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VALUE-BASED ADVERTISING ON THE INTERNET:

A LITERATURE REVIEW

Nabil Y. Razzouk, Cal State University, 5500 University Pkwy, San Bernardino, CA
92407. nrazzouk@csusb.edu
Victoria Seitz, Cal State University, 5500 University Pkwy, San Bernardino, CA 92407.
vseitz@csusb.edu
Eric Newman, Cal State University, 5500 University Pkwy, San Bernardino, CA 92407.
enewman@csusb.edu
Ali Caglar Kepekci, Cal State University, 5500 University Pkwy, San Bernardino, CA
92407.

Abstract

The Internet has attracted companies in different industries to market products

and services. However, many companies have become disenchanted with the Internet, as

they have not achieved the commercial potential anticipated. Some suggested the Internet

is better suited for interpersonal communication and personal sites rather than for

marketing products. However, researchers suggest that value-based advertising is the key

concept behind their success. The paper reviews the nature and role of value-based

advertising as applied to advertising on the Internet.

Introduction

Since 1996, The World Wide Web has captured significant public attention.

Exponential growth in Internet hosts and personal computer adoption has led to dramatic

increases in online activity. There are 88 million Internet users in the United States. This

number is expected to reach 143 million by the end of 2004 (Gilbert, 2001). Millions of

people are online for various reasons such as sending e-mail (52%), reading news (22%),

surfing on the web for fun (21%), buying products (4%), participating in auctions (3%),

and finding friends (2%) (Internet Advertising, 2001).


During the growth process, marketers recognized that the Internet was a medium

for reaching millions of potential customers. Since then, marketers have adapted value-

based advertising strategies to the Internet. Advertising revenues in 2000 were reported at

$8.2 billion in the United States. This has been achieved in just six years. Forecasters

predict that advertising revenues will top $14 billion by the year 2002 (Netvalue, 2000).

Additionally, advertising on the Internet has created opportunities for businesses

to develop new services and products (Hanson, 1999). However, many companies have

become disenchanted with the Internet since they have not achieved the commercial

potential promised. Some have suggested that the Internet is better suited for

interpersonal communication and personal sites rather than for commerce. Some reports

indicate that companies are removing their ads and writing off their investment with

executives questioning whether the potential is real or just hype (Schlosser & Kanfer,

1995).

Hence, the purpose of this paper is to review the nature of value-based advertising

as it applies to the Internet. Value-based advertising is advertising that is planned

strategically to fulfill customer needs and expectations. It is reflected in the quality of

web sites and their content and the level of consumer involvement with the product

(Ducoffe, 1996). Value-based advertising meets the needs of consumers to aid in making

decisions as to whether or not to purchase an item whether it is a high involvement or low

involvement product.

Literature Review

Regarding the Internet, Berthon, Pitt, and Watson (1996) and Lamb, Hair and

McDaniel (1996) suggest that marketers need to understand the true nature of this
medium to enhance its effectiveness. They add that “value” is a factor that plays an

important role in the overall effectiveness of the web sites. Value relates directly to the

quality of the data provided on the site.

Barker and Groenne (1996) investigated the type of value strategies being used on

the Internet and concluded that value in Internet advertising is provided in three ways:

information, entertainment and purchase facilitation. Furthermore, the authors argue that

the level of customer involvement should be taken into consideration when selecting the

type of value strategies to implement. This assertion is consistent with those of Rossiter,

Percy, and Donovan (1991). , and with the Elaboration Likelihood Model (Chaudhuri &

Buck, (1995).

Traditional consumer behavior literature would suggest that intense product

information is vital for high involvement product web sites, while entertainment content

may be more fit for low involvement product sites (Chaudhuri & Buck, 1995; Petty &

Cacioppo, 1983).

Additionally, the primary reason fo r distinguishing between high and low product

involvement is that habit, intuition and convenience sometimes guide the actions of

consumers rather than rational considerations (Lamb, 1996).

Value-Based Content in Advertising

Many researchers have studied the content of advertising in traditional media to

develop effective value-based strategies. Aaker and Norris (1982) state that an

advertising message can be either image/emotional/feeling or

informational/rational/cognitive. Howard (1989) indicates that examining high versus

low involvement situations is the basic criteria before selecting an advertising strategy.
Ducoffe (1996) notes the importance of value-based ads in the traditional media

and defines an advertising message as an exchange of communication as well as an

exchange of value between a company and potential consumers. Furthermore, Ducoffe

suggests that “… from a consumer point of view, a satisfactory exchange is one where

the value of the advertising itself is considered to meet or exceed expectations. According

to Ducoffee (1996, p. 22), “advertising value is an overall representation of the worth of

advertising to the consumer.” (Ducoffee, 1996, p. 22)

In their research, Stayman, Aaker, and Bruzzone's (1989) revealed that 47 percent

of television viewers watch an ad because of its information content and 45.6 percent

watch it because it is entertaining. Ducoffe (1996) affirms that from consumers’

perspective, the ability to supply information is the primary reason for watching

advertising.

