, the monthly number of marketing encounters per physician and total monthly amount received per physician decreased. However, the amount spent at each marketing encounter increased. The release of the CDC guidelines was associated with an immediate increase in level of opioid marketing spending per encounter by $0.59 (95% CI, $0.51-$0.68; P < .001) and an over-time increase in rate of spending per encounter of $0.04 per month (95% CI, $0.03-$0.05; P < .001). These changes differed between specialists and PCPs and between urban and rural PCSAs. It is important to continue ongoing education for physicians on changes in pharmaceutical opioid marketing practices.

FDA safety warnings and trends in testosterone marketing to physicians.

In response to study findings showing the risk of cardiovascular adverse events associated with testosterone therapy, the FDA issued safety warnings in 2014 and modified testosterone labeling in March 2015 to indicate the increased risk of stroke and heart attack. It is unknown whether there were changes in testosterone marketing practices by pharmaceutical companies following the FDA label warning. Both primary care physicians (PCPs) and non-PCPs prescribe testosterone and are targeted by pharmaceutical marketing representatives to encourage testosterone prescribing. Likewise, pharmaceutical marketing occurs in both urban and rural areas. Our study is the first to examine testosterone marketing practices around the period of the testosterone label warning by physician specialty and rural vs urban primary care service area. In this study, we found that testosterone marketing efforts such as marketing spending per encounter, quarterly marketing spending per physician, and quarterly number of encounters per physician increased among non-PCPs and urban physicians for 4 quarters following an FDA boxed warning in 2015 on testosterone prescriptions. After the black box warning, off-label testosterone advertisements stopped. This reduction in advertising could have made it more attractive for pharmaceutical companies to increase their marketing spending targeting non-PCPs and physicians in urban areas. Understanding responses of pharmaceutical companies to FDA guidelines is important and can help inform future guideline initiatives.

The Relationship Between Online Referral Marketing and Price Promotion: Evidence from a Large E-Commerce Platform

ABSTRACT We empirically examine the effectiveness of referral marketing and price promotion in generating sales in a large e-commerce platform. Our results show that although referral marketing increases sales, its effect is attenuated by price promotion. We argue that price promotion arouses quality concerns and undermines the credibility of online paid referrals in a weak-tie environment. This finding implies diminishing marginal returns for referral marketing and price promotion spending. We conduct a battery of validation tests to support our argument. Our research highlights the importance of scrutinizing the complementarity of marketing promotions in the unique context of the Internet. Depending on the persuasiveness of the brand and the promotional channel, promotional strategies may conflict in addressing consumers’ quality concerns. Our findings suggest that marketing managers should use discretion in combining online referral marketing and price promotion. We advise sellers against using both marketing tactics if they lack a strong brand image.

Drive by My Cellar Door: Rethinking the Benefits of Wine Tourism in Niagara

The purpose of this study is to compare the effects of various marketing activities on retail winery spending in a wine tourism region. Data from a survey of 282 visitors to three Niagara boutique wineries are analyzed using principal component analysis to identify marketing drivers of winery sales, and regression analysis to measure the influence of marketing activities, demographics, and personal experience. The results illustrate the relative influence of in-region, web-based, and indirect marketing, suggesting that web-based marketing is most effective in driving sales, whereas visitors influenced by in-region tourism marketing spend less. This finding suggests that while wine tourism may drive traffic, it may not drive sales. The results provide direction for boutique winery operators and regional associations to plan marketing activities more effectively. Exploring the relationships between marketing and visitor spending by using multiple drivers in one study sheds new light on the benefits of wine tourism for boutique operators.

MARKET INTELLIGENCE FROM THE INTERNET: AN ILLUSTRATION USING THE BIOMASS HEATING INDUSTRY

Extant research on marketing strategy suggests that most companies underuse web intelligence as publicly available data on the Internet are considered hard to access and analyse. This paper demonstrates how biomass home heating businesses can utilise the Internet for data collection and business insights. The market structure of the biomass heating industry was identified using the Google Correlate algorithm. The production rule ‘that newer the product the higher is consumer search for the product’ was operationalised using the correlations of the concept ‘home heating equipment’. Intra-industry competition was assessed using Google’s brand impression analysis and firm behaviour and performance were modelled using a differential equation relating product sales to marketing expenditures. Empirical analysis reveals that the product form “biomass home heating” is growing, pellet stoves and fireplace inserts top the lists of “stove” searches, there are two competitive clusters of biomass firms and the marketing spending for the industry is well below its optimum level needed to increase and maintain sales. Keywords: Market intelligence, Biomass home heating, US biomass markets, Marketing optimisation, Google tools

With Power Comes Responsibility: How Powerful Marketing Departments Can Help Prevent Myopic Management

Firms sometimes engage in myopic management (e.g., cutting marketing spending, providing lenient credit to customers to improve short-term results). Although marketing is at the center of such myopic management, there are few insights on whether a marketing department could prevent it. To address this gap, the authors examine the role of powerful marketing departments in preventing myopic marketing spending and revenue management. They hypothesize that there are internal and external enablers of marketing department power (i.e., a chief executive officer with marketing experience, the firm’s power over its customers, analyst coverage, and institutional stock ownership) that help a powerful marketing department prevent myopic management. They test the hypotheses using a panel of 781 publicly listed U.S. firms between 2000 and 2015. As hypothesized, when the firm has (1) a chief executive officer with a marketing background and (2) power over its customers, increasing marketing department power decreases the likelihood of both myopic marketing spending and myopic revenue management; increasing marketing department power and analyst coverage decreases the likelihood of myopic marketing spending. The findings highlight powerful marketing leadership as a hitherto overlooked way to prevent myopic management and improve firm performance.

