While the results apply most directly to advertisers

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excel at preventing practices viewed as "borderline" under industry norms. While the results apply most directly to advertisers considering the management structure of their online marketing programs, the analysis also speaks to broader concerns of outsourcing and the boundary of the firm. Key concepts include: Affiliate marketing broadly aligns incentives between advertisers and affiliates by compensating affiliates only when sales occur. Rogue affiliates may seek commissions they have not fairly earned, typically by claiming to have referred customers who were already going to buy. Alternative structures of affiliate program management can influence merchants' vulnerability to affiliate fraud. Outsourced marketing managers tend to enjoy superior information about affiliates' practices, but outsourcers' incentives differ from advertisers' objectives AUTHOR ABSTRACT We consider alternative methods of supervising staff who have significant discretion and whose efforts are subject to both incomplete information and skewed incentives. Specifically, we examine online affiliate marketing programs in which merchants oversee thousands of affiliates they have never met. Some merchants hire specialist outside advisors to set and enforce policies for affiliates, while other merchants ask their ordinary marketing staff to perform these functions. For clear violations of applicable rules, we find that outside advisors are most effective at excluding the responsible affiliates-which we interpret as a benefit of specialization. However, in-house staff are more successful at identifying and excluding affiliates whose practices are viewed as "borderline" (albeit still contrary to merchants' interests), foregoing the efficiencies of specialization in favor of the better incentives of a company's staff. We consider implications for marketing of online affiliate programs and for online marketing more generally. Solving the Search vs. Display Advertising Quandary
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Internet advertising was supposed to make it easier for marketers to measure the impact of their ad buys. But a basic question remains: Do search ads or do display ads create more customers on the web? Research by Professor Sunil Gupta . by Michael Blanding The dirty little secret of advertising agencies is that much of their work is pure guesswork. Companies spread out their advertising budgets across channels—a little bit of TV, some print media, a few billboards—and wait for customers to roll in. In very few cases, however, do they know if or how these investments motivated consumers to plunk down their credit cards or fill out an application for a service. That's why the Internet has been such a godsend to companies, says Sunil Gupta, the Edward W. Carter Professor of Business Administration at Harvard Business School. Finally, by measuring a few clicks of a mouse, companies can tell how successful a particular ad was in making a purchase decision. "A lot of companies have put more and more money
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  • Summer '16
  • Advertising, online advertising, display ads, deep metaphors

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