Online Advertising 1
An Online Advertising Model: Comparing China and the U.S.
Ying Wang
Shaojing Sun
Ying Wang (Ph.D., Kent State University) is an Assistant Professor in the Williamson College of Business Administration at YoungstownStateUniversity. Shaojing Sun (Ph.D., KentStateUniversity; Ph.D., University of Virginia) is an Associate professor in the School of Journalism at FudanUniversity, Shanghai, P. R. China.
Contact Information: Ying Wang, Department of Marketing, Williamson College of Business Administration, Youngstown State University, One University Plaza, Youngstown, OH 44555. Telephone: (330) 941-1867. Fax: (330) 941-1871. E-mail:
April 1, 2009
Paper submitted to Cheung Kong GSB Marketing Research Forum
Online Advertising 1
An Online Advertising Model: Comparing China and the U.S.
Introduction
The Internet is ushering in a new age of advertising which has drawn attention from both researchers and professionals. A hot button topic over the last few years has been consumers’ beliefs and attitudes toward online advertising. A host of studies (e.g., Ducoffe, 1996; Russell, Staffaroni and Fox, 1994) have suggested that individuals’ attitudes toward online advertising (ATOA) is an important measure of advertising effectiveness. Past research of online advertising has provided insight into global marketing and commerce.However, the focus of most studies have been in the U.S. or other developed countries. Little is known about online advertising in developing countries such as China.
The goal of the current study is to investigate online advertisingacross different cultures such as China and the United States.Scholars and practitioners alike have explored the relationship between culture and advertising extensively in the traditional media environment, but rarely do so in theonline context. Nonetheless, as Roberts and Ko (2001) stressed,cultural differences and adaptations are as relevant to online advertising as to traditional advertising. Moreover, the Internet affords companies of different sizes nearly equal opportunities to present themselves globally, and hence examining the role of culture in online advertising may provide useful implications about expanding business across nations.
There are two majorobjectives of this study: first, the study attempts to model the relationships among three groups of factors including beliefs about online advertising, ATOA, and online advertising outcomes; second, the study seeks to explore the influence of culture on the aforementioned three factors. China and the U.S.arethe two nations chosen for cross-cultural comparison becauseChina represents a typical Eastern culture that is experiencing rapid economic growth and sociocultural transition, whereasthe U.S. signifies a typical Western culture. The great cultural distance between the two renders a meaningful comparison to examine the impact of culture on online advertising.
It is of both theoretical and practical significance to inspect online advertising in China and U.S.On one hand, the study can shed light on the links among consumers’ beliefs, attitudes, and consumer responses, and how such relationships hold or vary across different cultures. On the other hand,China is a booming emerging market. The study may enhancemarketing professionals’ understanding of online advertising audiences in China, and thus help businesses and organizations employ online advertising more effectively and efficiently in their global marketing endeavors.
This article is organized in the following manner: first, the authors reviewrelevant literature on consumers’ beliefs, attitudes, and consumer behavioral responses, as well as a brief introduction to the Chinese and American cultures; second, based on the literature review, we propose research questions and hypotheses and usestructural equation modeling to dissect the relationships among culture, individuals’ beliefs, attitudes and consumer responses; third, we presentsignificant research findings and discussimplications of those findings; finally, we address limitations and future research directions.
Literature Review
Beliefs about Online Advertising
Consumers’ beliefs and attitudes toward advertising are important indicators of advertising effectiveness (Mehta, 2000). To date, there exist two typical views aboutthe relationship between consumers’ beliefs and their general attitudes toward advertising. The first treats the two constructs as equivalentand interchangeable both conceptually and operationally(Mehta, 2000; Schlosser and Shavitt, 1999), whereas the second postulates that one’s beliefsabout advertising are antecedents of attitude toward advertising (Brackett and Carr, 2001; Ducoffe, 1996; Pollay and Mittal, 1993). In the later research on the subject, the second perspective seems to be gaining popularity. Pollay and Mittal (1993), for example, argued that beliefs are specific statements about the attributes of objectsand attitudes are summative evaluations of objects. Emanating from beliefs, attitudesoperate at different levels of cognitive abstraction. Specifically, ATOA is the aggregation of weighted evaluations of perceived attributes and consequences of products(Brackett and Carr, 2001).
