University of Halmstad School of Business and Engineering Master International Marketing Advertising management influence effectiveness of online advertising --A study of white-collar workers in online advertising context Master’s Dissertation in International Marketing Authors: Jin Ma 870705-T044 Handan Liu 800218-T157 Supervisor: Gabriel Baffour Awuah ~ 1 ~ ACKNOWLEDGEMENT This dissertation has been written during the spring semester of 2010 at Halmstad University. First of all, we would like to sincerely acknowledge to our supervisor Mr. Gabriel Baffour Awuah. We have learned a great deal from his constructive suggestions and valuable assistance for our dissertation, both in the seminars and supervisions. Secondly, we want to express our gratitude towards all the students in the other two seminar groups, particularly our opponents who also provide us with helpful advices. Thirdly, we are extraordinary thankful to our friends who take part in our research as respondents. We appreciate their time to complete the questionnaires which constitute our emprical data. Last but not least, we are much obliged to our parents for the spiritual support they provide during the whole thesis-writing process. Despite the far distance between China and Sweden, they always offer us with courage and confidence via phones and online communication tools. Halmstad, 2010 Jin Ma and Handan Liu ~ 2 ~ ABSTRACT Online advertising which is a new form of communication provides interactivity between advertisers and consumers. This dissertation is focusing on how advertising management influence the effectiveness of online advertising.The theoretical framework of this study mainly contains the advertising management and effectiveness of effects model.These two models are combined together in an analytical model where a connection between the two theories is explained that will be used as a foundation in gathering and analyzing the empirical findings. The quatitative research strategy is appliedd in this dissertation. Based on the questionnaies of white-collar workers, the empirical data was collected. The conclusion which can be drawn from this study is that there is clear evidence that good management will improve cognitive,affective and conative degree of consumer behavior. Key words: Online advertising, interactivity, advertising mangement, hirachy of effectiveness. ~ 3 ~ TABLE OF CONTENTS 1 Introduction ........................................................................................................................................... 6 1.1 Background................................................................................................................................. 6 1.2 Problem discussion ..................................................................................................................... 7 1.3 Research Purpose ....................................................................................................................... 8 1.4 Research Question...................................................................................................................... 8 1.5 Delimitation ................................................................................................................................ 8 1.6 Definitions .................................................................................................................................. 9 1.7 Previous studies and Earlier Research ........................................................................................ 9 2 Theoretical framework ........................................................................................................................ 11 2.1 Main steps in the management of advertising communication ............................................... 11 2.2 Hierarchy of effectiveness model ............................................................................................. 13 2.3 Traditional advertising VS online advertising ........................................................................... 14 2.4 Why the authors combine the preceding two models ............................................................. 17 2.5 Description of analytical framework ........................................................................................ 18 2.6 Hypotheses ............................................................................................................................... 22 3 Methodology ....................................................................................................................................... 23 3.1 Research strategy and approach .............................................................................................. 23 3.2 Data collection .......................................................................................................................... 25 3.3 Sampling ................................................................................................................................... 27 3.4 Data analysis ............................................................................................................................. 28 3.5 Validity and Reliability .............................................................................................................. 29 4 Empirical finding .................................................................................................................................. 30 ~ 4 ~ 4.1 Sampling, source of data .......................................................................................................... 30 4.2 Questions regard to cognitive ................................................................................................... 30 4.3 Questions regard to affective .................................................................................................... 33 4.4 Questions regard to conative .................................................................................................... 35 4.5 Questions regard to management.............................................................................................. 37 5 Analysis ................................................................................................................................................ 40 5.1 The correlation between management and cognitive................................................................ 40 5.2 The correlation between management and affective................................................................. 44 5.3 The correlation between management and conative ................................................................. 47 6 Conclusions .......................................................................................................................................... 52 6.1 Conclusion and discussion ........................................................................................................ 52 6.2 Implications .............................................................................................................................. 53 6.3 Further Research ...................................................................................................................... 53 References .............................................................................................................................................. 54 ~ 5 ~ 1 INTRODUCTION 1.1 BACKGROUND Advertising has been existed for many decades. It is one means of promotional mix which has its ultimate function to set up channels of information and persuasion to sell goods and services or promote an idea (Belch & Belch, 1998; Aaker, 1991). As an integral part of social and economic systems and one of the rapidly growing industries, advertising determines the GDP (Gross domestic product), of a country to a considerable extent during the late 1980s (Belch & Belch, 1998; Daniels, 1995). Advertising is considered to be one of the marketing communication tools. Communication is the process of giving or an exchange of information and the science of transmitting information as well (Smith, 1993). In the world‟s complicated society, advertising has developed into a significant communication system which connects both consumers and businesses (Belch & Belch, 1998). Advertising communication can be conveyed through various mass media which include traditional media such as TV, broadcasting, magazines and newspapers (Belch & Belch, 1998). In addition, Internet industry becomes a new medium for businesses, especially provides a new living space for the growth and development of enterprises (Jim Hamill, 1997). Therefore, online advertising which is a new type of advertising has been explored since the information explosion dynasty is coming. It is also one of the marketing communication tools (Doole and Lowe, 2008). When it comes to the effects of advertising, they are considered to be an investment in a long term process (Lavidge & Steiner, 1961). According to Robinson et al. (2007), online advertising has grown significantly since its beginning in 1994. From the article of E-Marketer, it is estimated that Internet spending in China will reach $1.7 billion in 2009 and $3.5 billion in 2012, with a 24% growth rate annually from 2007 till now (E-Marketer, 2009). Although in USA,the amount of 2009 will be $25.7 billion (ibid), China has the most Internet users in the world. Hence, online advertising opens up a door for companies to communicate with customers and potential customers