Comparing the Effectiveness of Outdoor Advertising with Internet Advertising Case Study: Inetcom Company Olga Borisova Anna Martynova Bachelor’s thesis September 2017 Business Administration Degree Programme in International Business Description Author(s) Type of publication Date Borisova, Olga Bachelor’s thesis September 2017 Martynova, Anna Number of pages Language of publication: 85 English Permission for web publication: x Title of publication Comparing the Effectiveness of Outdoor Advertising with Internet Advertising Case Study: Inetcom Company Degree programme Degree Programme in International Business Supervisor(s) Kujala, Irene Assigned by - Description At the time of rapid changes, it might appear that some aspects of the pre-online life are vanishing. However, they have only mutated into new fascinating forms which arguably prove to be more effective and usable by tech-savvy population. In the marketing world, numerous techniques, including both traditional and non-traditional media, are used to attract and retain consumers. The purpose of this study was to identify the effectiveness of the case company’s advertising methods, namely, outdoor advertising and internet advertising, and then justify outdoor advertising as the most effective marketing method in the company. The study results were found to be important as they would influence the profitability of the organization based on avoiding ineffective advertising methods. The study was implemented by conducting theoretical research and then analyzing the data provided by the case company. The research design was that of the mixed approach: both qualitative and quantative methods were applied. The quantitative approach was used to obtain numerical data from the respondents based on the following categories: demographic, age, marital status and level of education. The qualitative approach was used to obtain information about the participants’ personal responses or authors’ observations in the field. The results of the study showed that despite the popularity of advertising on the Internet, it was often associated with fraud and should not be considered as reliable as outdoor advertising. Outdoor advertising was identified as a facilitator of acquiring accurate access to data and elongating the advertising period at the same station. Based on the research findings, the case company was advised to focus on outdoor advertising rather than on Internet advertising. Keywords (subjects) Marketing, Advertising, Outdoor Advertising, Internet Advertising, IMC, Russia, Moscow, Comparison Miscellanous 1 Contents 1 Introduction ............................................................................................. 3 1.1 Background ......................................................................................... 3 1.2 Rationale ............................................................................................. 5 1.3 Motivation ............................................................................................ 7 1.4 Research Problem, Objectives and Questions .................................... 9 2 Litrature review ..................................................................................... 10 2.1 Trends in advertising industry ........................................................... 10 2.2 Definition and process of advertising ................................................. 12 2.3 Media types ....................................................................................... 16 2.4 Marketing theories applicable in the research ................................... 31 3 Methodology .......................................................................................... 35 3.1 Research Design ............................................................................... 36 3.1.1 Quantitative Method .................................................................... 36 3.1.2 Qualitative Method ...................................................................... 37 3.2 Data Collection .................................................................................. 40 3.2.1 Qualitative Data Collection.......................................................... 40 3.2.2 Quantitative Data Collection ....................................................... 43 3.3 Data Analysis .................................................................................... 43 3.4 Research Implementation ................................................................. 46 2 4 Presentation and Discussion of Result ............................................... 49 5 Discussion of the Research Findings and Conclusion ...................... 64 References .................................................................................................... 74 Appendices ................................................................................................... 80 Appendix 1. Questionnaire ...................................................................... 80 Appendix 2. Respondents by Gender ..................................................... 81 Appendix 3. Respondents by Age ........................................................... 81 Appendix 4. Respondents by marital status ............................................ 82 Appendix 5. Respondents by level of education ...................................... 82 Appendix 6. The justification of outdoor as the most effective method of advertising in the company ...................................................................... 83 Figures Figure 1 Inetcom’s Internet Services ................................................................ 4 Figure 2 Google advertising revenue versus U.S. print media advertising media.............................................................................................................. 12 Figure 3 Inetcom’s Promo Sticker .................................................................. 58 Figure 4 Inetcom uses Address Plaques as one of the ways to attract people through the positive change in their surroundings .......................................... 60 Figure 5 Inetcom’s Special Promo Packaging ................................................ 61 Figure 6 One of Inetcom’s middle-sized posters ............................................ 65 Figure 7 Inetcom’s No Smoking Sticker ......................................................... 68 Figure 8 Inetcom’s Flyer ................................................................................. 