Consistently, researchers haveargued that ATOA has both cognitive and affective antecedents (Ducoffe, 1996; Shimp, 1981). Belief about advertising, as a result of the benefit and cost that consumers derive from advertising, primarily servesas a cognitive predictor of ATOA. Moreover, one’s belief plays a more important role in forming ATOA when the person is engaged in centrally processing (i.e., more deliberate, effortful and thoughtful) advertising information than in peripheral processing (low involvement, less thoughtful, and more emotional) (Petty and Cacioppo, 1986).
Prior studies have demonstrated that one’sbeliefabout advertising is a multidimensional construct. For instance, Bauer and Greyser (1968) identified two dimensions underlying consumers’ beliefs: economic and social. Later on, Pollay and Mittal’s model (1993) presented seven belief factors underlying consumers’ beliefs, and classified those factors into two categories. The first category, labeled as personal use, consists of factors including product information, social role and image, and hedonic/pleasure.The second category, labeled as social effect, includes value corruption, falsity/no sense, good for the economy, and materialism.
Among the seven factors, product informationdescribesadvertising’s role as an important information purveyor, which contributesto marketplace efficiencies. Social role and imagereflectsthe belief that advertising influences people’s lifestyle and formation of social status and image.Hedonic/pleasure refers to the view that advertising can be fun, pleasant and entertaining. Good for the economyreflects the viewpoint that advertising accelerates consumers’ adoption of new goods and technologies, fosters full employment, lowers the average cost of production, promotes healthy competition between producers, and raises the average standard of living (e.g., Belch and Belch, 2007). Notwithstanding its benefits for consumers and the whole society,advertising is often criticized for promotingmaterialism, corrupting values, and misleading audiences.Particularly, advertising is accused of providing people withunending razzle-dazzle of high-end products and preoccupying consumers with commercial concerns at the expense of social, political, philosophical, and cultural scruples. As a carrier of cultural and social values, advertising can contradict or even compromise the values that a society cherishes.
Attitudes toward Online Advertising
Research on attitudes toward advertising generally falls into two avenues. Along the first line, scholars examine attitudes toward a particular advertising stimulusand how they correspondingly influence consumers’ brand preferences and, ultimately, purchase intention (e.g., Gong and Maddox, 2003). Along the second line, scholars investigate the impact of consumers’ general beliefs and attitudes toward advertising effectiveness (e.g., MacKenzie, Lutz and Belch, 1986; Muehling, 1987). It is argued that consumer behavior such as advertisement avoidance may be a result of consumers’ general negative attitudes toward advertising (e.g., Li et al., 2002). The present study focuses on consumer’s general beliefs and attitudes toward online advertising.
As stated earlier, attitude toward advertising is shaped or molded by consumers’ beliefs. Furthermore, previous research has documented that attitude toward advertising affects consumers’ attitudes toward brands and sales responses (Mitchell and Olson, 1981). Mehta (2000), for example, found that consumers with a more favorable attitude toward advertising were more likely to be persuaded by advertising.
Online Behaviors
Ad clickingor clickthrough (the number of times that a banner ad is clicked upon) is an important measure of evaluating the effectiveness of online advertising (Dreze andZufryden, 1997). Compared with another commonly used measure, ad impression, ad clicking is viewed to be more relevant and performance-based (The Economist, 2001). In Gong and Maddox’s (2003) study, ad clicking was a significant predictor for advertising recall among Chinese Internet users. Wolin, Korgaonkar, and Lund (2002) also included ad clicking as one of the main online advertising behaviors. Therefore, in this study, we use ad clicking as one of the behavioral outcomes of online advertising.Another behavioral variable to be examined is prior online shopping experience.
