Key Takeaways:
- Grocery retailers are particularly reliant on traditional printed advertising channels.
- An ad ban that stopped printed marketing materials reduced retail sales by 6%.
BALTIMORE, MD, August 5, 2024 – In spring 2021, during the height of the COVID-19 pandemic, one of Germany's 16 federal states instituted an ad ban, forcing retailers to stop all print advertising in that state for three weeks. The state did so under the assumption that such a ban would limit contacts during the pandemic. However, banning print advertising is also being discussed as a way to conserve natural resources, including the paper and water required to produce printed advertising materials, and a way to help reduce carbon emissions.
In the process, according to the authors of a new study, the impromptu experiment also led to a 6% reduction in grocery retail sales in that state.
The peer-reviewed study published in the INFORMS journal Marketing Science is titled, "The Effect of an Ad Ban on Retailer Sales: Insights from a Natural Experiment." The authors of the study include Sebastian Gabel of Erasmus University in the Netherlands; Dominik Molitor of Fordham University; and Martin Spann of Ludwig Maximilian University in Munich.
"After identifying the situation in Saarland – the German state in which the ad ban occurred – we decided to study how banning print advertising affects retailers, particularly in a time when they have other, more sustainable and even cost-efficient means to market on digital platforms," says Gabel. "As a result, we decided to measure the causal effect of grocery retailer advertising on consumer purchasing behavior and overall retailer performance."
The researchers focused on data obtained from a nationwide grocery retail chain that operated in Saarland and the adjacent state Rhineland-Palatinate, which did not institute an ad ban. They were able to compare the chain's sales in both states to determine the impact of the ad ban. They analyzed the daily sales data of 56 stores over a period of 25 weeks to arrive at their conclusions.
"What we found was that while the Saarland ban on printed advertising did contribute to a 6% decrease in retail sales, in Rhineland-Palatinate, where there was no ban, sales did not decrease," says Molitor. "Grocery retailers are specifically reliant on traditional printed advertising vehicles."
Spann added, "We also found no significant change in household expenditures or shopping trips in the marketplace. The ad ban did not shrink the market where consumers reduced overall spending. Instead, it shifted demand across multiple retailers."
About INFORMS and Marketing Science
Marketing Science is a premier peer-reviewed scholarly marketing journal focused on research using quantitative approaches to study all aspects of the interface between consumers and firms. It is published by INFORMS, the leading international association for operations research and analytics professionals. More information is available at www.informs.org or @informs.