69 Tables Table 1 Respondents by Gender .................................................................... 49 Table 2 Respondents by Age ......................................................................... 50 Table 3 Respondents by marital Status .......................................................... 52 Table 4 Respondents by level of education .................................................... 52 Table 5 Advertising methods .......................................................................... 53 Table 6 Characteristics of outdoor advertising ............................................... 54 Table 7 Characteristics of internet advertising ................................................ 54 Table 8 Benefits of outdoor advertising .......................................................... 55 Table 9 Benefits of internet advertising .......................................................... 55 Table 10 Justification of the use of outdoor advertising .................................. 56 3 1 Introduction 1.1 Background Advertising is a form of persuasion in which a firm or an organization motivates people to buy or use its products. In most cases, it is done through a mass medium or the use of sales people. It aims at attracting more buyers in comparison to other competitors. The main aim of advertising is to create awareness of the advantages of a product and inform people of the availability of the product in the market. Advertisements, therefore, play a significant role in the marketing and overall sales of a product because they influence consumers’ attitudes, behavior, preferences, and decisions related to the product (Belch & Belch 2009). Indeed, an advertisement that appeals most to the more potential customers is effective because it has high chances of increasing the sales of a product than one that does not have visual appeal. This means that in making an advertisement, the intention of the marketer must be clear and it should target a specific consumer segment. In marketing, outdoor advertising plays an integral role in creating awareness of a product and the sales of such goods. In astudy conducted by Kotler, Wong, Saunders and Armstrong (2005), the scholars note that outdoor advertising achieves this objective by influencing the decisions, behavior, preferences and attitudes towards the product through explicit visual expression of the goods. The nature and design of the outdoor advertisement could increase or reduce their appeal to the potential customers, hence the reasons explaining the use of bright colors in painting the products (Carson, Gilmore, Perry & Gronhaug 2001). Moreover, the advertisements of a product using the outdoor method are erected outside using billboards or large posters, flyers and brochures. On the other hand, internet advertising is also widely used on smart phones, websites and in the social media. The internet services that Inetcom Company (which is the case company) provides include websites, electronic mails, internet bundles, files transfer protocol, and telnet as shown in Fig. 1. On these platforms, many people including non-interested 4 customers may in turn become attracted to the products being explicitly advertised or pop-up ads using outdoor and internet advertising respectively. Fast Internet Services Websites and Electronic Mail Files Internet Transfer Bundles and Protocol Telnet Figure 1 Inetcom’s Internet Services The latest trend of outdoor advertisements used in the company is inclined towards creating the desired visual and audio appeal or both to potential customers, an aspect that is achieved by using different methods to display the information of such products. Using synthetic papers and clothes, the company currently creates very exiting expressions of products on billboards erected in strategic locations so that as many potential customers as possible could have a glimpse of the product being advertised. According to Kotler and others (2005), other than outdoor advertising, the other method widely used is 5 an internet platform. Internet advertising is designed to meet the customers’ satisfaction through delivering effective services (Kotler et al. 2005). This means that the intention of the marketer in internet marketing must also be clear. This thesis focuses on the effectiveness of outdoor advertising as a marketing tool used in creating awareness of the products of a company, compared to the other marketing channels that the company uses, particularly internet marketing. This is a case study of the Inetcom Company, which provides internet services in Moscow. Here, the study is inclined to a comparative aspect in which the outdoor advertising method was compared to internet advertising in terms of effectiveness within the context of the company. The Inetcom Company was established in 2002 in Moscow and it has more than 50 employees qualified to do various duties in the provision of internet services. 1.2 Rationale Based on the background above, it is apparent that advertising arises from the field of business studies whose main aim is to study the relationship between different markets in an economy, and it is done through communication between the marketer and the consumers (Armstrong and Kotler 2012). Furthermore, advertising is under the branch of marketing, which seeks to ensure that the products produced by an organization are made known to people and that people can use the products of the organizations. Marketing through advertisement, according to Armstrong and Kotler (2012), is important since it enables people to be made aware of new brands of the products a company produces and its benefits. It seeks to increase the awareness of consumers. It affects the consumers’ buyer behavior since through advertising the consumers become more aware of the products that a particular firm has in the market. Armstrong and Kotler (2012) postulate that it also serves the roles of increasing the awareness of people, thus it has many benefits to marketers. It affects the consumer behavior because when the consumers become aware of the advantages of a new product different from another one, they end up buying the product. Outdoor advertising influences consumer behavior since it acts as a frequent reminder of a new product that is available 6 in the market. Through outdoor advertisements, Kotler and others (2005) acknowledge that people are reminded frequently of a product in the market, and through that, they may go ahead and purchase that particular product in the