The Optimal Ad Mix Discovered

In the scramble to capture consumer attention, businesses constantly face the puzzle of how to best allocate their advertising budgets across online platforms, social media, TV, and print. New research, co-authored by Yonghua Ji from the University of Alberta's School of Business, offers a sophisticated yet practical guide for companies to fine-tune their advertising efforts and build lasting brand recognition.

The research, published in Information Systems Research, dives deep into the intricate relationship between digital advertising (like search engines and streaming services) and traditional advertising (such as television and newspapers). It tackles a crucial question: how should a firm allocate its advertising efforts over time across these dual channels when promoting the same product?

The findings highlight two key factors often overlooked in this context. First, there’s a “substitution effect”; if you flood consumers with similar messages from both digital and traditional ads, some of that information becomes redundant. Second, the “goodwill” — or how well consumers remember and feel about a brand — created by digital ads tends to fade slower than that from traditional ads.

“Digital advertising, with its targeted and interactive nature, tends to stick with consumers longer,” indicates Ji. This means that, initially, digital campaigns often offer a greater return on investment due to this slower decay of brand memory.

However, this doesn’t mean digital is always king. The study reveals that the initial advantage of digital advertising gradually lessens over time. This leads to a strategic, sequential approach for businesses:

• Go digital first: Firms should prioritize investment in digital advertising early in a campaign because of its higher initial impact and longer-lasting goodwill.
• Introduce traditional later: As the effectiveness of continuous digital-only efforts starts to diminish, traditional advertising becomes increasingly important to maintain and expand market reach.

This dynamic strategy allows businesses to leverage the unique strengths of both channels. The research is supported by real-world examples, like Airbnb, which initially relied heavily on digital marketing but later integrated traditional advertising, including television commercials, as it expanded into broader demographics.

“Our results suggest firms not to fix the ratio of investments in different channels during the planning horizon, but rather to adjust it dynamically over time,” states Ji.

The research also delves into how digital and traditional advertising can mutually reinforce each other, making the overall campaign more powerful than the sum of its parts. When this synergy is strong, the optimal strategy shifts, encouraging businesses to introduce traditional advertising much earlier and maintain a consistent presence across both channels.

Furthermore, the researchers note how the modern e-commerce era, particularly with the rise of the influencer economy, has changed the game. In this landscape, simply generating awareness and attention can often lead directly to sales, challenging the traditional idea of a long "purchase funnel." The model reflects this, showing how awareness directly contributes to revenue, making it a better fit for today's digital-first commerce.

By understanding these complex interactions and decay rates, marketing managers can move beyond static budgets to adopt flexible, data-driven strategies that maximize profits and build lasting brand connections in a competitive marketplace.

Read this paper’s abstract at doi.org/10.1287/isre.2023.0779

This article was co-written with assistance from Gemini 2.5 Flash.