Short- and Long-term Effects of Online Advertising: Differences between New and Existing Customers

Online advertising has short- and long-term effects. Little is known, however, about which online advertising channel works best to address particular customer groups when short- and long-term effects, are taken into account. We look at the sales effect of search engine marketing (SEM), banner advertising, price comparison advertising (PCA) and coupon/loyalty advertising (CLA) on new and existing customers. Our analysis, which uses a sample of 2.8 million purchases, shows that SEM has the longest effect, followed by banners, CLA, and PCA. We find that CLA works better for existing customers than for new customers, whereas PCA works better to attract new customers.