The Effectiveness of Push vs. Pull in Online Marketing

Marketing strategy is arguably one of the major components of running a successful business. Without customers you have no sales, revenue or reason to exist. Online marketing is still in its infancy and will continue to grow and develop for the foreseeable future. A study by Spilker-Attig & Bettel (2010) analyzed the effectiveness of push and pull strategies at an online retailer by using 2.7 million orders across different price points. 

People regularly confuse the subtle but important difference between marketing and sales. Marketing is the long-term oriented strategy and sales are short-term customer-specific transactions (Homburg, et. al., 2007).  Marketing focuses on a larger demographic and casts a wide net while sales is focused more on specific activities that pin-point customers. 

All sales are based on interactivity between the company and its customers. Connectivity is seen as an important variable in online advertisement (Roehm & Haugtvedt, 1999).  The way in which the customer is attracted to a particular product/service and how they find that offering is the connective reaction between customer and company. 

Advertisements can generally take a central or peripheral route. The central route is used when customers are highly motivated and are willing to cognitively process the ad which changes attitude toward the product (Tam & Ho, 2005). The peripheral route is taken when low motivation is present and can temporarily change the attitude. 

Advertisements seek a central or peripheral route based upon the advertising channel used. For example, push strategies are more akin to centralized routes and make use of pop up displays, emails, and other company initiated methods. Pull strategies focus on search engine ranking, sponsored stories, and other customer initiated contacts. Think of putting it in your customers face or drawing your customers’ interest. 

The authors found that there was a significant differences of effectiveness between push and pull strategies. Clicks on price comparison websites, affiliate loyalty sites, and search engines produced higher purchase responses. Both cheap and expensive products responded well to search-engine market position. Higher cost products responded to affiliate loyalty programs. 

The study helps highlight how a number of push channels do not get the response rate companies desire. The internet is an amebic system that holds hundreds of millions of users it is generally better to develop organic methods of pulling customer interest. Focusing in areas where your target market is likely to be found, catering to your customer demographics, and drawing interest through key concepts and words seems to have the highest return rates.  

Pilker-Attig, A. & Brettel, M. (2010). Effectiveness of online advertising channels: a price-level-dependent analysis. Journal of Marketing Management, 26 (3/4). 

Roehm, H., & Haugtvedt, C. (Eds.). (1999). Understanding interactivity of cyberspace advertising. Mahwah, NJ: Lawrence Erlbaum.

Tam, K.Y., ôc Ho, S.Y (2005). Web personalization as a persuasion strategy: An elaboration likelihood model perspective. Information Systems Research, 16(3), 271-291.

The Spillover Effects of Online Marketing Channels

Marketing is a main source of income generation as firms seek to attract web visitors and convert those web visitors into paying customers. Firms consistently rely on a few marketing methods and overstate the importance of those methods without understanding how they work together to convert purchasing behavior. Research by Li & Kannan (2014) helps companies understand online channels, historical visits using these channels, and how spillover effects convert visitors into paying customers. They propose a new model that helps conceptualize the concept. 

Even though some companies rely on specific channels it is the combination of advertising channels that create the marketing mix. It is difficult for firms to determine which channels work well and which channels do not effectively contribute to customer conversion rates. Online marketing will move from $15 billion to $24 billion by 2016 (eMarketer, 2012). The growth in marketing expenditures will require better analysis of benefits in terms of attracting the right kinds of customers. 

Consumers in the online world may click and browse a number of different sites before actually visiting a webpage and making a purchase. Initial exposure and activities are regularly discounted according to conventional practices such as the last-click analysis. Consumers exposed at one time to a company or product may not make a purchase until some other point in time leaving previous exposures uncovered as a source of marketing. 

The authors designed a model that helps to analyze the spillover effects of marketing. Based upon individual-level path data of customers’ touches their purchase decision hierarchy finds 1) heterogeneity across customer’s channel use to visit sites, 2) the carryover and spillover impact of prior marketing interventions that lead to visits, and 3) the conversion of visits to purchases. The overall approach helps to highlight how online purchases that use multiple channels mesh together to lead consumers to a particular site to encourage purchasing behavior. 

The model is in alignment with other research focused on Internet marketing. According to Wiesel, et. al. (2011) there are three stages to a purchase that include the consideration stage, visit stage, and purchase stage.  In the consideration stage the customer determines his needs and utilizes different channels to find information, in the visit stage they visit a website based upon channel information, and in the purchase stage the customer makes a purchase.

As you can see from the figure the consumer moves through the consideration, visit and purchase stage by using customer initiated or firm initiated channels. Customer initiated methods could be direct, referral, or search engine. Firm initiated methods include things like display ads and email advertisements that are pushed on the customer. Each of the effects contributes in a spillover effects that translate into total attractiveness of making a purchase. 

The researchers found that both firm and customer initiated advertising channels contributes to purchasing behavior in some ways. The model helps companies determine where their advertising dollars are likely to receive the highest returns on investment. Paid search engine position is less effective than originally thought and using emails in combination with other organic methods helps consumers find the website and subsequently make a purchase. Understanding how customers find particular products/services and converts them to make a purchase furthers effective spending of revenue budgets on those channels that make the best marketing mix.  

eMarketer (2012). U.S. Digital Ad Spending to Top $37 Billion in 2012 as Market Consolidates. Retrieved June 8^th, 2014 from  http://www.emarketer.com/newsroom/index.php/digital-ad-spending-top-37-billion-2012-market-consolidates/

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). 

Wiesel, T. et. al. (2011). Marketing’s Profit Impact: Quantifying Online and Off-Line Funnel Progression. Marketing Science, 30 (4), 604–611.

Selecting Sales Channels

Sales channels can influence which products customers are exposed. Manager’s often select the sales channels they believe will best foster business growth. The researchers Karamehmedovic and Bredmar (2013) investigated the strategic choices behind how managers make sales channel decisions. You may be shocked to find that most decisions are rooted in personal experience or faulty logic without a thorough analysis of what makes one channel more effective than others.

Managers regularly believe that marketing channels often compete with each other. Even though this can be true in some cases, it is often not the market related. Companies that use a single marketing channel are often less competitive than those who find multiple ways of getting products into the hands of customers (Porter, 2001). Marketing is about exposure and if channels are not properly reviewed for effectiveness, the company may be missing excellent opportunities.

Even though managers may have preferred channels all business activities should focus on customer preferences. If customers prefer certain channels to others, it would not be wise for the company to ignore that information in their decision-making processes. Gaining market advantage by connecting with customers in mediums that they used is helpful in ensuring motivated purchasing behavior.

For example, in Sweden most of the major stores market their products to physical locations in a push strategy. Even though this was effective for their operations, the costs were much higher which in turn impacts profit margins. Companies can reduce some of these costs by using both physical and virtual sales.

Even though channels may have individual benefits, they may also have collective benefits when used together. Marketing should help ensure that customers are aware of the product and its features. When these customers are exposed to products within multiple venues sales often increase. Managers should use more of an analytically approach to channel selection and consider the benefits of using more than one.

Karamehmedovic, L. & Bredmar, K. (2013). Sales Channel as a strategic choice-sme managers seeking profitability. International business research, 6 (7)

Porter, M. E. (2001). Strategy and the internet. Harvard business review, 1-20.