Industrial Marketing Management 102 (2022) 252–265

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Industrial Marketing Management

journal homepage: www.elsevier.com/locate/indmarman

Can B2B firms benefit from competitors' advertising? A dynamic business

environment perspective on an emerging communication form
Peter Guenther *, Miriam Guenther
Management School, University of Liverpool, Chatham Street, Liverpool L69 7ZH, United Kingdom

A R T I C L E I N F O A B S T R A C T

Keywords: Advertising, which has traditionally played an ancillary role in B2B firms' marketing efforts, gains momentum,
B2B advertising with firms' spending levels steadily increasing and recent research showing positive effects on firms' sales rev­
Dynamic NEST enues. However, the sales effect generated through a firm's B2B advertising is likely to critically depend on
Competitive effects
competitors' advertising investments. While B2C research suggests that competitive advertising reduces the
Complex business goods
Credence business services
effectiveness of own advertising, this study applies the dynamic NEST (nested business environment) framework
to propose the opposite effect, considering the emerging nature of advertising in business markets and the impact
of competitor advertising in establishing this form of communication. This opposite, synergistic effect means that
advertising competition increases, instead of decreases, the effectiveness of own advertising in B2B contexts.
Using a large panel dataset of 2723 B2B firms, this study finds evidence for the synergistic effect and also shows
that it reduces the sales effect of sales force spending, i.e. an established communication form in business
markets. However, the results also show that the effect's presence or absence critically depends on the business
context. This research provides important insights for researchers and managers concerning competitive
advertising effects in different B2B contexts.

1. Introduction
Recent research demonstrates that advertising spending can pay off
significantly in business markets, suggesting that B2B firms can improve
their performance by increasing their advertising spending level
(Guenther & Guenther, 2020; Rahman, Rodríguez-Serrano, & Lambkin,
2020). However, a firm's specific payoff is likely to depend on compet­
itive dynamics (Danaher, Bonfrer, & Dhar, 2008), which prior work on
B2B advertising has not considered directly. For example, KPMG has run
several advertising campaigns in the U.S. in recent years, including In the
Real World and Turbulent Times in order to promote the firm's profes­
sional services portfolio to other businesses and improve financial per­
formance. Their competitor EY also advertises, including through the
recent Question Everything campaign. In this scenario a critical question
is: What does EY's, and possible other competitors', advertising
engagement mean for KPMG's financial outcomes from its own adver­
tising activity?
Research from B2C contexts would suggest that competitors' adver­
tising activity reduces the sales effectiveness of a firm's own advertising
(Danaher et al., 2008). In fact, the problem of competitive interference
for advertising effectiveness has long been an important research focus
in the consumer marketing literature (e.g., Burke & Srull, 1988; Keller,
1991). However, in contrast to B2C communication which has tradi­
tionally been dominated by advertising, this form of non-personal
communication has been ancillary to personal selling in B2B contexts
(Guenther & Guenther, 2020; Schultz, 2012). This contrast is reflected in
B2B firms' advertising spending levels which, although rising, are only a
tiny fraction of B2C firms' spending (AdAge, 2015, 2016). Thus,
advertising is only emerging as a form of B2B marketing communication
and, against this background, increased competitor advertising activity
may actually contribute to transforming B2B marketing practice and
help establish legitimacy for advertising as a form of communication
with potential customers. As a result, a firm could benefit from com­
petitors' advertising activity instead of suffering advertising effective­
ness losses, consistent with the notion that logics from B2C marketing
frequently do not directly translate to B2B contexts.
The purpose of this study therefore is to shed light on the impact of a
B2B firm's competitive advertising context on its advertising payoffs.
Our theoretical lens is the dynamic NEST framework that describes
firms' business environment and, importantly, transformational

* Corresponding author.
E-mail address: peter.guenther@liverpool.ac.uk (P. Guenther).