DIGITAL MARKETING PERFORMANCE EVALUATION METHODS

The share of digital marketing from total marketing spending is increasing fast year by year. Still the majority of companies admit that they are missing clear methods on how to evaluate (positive/negative) effects obtained using digital marketing. As this field of digital marketing is relatively new, there are no firm and widely recognized measurement methods resulting in marketing specialists being confused by an overwhelming amount and variety of different digital marketing metrics and large amounts of data. Therefore, the aim of this paper is to list the existing methods which could help marketers to evaluate their digital marketing campaign effectiveness and to discuss these methods’ effectiveness with experts. To achieve this aim, the author defined the following objectives for the paper: 1) to explore which digital marketing campaign effectiveness evaluation methods can be found in realized scientific research so far; 2) to assess the strengths and weaknesses of each method by conducting expert interviews; 3) to determine the practical application opportunities for each identified method; and 4) to draw conclusions and make recommendations for the practical usage of the studied methods. Research methods used were secondary data analysis and expert interviews. The secondary data analysis contained reviews of scientific research results in the field mentioned above. The expert interviews covered in-depth interviews with the main stakeholders – leading online retailers in the Baltics and digital marketing experts. The results show that the conversion evaluation method is most frequently used in theory and in practice as it can be best connected with direct business goals to increase sales. It also highlights that each method has some benefits to be used in specific situations, with specific aims.

Marketing spending and aftermarket performance of IPO firms

PurposeIncreasingly, marketing managers are asked to consider the financial implications, in terms of both book and market values, when making strategic decisions. The purpose of this paper is to investigate the role of marketing expenditures in explaining the variation in the aftermarket performance of a sample of firms conducting initial public offerings (IPOs).Design/methodology/approachTheories from marketing and finance – market-based assets (MBA) theory and signaling theory respectively – serve as the conceptual basis of this paper. The results of this study, based on a sample of 2,103 IPOs covering the 1996 to 2008 time period, suggest that increased marketing spending positively impacts aftermarket (i.e. stock price) performance.FindingsThe authors find that while short-run aftermarket performance is positively and significantly impacted by pre-IPO marketing spending, long-run firm performance measures do not appear to be impacted by pre-IPO marketing spending. Further, pre-IPO marketing spending does not incrementally reduce underpricing or improve long-run performance when the IPO takes place during extreme market conditions such as recessions or hot markets, and these results are important to the shareholders and potential investors in the firm.Research limitations/implicationsTheoretically this paper advances the literature on the marketing-finance interface by extending the MBA and signaling theories. For practice, the results indicate that spending more money on marketing before the IPO and disclosing this information produces positive bottom-line results for the firm.Originality/valueWhile Luo (2008) documents a significant relationship between the firms’ pre-IPO marketing spending and IPO underpricing, few studies explore the impact of marketing spending on stock price performance beyond the first day of trading. This paper makes three unique contributions. First, the authors extend Luo’s study by investigating the effect of marketing expenditures on underpricing during extreme market conditions. Second, the authors are the first to examine IPO performance in the long-run as well as the short-run. Finally, the authors assess how long-run performance is impacted by marketing spending during extreme market conditions. The findings of this study has implications for managers and shareholders of firms considering going public through a traditional IPO.

Effect of analysts’ earnings pressure on marketing spending and stock market performance

Despite the clearly visible effects of analysts’ pressures on C-level executives in the popular press, there is limited evidence on their effects on marketing spending decisions. This study asks two questions. First, how do analysts’ pressures affect firms’ short-term marketing spending decisions? Based on a sample of 2706 firms during 1987–2009 compiled from Institutional Brokers Earning System, COMPUSTAT, and CRSP databases we find that firms cut marketing spending. Second, more importantly, we ask if firms which remained more committed in the past to marketing spending under analysts’ pressures have higher longer-term stock market performance. We find that the stock market performance of firms more committed to marketing spending under past periods of analysts’ pressures is higher. The findings are replicated for R&D spending and are robust across measures, controls, and methodologies. Consideration of two industry-based moderators, R&D spending and revenue growth, and one firm-based moderator, whether the firm is among the industry’s top four market share or other lower share firms, reveals that the findings are stronger for high R&D and growth industries and lower market share firms. One key implication is that top executives respond to analysts’ pressures by cutting marketing spending in the short term; however, if they can resist these pressures, longer-term stock market performance is higher.

