research@hec - Issue #11 - (Page VII)

of Online Advertising Key Ideas traditional media. on a given budget. Increasing the Effectiveness most traffic is not the best way to maximize a campaign’s effectiveness. • Spending on online advertising cannot be optimized in the same way as with be used to rapidly calculate the greatest exposure for an online ad campaign • For the first time, researchers have developed an optimization model that can •Generally speaking, devoting the entire advertising budget to the websites with the At first glance, marketing seems to be an odd territory for Laoucine Kerbache to explore. Kerbache holds a PhD in industrial engineering and is an expert on supply chain modeling and optimization. Yet, he emphasizes, “Supply chain optimization is not solely related to production. Optimization is an issue throughout the business value chain, and especially in marketing, which is the direct link to consumers.” Hence Kerbache’s interest in developing tools that help media planners target the right combination of websites for their ad campaigns. M A DEFICIT OF INTERNET-ORIENTED MODELS “The dotcom bubble of the early 2000s brought companies new means of advertising,” says Kerbache. Nowadays, businesses are devoting increasingly greater shares of their advertising budgets to online campaigns. In 2007, American companies spent $21 billion on online advertising, out of a total advertising budget of approximately $300 billion. Online advertising has been growing an average of 30% a year since 2003 (this figure is nearly the same in the U.S., Europe, and Asia), and Laoucine Kerbache would like to thank the HEC Foundation for its financial support for this research project. there are no signs of its slowing down. Yet companies have no models to help them make decisions about online advertising. As a result, they usually rely on habit and intuition to develop online media schedules, deciding, for instance, to advertise on the most-visited websites. Research has been conducted on traditional media since the late 1960s, but none of the associated tools show how to optimize spending on online advertising, due in part to the specific ways in which online advertising is sold (i.e., pay “per click” or “per view”). AN INNOVATIVE MODEL To respond to this need, Kerbache, Peter J. Danaher, and Janghyuk Lee developed an optimization model that measures online media exposure. It includes new variables and makes it possible to derive optimum online media schedules and thus budget allocation. The originality of the approach lies in its incorporation of the following factors: • The possibility for advertisers of sharing available space on a webpage; Laoucine Kerbache BIOGRAPHY Professor Laoucine Kerbache has been a member of the Department of Operations Management and Information Technology at HEC Paris since 2000. He holds a PhD in industrial engineering and operational research from the University of Massachusetts. His research focuses on developing optimization models for operations and logistics management. Kerbache is involved in HEC’s executive education programs and is a member of the engineering pedagogy advisory committee for international organizations (ONUDI, BIT, UE, FNEGE, etc.). In November 2008, he was appointed associate dean and PhD director at HEC. October-November 2009 • research@hec VII http://www.hec.edu/Faculty/Professors-alphabetical-list/(professor)/Kerbache

Table of Contents for the Digital Edition of research@hec - Issue #11

Cover & Contents
Should Business Schools Conduct Research on Innovation?
Cash Reserves: Both Safety and Strategy!
A Grain of Sand: Often a Pearl, Sometimes Poison
Increasing the Effectiveness of Online Advertising

research@hec - Issue #11