Better Is Better? Signaling Paradoxes in Performance-Based Advertising

IF 5 3区 管理学 Q1 INFORMATION SCIENCE & LIBRARY SCIENCE Information Systems Research Pub Date : 2024-07-31 DOI:10.1287/isre.2021.0419
Ran Pan, Juan Feng
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Abstract

Under performance-based advertising, firms pay only for measurable consumer actions, such as clicks or sales. However, these actions may result from factors other than effective advertising. For example, a high-reputation seller is more likely to generate more actions than a low-reputation seller. If such consumer actions are counted toward advertising performance, a high-quality firm is penalized because it has to pay more than necessary to signal its quality. Without addressing these paradoxes, it becomes increasingly challenging for a high-quality firm to signal its quality under the performance-based advertising scheme. Our research extends advertising signaling theory, which primarily focuses on new products without an established reputation and assumes that the advertising reaches the entire market (e.g., Milgrom and Roberts 1986 , Feng and Xie 2012 ). Instead, we consider products that may have an established reputation (e.g., newer versions of the iPhone) and allow for the scenario that not every market segment can be reached by the advertising. We identify two paradoxes that arise from performance-based advertising and discuss methods to mitigate these paradoxes by proposing different ways of measuring advertising performance.
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更好就是更好?基于效果的广告中的信号悖论
在基于效果的广告投放中,企业只对可衡量的消费者行为(如点击或销售)付费。然而,这些行为可能是有效广告之外的其他因素造成的。例如,声誉高的卖家比声誉低的卖家更有可能产生更多的行为。如果将消费者的这些行为计入广告绩效,那么高质量的公司就会受到惩罚,因为它必须支付比必要的更多费用来表明自己的质量。如果不解决这些悖论,那么在基于绩效的广告计划下,优质企业要发出优质信号就会变得越来越困难。我们的研究扩展了广告信号理论,该理论主要关注没有既定声誉的新产品,并假设广告覆盖整个市场(如 Milgrom 和 Roberts,1986 年;Feng 和 Xie,2012 年)。相反,我们考虑的产品可能已经有了一定的知名度(如新版本的 iPhone),并考虑到并非每个细分市场都能被广告覆盖的情况。我们发现了基于绩效的广告所产生的两个悖论,并讨论了通过提出不同的广告绩效衡量方法来缓解这些悖论的方法。
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来源期刊
CiteScore
9.10
自引率
8.20%
发文量
120
期刊介绍: ISR (Information Systems Research) is a journal of INFORMS, the Institute for Operations Research and the Management Sciences. Information Systems Research is a leading international journal of theory, research, and intellectual development, focused on information systems in organizations, institutions, the economy, and society.
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