Howard (1989) further explored the role of advertising content and argued that the

more pleasure, arousal and dominance in advertising content, the more effective the

advertising. In another study, Ducoffe (1996) found that the value of entertainment lies in

its ability to fulfill the emotional needs of the audience.

Another crucial content source for advertisements is entertainment. Howard

(1989) found that entertainment is an effective content of television commercials as well

as information. Furthermore, the researcher argued that emotional content was imperative

for entertainment in the ads. The typology of emotional content in advertisements is

shown in Table 1.
Table 1

Typology of Emotional Content

Type of Content Positive Negative

Pleasure Joy-Friendliness Sadness-Loneliness

Sluggishness

Arousal Vitality-Liveliness Over-Stimulation

Dominance Competence Futility

Self- fulfillment Ennui

(Howard, 1989, p. 312)

Altheide and Snow (1979) stated that entertainment calls forth behaviors based on

emotion but that this content of an advertisement may not be perceived directly. Various

tools may be applied to enhance the emotional content including humor, animation,

celebrity endorsements, psychological appeals (comfort, safety etc.) music, and semiotics

(signs and symbols).

In their research, Steward and Furse (1984) found that information and

entertainment are essential content for value-based advertising. If value is provided to the

consumer, it is more likely to stimulate purchase interest in traditional media.

Importance of Providing Value in a Web Site

Barker and Gronne (1996) state that while the traditional media approach to

advertising in mass media focuses primarily on capturing attention, the implications of


communicating with active media users on the Web should not be underestimated. If a

site is to receive a valuable, lasting and positive impression with the customer in the

interactive context of the web, it needs to provide value in return for the time the

customer spends visiting the site.

However, Berthon, et al., (1996) assert that capturing the attention of Web users

briefly on the Internet is inadequate. The ad must retain and reward their attention in

order to get the right exposure. The authors introduce a conceptual framework of a six-

stage conversion process (Figure 1) to point out the importance of value on the Internet.

According to this model, value plays a crucial role in the efficiency of the contact stage.

Contact efficiency measures the conversion of web site “hits” into “visits.” A visit

compared to a “hit” implies greater interaction between the surfer and the web page.

Moreover, the structure of the model implies that the conversion rate of “hits” into

“visits” may convert “hits” into purchases of the product. Consequently, from a

marketing perspective, the conversion of “hits” into “visits” needs to be as high as

possible.

.
Figure 1

Model of Conversion Process on the Web

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Value-Based Advertising Strategies on the Web

After analyzing possible value strategies in traditional media, Ducoffe (1996)

empirically tested the consistency of these strategies for the Internet and found that

information and entertainment are value-based strategies used on the Internet the same as

advertising on television. Barker and Groenne (1996) extended Ducoffe’s (1996)

research and found that purchase facilitation was another value-based strategy on the

Internet. However, research indicates that considering buyer involvement before

developing value strategies is a crucial element in Internet, as well as, traditional

advertising.
Information Strategy

Barker and Groenne (1996) and Ducoffe(1996) indicate that information is the

most prominent strategy on the Internet, particularly for high involvement product sites.

Prospective high involvement product buyers are more likely to require more extensive

information than low involvement product buyers. The more product information

provided, the greater the possibility of creating value and satisfaction for the web site.

Additionally, Resnik and Stern (1977) identified a fourteen- item scale to measure

the information content of a particular advertisement. These included: price (on which

most consumers base value), quality, performance, components and contents, availability,

special offers, taste, nutrition, packaging, guarantees/warranties, safety, independent

research, and new ideas. This protocol has been used in many studies to measure the

information content of advertising.

Automobile web sites may serve as an example for intense information content.

Most sites contain extensive information including details about the car, the engine,

accessories, performance, safety features, and price as well as detailed information about

company and its investors. They also provide the opportunity to compare the different

models as well as different makes. Other valued information may include warranties,

post-purchase conditions, financing interest rates, and availability of the model.

