Marketing's Profit Impact: Quantifying Online and Off‐line Funnel Progression

Inofec, a small‐ to medium‐sized enterprise in the business‐to‐business sector, desired a more analytic approach to allocate marketing resources across communication activities and channels. We developed a conceptual framework and econometric model to empirically investigate (1) the marketing communication effects on off‐line and online purchase funnel metrics and (2) the magnitude and timing of the profit impact of firm‐initiated and customer‐initiated contacts. We find evidence of many cross‐channel effects, in particular, off‐line marketing effects on online funnel metrics and online funnel metrics on off‐line purchases. Moreover, marketing communication activities directly affect both early and later purchase funnel stages (website visits, online and off‐line information, and quote requests). Finally, we find that online customer‐initiated contacts have substantially higher profit impact than off‐line firm‐initiated contacts. Shifting marketing budgets toward these activities in a field experiment yielded net profit increases 14 times larger than those for the status quo allocation.