Links among Beliefs, Attitudes, and Behaviors
As discussed before, one’s beliefabout advertising is regarded asan antecedent of ATOA. Ducoffe (1996), for example, found that informativeness and entertainment were positively related to ATOA, whereas irritation was negatively related to advertising value. Wolin et al. (2002) tested Pollay and Mittal’s (1993) belief model and showed that several belief factors influenced Web users’ attitudes toward online advertising which in turn had an impact on users’ behavioral intention. They found belief factors, such as product information, hedonic pleasure, and social role and image, were positively related to ATOA, whereas materialism, falsity/no sense and value corruption were negatively associated with ATOA. In addition, the more positive attitudes one held toward online advertising, the greater the likelihood that person would respond favorably to Web ads.
Research has supported that beliefs and attitudesare precursors of consumers’ responses toward online advertising and their online shopping behavior. Karson, McCloy, and Bonner (2006) segmented consumers into Pro, Ambivalent, and Critics groups based on their ATOA. They found that critics tended to use the Internet less often for information search and to view the Internet as less utilitarian and hedonic than the other two groups did. Similarly, Korgaonkar and Wolin (2002) found that a positive attitude toward online advertising is more likely to result in frequent online purchasing and high onlinespending.
Above, the literature suggests that beliefs about online advertising have an impact on consumers’ ATOA, which in turn influences consumers’ purchase intention and behavior. Such an argumentechoeswith Lavidge and Steiner’s (1961) conceptual model, indicatingthat one’s belief is a precursor of attitude, which by default is an antecedent of behavior.
Culture and Online Advertising
Culture and advertising are intrinsically linked to each other. Hall (1976) defined culture as “the way of life of people, for the sum of their learned behavior patterns, attitudes, and material things” (p. 20). The effects of advertising on society and culture have been extensively examined by scholars from various disciplines. International marketing researchers and practitioners, however, have demonstrated special interest in how culture influences advertising.The long-standing debate of standardization vs. specialization reflects two main views on the issue. On the one hand, it isargued that, with the emergence of a global marketplace, consumers around the globe have become more homogenized and thus can be satisfied with similar products and advertising messages. To that end, a standardized advertising strategy should be effective and efficient. On the other hand, proponents of specialization contend that consumers’ cultural background has a profound impact on their attitudes and beliefs, which in turn influence how they respond and/or interpret advertising messages and,accordingly, their purchasing behavior. Therefore, advertisers must consider cultural differenceswhen marketing goods and services across culturesand tailor their strategies and messages to local markets.
A large amount of empirical research has lent support to the specialization school of thought. Frith and Sengupta (1997) reported significant differences in magazine advertisements across the U.S., the United Kingdom, and India. They asserted that consumers’ cultural valuesmay temper the influence of international marketing. Belk and Pollay (1985) reported that although Americanization was clearly increasing in Japanese advertisements, deep-seated Japanese cultural values remained strong in those messages. Mueller (1992) studied advertising appeals used in Japanese and U.S. magazines, and concluded that Japanese advertising may be becoming increasingly Japanese-culture-oriented instead of being westernized.
Attitude toward advertising has also been examinedin a cross-cultural context. For example, Durvasula and Lysonski (2001) systematically compared consumers’ attitudes toward advertising in five countries located on four different continents, and deduced that beliefs toward advertising vary across culture in general.Another study showed that cultural values did have a strong influence on attitudes toward advertising appeals (Rustogi, Hensel and Burgers, 1996). In a recent study, La Ferla, Edwards and Lee (2008) examined attitudestowardadvertising across China,Taiwan, and the United States. They found that Chinese and Taiwanese exhibited more favorable attitudestowardadvertising than did American consumers. Extending this line of research into the online advertising environment, the present study focuses on how two cultures,China and the U.S., influence consumers’ATOA.