https://doi.org/10.1016/j.indmarman.2022.01.016
Received 22 July 2020; Received in revised form 8 November 2021; Accepted 17 January 2022
Available online 5 February 2022
0019-8501/© 2022 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
P. Guenther and M. Guenther
processes within this environment (Möller, Nenonen, & Storbacka,
2020). We use the framework to derive that competitive advertising
could have a positive instead of a negative effect on a firm's ability to
grow its sales through advertising investments by helping change
existing marketing communication norms in business markets.
By explicitly considering the effect of a firm's business environment,
we seek to capture marketing shifts of strategic relevance that can
remain undiscovered when environmental factors are ignored. In
particular, we examine whether a greater uptake of advertising by
competitors can lead to a shift whereby the customer sales response to a
firm's communication efforts becomes more spread out across commu­
nication forms. More specifically, we test whether the response to
advertising increases while the response to sales force efforts decreases,
indicating a need for B2B firms to more strongly prioritize advertising in
marketing investment decisions. In so doing, we are responsive to calls
for more research on the impact of firms' changing environment in order
to generate research findings that are highly relevant and timely for
managers (Reibstein, Day, & Wind, 2009).
We further demonstrate the NEST framework's applicability to the
B2B advertising context by showing the effects of conditioning forces
that conceptually can be thought of as supporting or restricting the
establishment of advertising as an effective communication form in
certain market contexts (e.g., for complex B2B goods). While our
investigation can only be a starting point, identifying factors that can
influence the effectiveness of advertising in certain contexts is critical to
better understand when a shift in communication norms is likely to
occur and to help guide managers' marketing communication decisions
for their specific context.
For our empirical investigation, we use a large panel dataset of
15,259 firm-year observations for 2723 B2B firms from the United
States. In total, our sample firms operate in 182 different industries such
that our findings have high generalizability across industries. Finally, we
ensured that our results are robust to several important econometric
issues.
In the following, we review existing literature on B2B advertising.
We then discuss the theoretical framework underpinning our research
and derive hypotheses, after which we explain our sample, measures,
and model. In concluding, we discuss our results, the theoretical and
managerial implications, and avenues for further research.
2. Literature review
Similar to definitions in the business marketing literature (e.g.,
Swani, Brown, & Mudambi, 2020), we define B2B advertising as a firm's
paid communication to other businesses. This communication can occur
via different media, which are usually non-personal and one-way. With
regard to the typical media, the consulting firm Outsell found in a 2016
study that advertising B2B firms predominantly use digital media
including online search and display ads, or traditional channels such as
direct mail, trade magazines, and other print media (e.g., directories and
newspapers) (Chief Marketer, 2016). Across these different channels,
data suggest that B2B firms' total spending on advertising as well as the
number of advertising firms are increasing over time, although from
relatively small levels (Fig. 1 for U.S. B2B firms). Thus, B2B advertising
can be considered to be evolving from a niche communication form in
business markets toward a more established form.
Since B2B firms have only recently begun to more substantially
invest in advertising, an important question is whether the resulting
increase in advertising intensity will have a negative interference effect,
reducing a firm's own advertising effectiveness, or whether it may be
conducive by helping to establish advertising as an accepted commu­
nication form. For managers, the answer to this question has important
implications. A positive effect of competitive advertising intensity on a
firm's own advertising effectiveness would indicate a shift in commu­
nication practices, alerting managers to change their marketing mix
accordingly, while an adverse effect would signal boundaries and a need
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Industrial Marketing Management 102 (2022) 252–265
to monitor the net payoff from advertising.
Prior research has not yet considered competitive advertising effects,
since the focus so far has been on the financial benefits for the individual
firm (Table 1, Panel A) and on the characteristics of B2B advertising,
such as the use of celebrities or different types of appeals (Table 1, Panel
B). Studies that have investigated whether B2B advertising can pay off,
have demonstrated this effect for the ‘average firm’ (Guenther &
Guenther, 2020; Rahman et al., 2020). As a result, it remains unclear
how the competitive environment shapes the financial payoff from B2B
advertising. Moreover, contexts may differ with regard to the extent that
sellers and buyers perceive advertising to be beneficial to the sales
process, suggesting that adoption and acceptance of advertising could
differ. Next, we discuss how our study addresses the void in the extant
literature by introducing relevant theory underpinning our research
propositions regarding the effect of competitive advertising intensity.
3. Theoretical background and conceptual framework
We draw on the dynamic NEST (nested business environment)
framework to formulate our conceptual model and derive expectations
regarding the effect of competitive advertising intensity (Möller et al.,
2020). The framework is suitable for our study since it describes trans­
formation processes against the background of multiple layers of a firm's
business environment. Although the framework is more comprehensive
and captures several types of transformation processes, we focus on
institutionalization and influencing processes for our study since we pro­
pose that advertising is still an emerging business marketing practice
that may become institutionalized through a greater uptake by com­
petitors. Institutionalization pertains to the processes by which social
expectations of appropriate organizational actions (i.e., norms and
rules) influence how organizations behave (Dacin, 1997). In other
words, the framework provides us with a useful theoretical lens to
formulate expectations regarding how business marketing communica­
tion practices may, or may not, change due to processes in a firm's
normative business environment. In this regard, the key consideration is