market. When people are reminded of something repeatedly, they tend to remember it and even buy the product. Therefore, the rationale for choosing this topic was to identify the specific roles that outdoor advertising plays in today’s complex business world, which other advertising channels, particularly internet advertising, do not play. The topic is also important as it helps the authors to evaluate the effectiveness of outdoor advertising compared to internet advertising in the context of the chosen company. Internet platforms have been increasingly used in marketing by most organizations around the world, and Inetcom has also applied them in its marketing activities. However, traditional outdoor advertising still plays an important role in the company’s overall marketing campaign as admitted to us by the company’s marketing manager during a discussion. According to Berenson, Levine and Krehbiel (2004), the increasingly complicated business world has led to the rise of several advertising platforms to compete with the outdoor method that the case company could as well adopt. However, Inetcom still relies heavily on outdoor advertising to reach out to its customers. The company’s perspective is that it finds this method useful because once an advertisement is imposed on a billboard and erected in a strategic location, many potential customers will have unlimited access to it and conform to its message. As the company continues to provide Internet products and services across the region, there is a similar growing need for information about their services to reach as many potential customers as possible. The implication is that the products have to be advertised using an appropriate platform so that the potential consumers could receive precise information about the products (Kotler et al. 2005). The issues highlighted above rationalize the choice of the topic and its relevance to the company and in the contemporary complex business world. 7 1.3 Motivation In terms of motivation, since Inetcom Company uses outdoor and internet forms of advertising, this thesis mainly evaluates the effectiveness of the outdoor method, hence prompting the company to use outdoor advertising as compared to the other forms of advertising, in this case, internet advertising. From the point of view of the company, the choice of this topic was motivated by the need to justify outdoor advertising as the most effective advertising method used in the company. This would make it possible to validate its continued use in the company compared to internet advertising (Porter 1998). The company advertises its products, such as websites, electronic mails, files transfer protocol, and internet bundles, on different platforms which vary significantly. Therefore, in an attempt to reduce cost and maximize on the gains, the selection of the most cost effective method was appropriate (Proctor 2003). In addition, the information about the contemporary, yet highly differentiated products of the company, is sometimes lacking in the market, and, thus, most customers are not aware that such products exist (Belch & Belch 2009). Consequently, the nature of the advertisement method used either lowers or increases the overall sales of the products, and this fact necessitates the use of proper advertising to increase awareness of the products in the market. From the viewpoints of the industry/society, the motivation for choosing this topic was to create awareness of the products that the company produces using the most efficient, cost-effective and reliable advertising method. Noting that the service sector/industry, into which the company falls, continues to undergo changes to provide essential services to customers, there is a similar need to select the best advertising platform to deliver the information about the services to the potential customers (Carson, Gilmore, Perry and Gronhaug 2001). In addition, Belch and Belch (2009) propose that the awareness of the society about the existence of certain products or services needs to be enhanced, and, thus, companies should choose the most cost effective method of advertising. Therefore, in an attempt to satisfy the need of the two 8 categories above (industry and society), the choice for this topic was necessary. From our viewpoint, the motivation to choose this topic was to evaluate the effectiveness of outdoor advertising as a significant marketing tool in the company compared to the internet advertising method. The other motivation for choosing this topic was to know the benefits of outdoor advertising compared to internet advertising, and, thus, help us in making critical decisions about advertising in future endeavors. Armstrong and Kotler (2012) note that advertising companies are worried about the future of outdoor advertising campaigns and their relevance in the technological world we live in today. However, Inetcom still uses outdoor advertising. Therefore, several internet advertising companies compete with Inetcom in the provision of Internet services and use different kinds of advertising methods to market their products and services (Distinctia 2006). However, as people drive along major highways or walk in the streets, they easily spot an outdoor advert either on billboards, posters or large screens. This raises the concern about the justification of the use of outdoor advertising as opposed to the use of other advertisement methods. Buber, Gadner and Richards (2004) reveal that a critical examination of the company under study offers justification for this concern, and some of these issues prompted our research. The proliferation of internet media has led to marketing activities being carried out via the internet on different platforms. Currently, the widely used internet platforms in the company to market its products include Facebook, Whatsapp, Instagram, Twoo, YouTube, Twitter, and Skype among others, and they form a hub of activities (Buber et al. 2004). Various people between the ages of 15 to 60 years are increasingly using the internet on their smart phones, laptops and tablets. The Inetcom Company, as the major internet service provider in Moscow, has been using both outdoor advertising and internet advertising to deliver information about their services to the potential clients. The study conducted by Hollensen (2004) postulates that some companies widely use outdoor advertising compared to internet advertising. This revelation made us curious about the importance of outdoor advertising compared to the internet