China.Over the past decade,China has witnessedthe most energizing and skyrocketing economic growth in history. Its entry into the World Trade Organization (WTO) has facilitated its convergence with the global economy, including rapid diffusion of Internet technologies. According to the China Internet Network Information Center (CNNCI), by June 2007, the population of Internet users had reached 162 million users in China, second only to the United States (CNNCI, 2007). Correspondingly, online advertising in China has experienced explosive growth, evidenced in the scale of the market, the revenue generated, and its share of the overall Chinese overall advertising market. In 2006, the revenue of Internet advertising in China jumped 48.9% from 2005 to $630 million. The figure was predicted to reach $840 million and $1.3 billion in 2007 and 2008 respectively as a benefit of 2008 Olympics in Beijing.
In spite of the phenomenal growth, online advertising in Chinahas been encountering various challenges. Online fraud and deception are common practices. Advertising Law in China has not been able to keep pace with the development of new technologies. Current policies or measures are not ample to safeguard against misleading or deceptive advertising on the Internet. Furthermore, malpractice by marketers and advertisers may breach consumers’ confidence and trust toward online advertising, which in turn may have a direct impact on the effectiveness of online advertising.
Despite the rapid diffusion of the Internet, academic research on this new advertising medium is by and large lagging behind. Gong and Maddox’s (2003) study is one among the few.The researchers investigated Chinese consumers’ perceptions and responses to specific Web banner advertising, focusing on the short-term effects of banner advertising among Chinese consumers. Results suggested that additional banner exposure improved Chinese users’ brand recall, changed their attitude toward the brand, and strengthened their purchase intent.
With the rapid growth of mobile phone use in China, mobile advertising has become apromising advertising channel for marketers to reach Chinese consumers. Focusing on this particular type of advertising, Tsang et al (2004) found that entertainment, credibility, irritation and informativeness were the significant factors affecting respondents’ attitudes toward mobile advertising. Xu (2006) further proposed personalization (sending advertising messages to mobile devices based on individual consumer characteristics and context) as an important factor affecting consumers’ attitudes toward mobile advertising in China. The researcher found that Chinese consumers generally hadless than favorable attitudes toward mobile advertising; Entertainment, credibility and personalization were the important factors influencingpeople’s attitudes toward mobile advertising whereas informativeness and irritation did not emerge as significant predictors.
The United States. Online advertising has become a rather mature industry in the United States. Consumers have become more familiar with online promotional tools. Awell-established credit card system helps making online shopping easy and safe. According to American Marketing Association, in 2007, online advertising in the U.S. grew 18.9% to reach 21.2 billion dollars. A continuous phenomenal growth has been predicted in this market as advertisers aggressively pursue various opportunities with the Internet. The Yankee Group, for example, predicted that the U.S. online advertising market will reach $50.3 billion in revenue by 2011, more than double the amount of 2007.
The Internet is quickly gaining primacy as an important advertising medium in theUnited States. However, issues such as privacy remain as a concern for many users in online advertising. Despite its fast growing rate, online advertising only accounts for a small percentage of advertisers’ overall budget. Advertisers currently spend 7.5% of their budget online, even though the Internet accounts for 20% of overall media consumption in the U.S. (The Yankee Group, 2008).
Over the next few years, the driving forces for the U.S. online advertising market will be the increasing size of the audience, the development of new types of advertising, and the creation of new publisher business models that will help sell interactive advertisements (The Yankee Group, 2008). The Yankee Group (2008) predicted that advertisement-related revenue pertaining to online search and animated advertisements will increase. Social networks will become a part of the online advertising mix, but it’s too early to tell whether they will evolve into the hot buy for advertisers.
It might be enlightening to employ Hofstede’s (2001) framework of cultural dimensions to analyze cultural differences. The individualism/collectivism dimension speaks to the dialectical relationship between individuals and groups. The power distance dimension refers to the degree of hierarchical power distribution in a society. Uncertainty avoidance explains the degree to which people are tolerant of uncertainties. The masculinity/femininity dimension describes the gender role in a society. The long-term versus short-term orientation, addresses the differences in cultural values and virtues. Values associated with long-term orientation are thrift and perseverance; values associated with short-term orientation are respect for tradition, fulfilling social obligations, and protecting one’s face. Table 1 shows the scores of the U.S. and China on these cultural dimensions (Hofstede, 2001).