whether or not this environment is conducive or inhibiting for B2B
advertising to establish itself as an accepted or legitimized form of
communication, which ultimately determines a firm's outcomes from its
advertising.
A firm's nested business environment is made up of four layers
(Möller et al., 2020). The lowest layer of NEST is the actor layer1
comprised of individual firms which depending on their goals (e.g.,
building a brand), resources (e.g., marketing budgets), and capabilities
(e.g., advertising campaign development, graphic design etc.) may
engage in advertising to differing extents. Importantly, these individual
firms are embedded within their focal ecosystem (e.g., suppliers, cus­
tomers, and competitors) that in turn is embedded within the whole
business field (i.e., an industry) which then forms the macro layer or set
system together with other business fields. Within the upper environ­
mental layers, certain norms will have emerged as dominant, i.e. have
become institutionalized. Such institutional norms can be professional
norms and standards that are upheld within the industry or across
similar industries (e.g., B2B marketing dominant industries). With re­
gard to marketing communication, research indicates that a norm or
standard followed by B2B firms is to rely on the sales force to commu­
nicate and bond with customers (Ohiomah, Benyoucef, & Andreev,
2020; Yeoh & Roth, 1999). This norm will then also be reflected in
customer expectations regarding appropriate ways of communicating
with them.
However, when individual firms start to invest more in advertising,
the prevailing norm concerning industrial marketing communications
can change in a bottom-up transformational process. The more firms adopt
1
Italics denote NEST environmental layers and transformation process
elements.
P. Guenther and M. Guenther
Fig. 1. U.S. B2B firms' advertising activity over time.
Note: Based on data from S&P Global Market Intelligence.
advertising—which actually increases the competitive advertising
intensity—the stronger should be the influence to alter existing norms in
upper environmental layers which can positively influence customers'
perception of the legitimacy of this form of communication and hence
their responsiveness to it (i.e., its effectiveness). To test this prediction
that competitors' advertising activity improves an individual firm's
advertising effectiveness, we investigate to what extent competitive
advertising intensity positively moderates the relationship between a
firm's own advertising spending and its sales growth (i.e., a firm's
advertising effectiveness), as illustrated in Fig. 2. In the following, we
refer to this predicted interaction relationship as a synergistic effect
between competitors' and own advertising.
However, transformation processes are shaped by conditioning forces
that can either support a change or restrict it (Möller et al., 2020). In this
regard, it is plausible that customers' preferences are the key condi­
tioning force that critically determines B2B advertising's acceptance as
an appropriate communication form (i.e., its institutionalization). Cus­
tomers are the ultimate receivers of and respondents to advertising and
what becomes accepted practice is part of a social negotiation. We
expect that the acceptance depends on the offering that customers are
seeking to buy and the resulting information and communication re­
quirements that they have to distinguish between various suppliers' of­
ferings and determine the potential quality of those offerings.
In this regard, literature on B2B buyer behavior suggests that cus­
tomers are less accepting of non-personal and non-interactive commu­
nication forms (i.e., B2B advertising) than personal interactive
communication forms (i.e., sales force contact) when their buy-task
involvement is high (e.g., when the purchase is highly consequential/
risky) (Appio & Lacoste, 2019; Bach & Lund Jepsen, 2007). However,
despite of high buy-task involvement, literature also indicates that
business buyers draw on abstract reputational considerations when it is
difficult to evaluate an offering objectively regarding its expected out­
comes (Greenwood, Li, Prakash, & Deephouse, 2005; Guenther &
Guenther, 2019), suggesting that in such contexts buyers are likely to be
more accepting of advertising since it forms an important quality signal
and, in the longer term, builds a brand reputation.
To test these contextual predictions, we firstly examine whether the
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Industrial Marketing Management 102 (2022) 252–265
synergistic effect of competitive advertising intensity on a firm's own
advertising effectiveness is weaker for complex goods (e.g., those that
involve complex technologies) than for non-complex goods, since buyers
have greater buy-task involvement for complex goods, meaning that
new non-personal and non-interactive communication forms are less
likely to become an accepted norm (Fig. 2). Secondly, we examine
whether the synergistic effect of competitive advertising intensity on a
firm's own advertising effectiveness is stronger for credence services
than for non-credence services, since the former are more difficult for
customers to evaluate objectively, hence aiding acceptance of new
communication forms that build a (brand) reputation.
In summary, we argue that the emergence of advertising as a more
broadly accepted form of industrial marketing communication can be
described as a transformation process which is likely to be reinforced
through greater usage by firms in a particular industry, suggesting a
synergistic instead of an antagonistic effect of increased advertising
competition on the sales outcomes of a firm's advertising. However, the
reinforcement of this process may either be stifled or supported
depending on the way in which customer preferences shape communi­
cation norms and expectations in a firm's ecosystem and business field. In
the following hypothesis section, we explain the expected mechanisms
that drive the interaction of competitive advertising intensity with a
firm's own advertising effectiveness and the moderating effects of
customer communication factors (buy-task involvement and ability to
assess objectively) that are related to offering types (complex vs. non-
complex goods and credence vs. non-credence services).
4. Hypotheses
4.1. The synergistic effect of competitive advertising intensity
Intuitively, from an advertising firm's perspective, more intense
advertising competition means that the firm's ads compete with other
ads for the attention of potential buyers, suggesting a lower effectiveness
to grow sales through advertising (Davis, 2018; Jones, 1990). However,
advertising is only an emerging communication form in business mar­
kets, meaning that greater use of advertising by firms in a particular
 Table 1
Prior empirical studies on B2B advertising.

