Summary
A recent study highlights the significant time lag in advertising returns for B2B companies, revealing that patience is crucial for effective marketing strategies. The research, conducted by scholars from the National University of Singapore, Universidad de Chile, and Santa Clara University, focused on a semiconductor company and its advertising efforts over two and a half years. The study found that while initial purchases from ads typically occur within one to five months, repeat purchases can take much longer, with less than half of the revenue generated within the first three months.
The findings indicate a remarkable return on ad spend, with every dollar invested yielding approximately $12 in revenue over the following year. Interestingly, the majority of revenue came from existing customers purchasing new parts rather than new customers, suggesting that familiarity and prior engagement play a significant role in B2B purchasing decisions. The study emphasizes the need for companies to align their measurement strategies with longer sales cycles and to continue advertising to existing clients, as they may have untapped potential for additional purchases.
The researchers also recommend that companies adjust their accounting practices to better reflect the delayed payback from advertising, particularly in industries with lengthy decision-making processes. By understanding these dynamics, marketing teams can enhance their strategies and improve the effectiveness of their campaigns.
Show Notes
Welcome to Nerd Alert, a series of special episodes bridging the gap between marketing academia and practitioners. We're breaking down highly involved, complex research into plain language and takeaways any marketer can use.
In this episode, Elena and Rob dig into a two-and-a-half-year experiment with a semiconductor company's ads. Every ad dollar brought back about $12 in revenue, but less than half arrived within three months. They cover why existing customers drove most of the payback and how to match your measurement window to your sales cycle.
Topics covered: [01:50] "Long Lags and Large Returns: Experimental Evidence from Advertising to Businesses"
[02:30] Why B2B buyers are a tough crowd
[03:20] Switching ads on and off across U.S. markets for two and a half years
[04:00] A return on ad spend of 12, and the payback lag
[05:10] Existing customers returned $34.60 per ad dollar, new ones $1.40
[06:00] The approved vendor list and why paperwork slows new buyers
[06:50] What marketers should do about the lag
To learn more, visit marketingarchitects.com/podcast or subscribe to our newsletter at marketingarchitects.com/newsletter.
Resources: Thomas, M., Goic, M., & Kalyanam, K. (2025). Long lags and large returns: Experimental evidence from advertising to businesses. Management Science. 71(10):8750-8766. https://doi.org/10.1287/mnsc.2023.02661
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