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Effects of online advertising on automobile sales

Jianping Peng (Sun Yat-sen Business School, Sun Yat-sen University, Guangzhou, P.R. China)
Guoying Zhang (Dillard College of Business Administration, Midwestern State University, Wichita Falls, Texas, USA)
Shaoling Zhang (Sun Yat-sen Business School, Sun Yat-sen University, Guangzhou, P.R. China)
Xin Dai (Sun Yat-sen Business School, Sun Yat-sen University, Guangzhou, P.R. China)
Jing Li (Xinhua College, Sun Yat-sen University, Guangzhou, P.R. China)

Management Decision

ISSN: 0025-1747

Article publication date: 10 June 2014

6777

Abstract

Purpose

The purpose of this paper is to explore the effects of online advertising spending on automobile sales through both search and non-search advertising.

Design/methodology/approach

Sales data of the top 52 vehicle models were collected in two consecutive years in China. The advertising spending data of both formats were collected from a leading consulting company and a major search engine company. Then several empirical models were proposed to evaluate the effects of online advertising on automobile sales. Two extended models were further investigated for search advertising.

Findings

The results revealed that both formats of online advertising have significantly positive effects on automobile sales. However, excessive spending on non-search advertising does not help sales and a moderate budget is preferred. On the other hand, spending on search advertising has no such constraint to improve the vehicle sales.

Practical implications

The empirical findings have proved the importance of online advertising to the automobile companies and thus can help companies improve their decision making in online advertising allocation strategies.

Originality/value

This study provides a better understanding of the relationship between online advertising spending and automobile sales, and helps business to define sophisticated online advertising strategies to improve sales performance.

Keywords

Acknowledgements

This study is based upon work supported by the National Natural Science Foundation of China under Grant Number 71072086 and the Ministry of Education of China, Humanities and Social Sciences Grant Number 10YJA630124.

Citation

Peng, J., Zhang, G., Zhang, S., Dai, X. and Li, J. (2014), "Effects of online advertising on automobile sales", Management Decision, Vol. 52 No. 5, pp. 834-851. https://doi.org/10.1108/MD-10-2012-0753

Publisher

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Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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