Media Releases

Online advertising waters down impact of offline ad bans

May 30, 2011

TORONTO, ON – Not allowed to adver­tise your booze or smokes on a bill­board?

That’s okay. Research shows online adver­tis­ing works espe­cial­ly well in places with gov­ern­ment ad bans.

“If you want to reg­u­late the offline world, you have to remem­ber that peo­ple have access online too and you have to think about how that online world is going to mit­i­gate the effects of your reg­u­la­tion,” says Avi Gold­farb, a mar­ket­ing pro­fes­sor at the Uni­ver­si­ty of Toronto’s Rot­man School of Man­age­ment who co-wrote a study on the top­ic with Cather­ine Tuck­er of MIT’s Sloan School of Man­age­ment.

The researchers com­pared data on respon­dents in 17 U.S. states where there are adver­tis­ing restric­tions on alco­hol, with data for respon­dents in 33 states that did not reg­u­late such adver­tis­ing.

Respon­dents in states sub­ject to restric­tions were 8 per­cent less like­ly to say they would pur­chase an alco­holic bev­er­age. But that gap nar­rowed to 3 per­cent when some of those con­sumers were exposed to online adver­tis­ing for the prod­uct, sug­gest­ing the inter­net hurts the abil­i­ty of local gov­ern­ment to curb the effect of adver­tis­ing on their res­i­dents.

Small­er local stud­ies rein­forced these find­ings, show­ing an increase in reg­u­la­tion of offline adver­tis­ing increased the effec­tive­ness of online ads, mak­ing them a “sub­sti­tute” for the offline for­mat.

The study shows that online adver­tis­ing works espe­cial­ly well with con­sumers who have lim­it­ed knowl­edge of a prod­uct – either because the prod­uct is new in the mar­ket­place or because the con­sumer has not had expo­sure to it through oth­er forms of adver­tis­ing.

Besides the impli­ca­tions for author­i­ties seek­ing to reg­u­late adver­tis­ing for things like tobac­co, pre­scrip­tion drugs, and gam­bling, the study has impli­ca­tions for prod­ucts that may be hard to adver­tise offline for oth­er rea­sons besides legal restric­tions.

“With peo­ple who you have a hard time reach­ing offline, those are the cas­es where online adver­tis­ing is the most valu­able,” says Gold­farb.

While the find­ings may lead author­i­ties to ques­tion the use­ful­ness of adver­tis­ing bans that do not include the online world, they may still be effec­tive with nar­row­ly-tar­get­ed groups, such as restrict­ing cer­tain kinds of ads around schools, Gold­farb says.

“Regard­less of the sit­u­a­tion, you need to remem­ber peo­ple have this oth­er chan­nel to access infor­ma­tion and that should inform your reg­u­la­tion. It shouldn’t nec­es­sar­i­ly pre­vent your reg­u­la­tion.”

The study, which was pub­lished by the Jour­nal of Mar­ket­ing Research, is avail­able online here<>.

For the lat­est think­ing on busi­ness, man­age­ment and eco­nom­ics from the Rot­man School of Man­age­ment, vis­it

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Ken McGuf­fin
Man­ag­er, Media Rela­tions
Rot­man School of Man­age­ment
Uni­ver­si­ty of Toron­to
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