Purchase Facilitation Strategy

On the Internet purchase facilitation is possible just as in other direct marketing

methods. Internet companies may stimulate purchases by focusing on purchase

facilitative attributes. Fraud prevention, satisfaction guarantees, promises about handling

shipping and refund difficulties are the most common impediments to Internet shopping,
but can be transformed to become a strong facilitator of purchase transactions on the

Internet. The web site may include sufficient information regarding delivery and any

additional costs that may be incurred, such as fees for overnight delivery.

Findings from research by Vassos' (1996) provide the following implications of

value-based advertising for selling products via the Internet:

• Products that normally require extensive information are at a

disadvantage with respect to buying via the Internet. Products that

need to be physically seen, "tried on," or touched before a decision

is made are less likely to be sold via the Internet. However, in the

case of certain information-based products, it is possible to let the

customer sample the product. One example is to include listening

to a sound clip from a compact disc or reading an excerpt from a

book.

• The possibility of direct selling in advertisements is especially

relevant for low involvement products usually sold via mail order

such as books, compact discs, appliances, and, to a lesser extent,

clothing.

• Standardized goods such as compact discs and books are also well

suited for online sales, since the customer knows which quality

level to expect.

• In addition to mail order products and well-known brands,

purchase- facilitation adds value to the strategy for products that

can actually be distributed online such as smaller software


applications, magazines (commonly referred to as e- zines) and

reports.

• High-risk goods such as cars or jewelry are ill suited for online

sales since personal contact often plays an important role when

these goods are purchased.

One of the best-known Internet web sites that combines purchase facilitation

function with advertising is Amazon.com. The products sold by Amazon.com fall within

the suggested range of products that can be sold via the Internet and the company uses a

combination of information and purchase facilitation strategies to provide value. Visitors

to the site can search for books on specific topics, retrieve specific information regarding

the book such as price, read reviews from the publisher and comments from cus tomers.

After a specific book has been selected, the customer can purchase the book via the

Internet. Clearly explained purchase steps, fast download time, online price specials, as

well as a variety of personal services encourage customers to buy from Amazon (Gilbert,

2001).

Entertainment Strategy

The final value-based advertising strategy on the web is entertainment, or now

referred to as, advertainement (using entertainment in an advertisement). As in TV

advertising, researchers suggest this strategy is appropriate for low involvement products.

Barker and Groenne (1996) indicate the possibility of creating entertainment focused

advertising on the web for products with low involvement, low information intensity and

low possibility of purchase facilitation. The advertainment model proposed by the

researchers includes different incentives for customers to visit and stay on the web site.
As noted earlier, the longer a visitor stays on the site, the higher the probability for

advertising success.

In contrast with commercials that focus on product related information,

advertainments attract customers by providing entertainment and information that has

little to do with the product presented. Because of this, advertainment strategies can

theoretically be used for all kinds of products. Where commercials compete for attention

in sites with related content, advertainments compete for attention with both related and

unrelated sites (Barker & Groenne, 1996). Advertainments are also likely to attract those

that just surf the Internet rather than those who are searching for information to purchase

a product.

Additionally, Barker and Groenne (1996) found that interactivity in the site

provides unique opportunities for creating advertisements with a high entertainment value

and a high degree of customer involvement. Examples are: chat services, competitions,

and games. In addition to providing entertainment, high- involvement exposures created

through advertainment strategies can improve the company’s image and build brand

preferences.

Summary

The research presented indicates that the Internet, in many ways, is similar to

traditional media when creating value-based advertising. Specifically, information and

entertainment content are also effective in Internet advertising. However, because of

Internet’s ability to provide instant transactions, purchase facilitation strategies can be

developed to add value to the site. Furthermore, classification of target market’s product

involvement prior to developing value-based strategies is just as important on the Internet


as it is in traditional media. Research suggests that buyer involvement helps determine

the type of value-based strategy to be utilized, thus, enhancing the Internet’s ability to

meet consumers’ needs.

Much remains unkno wn about the future of advertising on the Internet. However,

what is known from the experience of most of the defunct dot.com companies is that

content, frequency, and dollar expenditures are insufficient to impress web surfers.

Value remains the caveat of efficient and effective advertising. Marketers can provide

such value through information, entertainment, and purchase facilitation. Moreover,

marketers need to formulate strategies that provide value and encourages consumers to

interact with the site. The basic premise underlying successful Internet advertising is that

if marketers do not provide value for the customer, they will find it highly difficult to

attract and retain customers

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