Thursday, August 25, 2016

The Value of Marketing Channel Spill Over

Marketing is an essential component to business success because without marketing you don't have much of a revenue source. We sometimes erroneously assume that visitors are attracted from calculating the direct influence of each marketing channel. We don't often take into account the spillover effects of these channels together which could be much more influential than we thought.

Consider a study in the Journal of Marketing Research that shows online purchase channels often work in conversational manners and spill over influence on each other (Li & Kannan, 2014). One channel may lead to a purchase through a different channel at some later point. Simply calculating sales through each channel might not be enough without total sales.

Consider that some people see a product or service as some point in history and don't make a purchase on that day because they don't have money or time. A few weeks pass and they want to make the purchase but don't know where to look. This is where they use search engines and other channels to find the product.

If this multi-channel spill over is happening in one company it is also happening with others. In our example, the customers searching out a product they saw a few weeks ago would ultimately see similar type products while searching online that could lead to a loss of sales.

Understanding how spill over works with multiple channels helps us not evaluate channels only in isolation to determine their effectiveness. Sometimes a purchase is not made until later or the purchase is completed after multiple exposures. Evaluating channels individually and in a mix creates to points of viewing their effectiveness.

Li, H. & Kannan, P. (2014). Attributing Conversions in a Multichannel Online Marketing Environment: An Empirical Model and a Field Experiment. Journal of Marketing Research, 51 (1).

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