Online Marketing Induced Performance Volatility

This paper analyzes how revenue and cash-flow volatility are influenced by own and competitive online marketing spending volatility, by the level of online marketing spending, by the responsiveness of own online marketing spending, and by competitive reactivity. The author develops hypotheses about the influence of these variables on revenue and cash-flow volatility that are rooted in online market response theory. Based on a broad sample of 99 pharmaceutical brands in four clinical categories in India, the author tests these hypotheses and assess the magnitude of the different sources of online marketing-induced performance volatility. The results support our hypotheses and demonstrate that effective online marketing may incur negative financial side effects such as greater financing costs or higher opportunity costs of cash holdings. Thus, common volatility-increasing online marketing practices such as advertising pulsing are effective at the top-line, but may turn out to be ineffective at the bottom-line.

Media Modeling and Budgeting at Dmi

A marketing director applies a scientific/quantitative approach to understanding and optimizing his company's marketing spending decisions. His hypotheses include the concepts of diminishing returns on spending, a results ceiling, carryover, and differential effectiveness. His team develops a mathematical formula that provides parameter estimates resulting from fitting the model to the three years of regional and national data. He must then decide how to apply the data to maximize media spending. A student Excel spreadsheet is available. Excerpt UVA-M-0791 Rev. Nov. 7, 2011 Media Modeling and Budgeting at DMI Direct Marketing Insurance (DMI) was known worldwide for its scientific/quantitative approach to understanding and pricing auto insurance risks. Many people in the DMI organization thought this same approach might be useful in understanding and optimizing marketing spending decisions. In three regions of the United States, DMI had assembled weekly data on media spending in five separate categories together with the number of prospects (potential customers requesting a quote either over the phone or using the web) the spending generated. There were a host of insights the company hoped a careful analysis of these data would provide. Before turning the data over to the company's analysis group, DMI regional marketing manager Phil Phariso decided to articulate some strongly held hypotheses about the nature of the relationship between impressions and results. For the purposes of this analysis, Phariso declared that “results” meant getting people to request a quote for auto insurance by phone or Internet. Exhibit 1 lists the hypotheses Phariso and his group generated. . . .

Growth of Internet Marketing: The Indian Scenerio

Internet marketing is the process of promoting a brand, products or services over the internet. Its broad scope includes email marketing, electronic customer relationship management and any promotional activities that are done via wireless media. It also combines the technical and creative aspects of the World Wide Web such as advertising, designing, development and sales. Moreover, internet marketing also deals with creating and placing ads throughout the various stages of customer engagement cycle. The aim of the study is to investigate the growth of internet marketing in Indian scenario. To study the influence of the use of internet and thereby the impact of internet marketing in overall market scenario it was decided to record opinions on various aspects related to the growth of internet marketing. Hence the important entities of market, i.e. consumer were considered as the respondents. It is observed that online marketing is becoming a significant part of marketing for a large number of companies. It is also found that companies have inclination for increasing their online marketing spending.

The Importance of Trade Promotion Versus Advertising in the Consumer Packaged Goods industry*

This study investigates the effects of marketing expenditures on firm performance in the very active and competitive consumer packaged goods industry. Even though the marketing expenditures run into billions of dollars annually, the practices themselves are very debatable. Currently, empirical literature in this field is limited because direct data is not available to the public. This research advances the literature in important ways. Not only has it used the actual dollar value of marketing expenditures, but also it has divided the marketing spending into two categories, trade promotions as push strategy and advertising as pull strategy. This study also employs the quantile regression method, which is suitable in analyzing the heterogeneity in the consumer packaged goods industry. The results show that marketing expenditures, such as trade promotions and advertising, are positively related to net sales in the consumer packaged goods industry.

Marketing spending, firm visibility, and asymmetric stock returns of corporate social responsibility strengths and concerns

PurposeThis paper aims to focus on the unique goal of understanding how marketing spending, a proxy for firm visibility, moderates the effects of corporate social responsibility (CSR) strengths and concerns on stock returns in the short and long terms. In contrast to the resource-based view (RBV) of the firm, the visibility theory, based on stakeholder awareness and expectations, offers asymmetric predictions on the moderation effects of marketing spending.Design/methodology/approachThe predictions are tested based on data from KLD, Compustat and Center for Research in Security Prices from 2001-2010 and panel data based regression models.FindingsTwo results support the predictions of the visibility theory over those of the RBV. First, strengths are associated with higher stock returns, for low marketing spending firms, and only in the long term. Second, concerns are associated with lower stock returns, for high marketing spending firms, also only in the long term. A profiling analysis indicates that high marketing spending firms have high R&amp;D spending and are more likely to operate in business-to-customer than business-to-business industries.Practical implicationsThe two findings highlight the importance of coordination among chief marketing, sustainability and finance officers investing in CSR and marketing for stock returns, contingent on the firm’s marketing and R&amp;D spending and industry characteristics.Originality/valueThis paper identifies conditions under which CSR is and is not related to stock returns, by uniquely considering three variables omitted in most past studies: marketing spending, CSR strengths and concerns and short- and long-term stock returns, all in the same study.