P. Guenther and M. Guenther

Study Topic Sample Number of industries Key findings pertaining to
B2B advertising

Panel A: Studies concerning financial outcomes of B2B advertising

Guenther and Guenther Performance effect of 12,701 firm-year observations 173 B2B ad spending
(2020) B2B ad spending increases revenues,
including via positive
synergies with sales force
spending and a quality
focus
Rahman et al. (2020) Performance effect of 174 firm-year observations 1 Higher B2B ad spending
advertising efficiency in efficiency improves firm
the pharmaceutical profitability
industry

Panel B: Studies concerning B2B advertising usage, content, and design aspects
Clarke and Honeycutt Color usage in B2B ads 842 print ads n/a Ads in Venezuela contain
(2000) more red, orange, and
green. Ads in France and
U.S. contain more black
and brown. Black-and-
white ads are the most
popular in the U.S.
Lohtia et al. (2003) Drivers of B2B banner ad 8725 banner ads n/a Incentives, emotions,
click-through rates animations, and
interactivity reduce the
click-through rate of B2B
banner ads. Low and high
levels of color use are
inferior to moderate use
255

McDowell (2004) Differentiation strategies 233 B2B TV ads 1 Differentiation strategies

in B2B TV ads are focused on supplier
affluence, originality,
reputation, and inventory
as well as audience
demographics,
personality or lifestyle,
and unique behaviors
Jensen (2006) B2B adoption of online 108 employees n/a Low importance of offline
marketing and online advertising,
communications except for search engine
ads, in B2B versus B2C
firms

Industrial Marketing Management 102 (2022) 252–265

Bach and Lund Jepsen Emotional appeals in B2B 48 print ads 1 Small usage of emotional
(2007) ads brand appeals and
intuitive messages in B2B
ads for low attention
products, despite possible
advantages
Jensen (2008) Planning B2B promotion 130 firms 1 Customers prefer B2B ads
via conjoint analysis via trade journals and a
combination of trade
journals and the Internet,
but are indifferent
toward advertising via
the Internet only and
reject no advertising
Fischer and Albers (2010) Physician- versus patient- 2831 brands 1 Small spending on
directed marketing physician-directed
spending journal (B2B) ads, which
have only small sales
(continued on next page)
 Table 1 (continued )

P. Guenther and M. Guenther

Study Topic Sample Number of industries Key findings pertaining to
B2B advertising

effects except for a few

brands and product
categories
Lord and Gupta (2010) B2B product placements 127 employees 3 Buying-center members
accept B2B product
placements, which create
high levels of recall and
modestly favorable
attitudes and purchase
intentions, depending on
the liking of the movie as
well as the placement's
fit, prominence, and
realism
Spotts and Weinberger Corporate reputation 97 firm-quarter observations n/a B2B ad spending is
(2010) effects of ad spending and relatively unimportant
publicity for the creation of
corporate reputation and
brand equity
Stevenson and Swayne Portrayal of African- 1200 print ads 4 Increased number of
(2011) Americans in trade African-American
journal ads portraits of females
versus males, in major
versus minor roles, and in
white collar versus blue
collar roles
256

Abrahams et al. (2012) Content of entrepreneur- 5288 print ads 7 Industries differ
directed print ads regarding ad position and
size, typical placement
months as well as use of
repetitions, contact
details, and comparative
messages
Huang (2014) Storytelling in Chinese 15 story-telling cases n/a Stories are most
B2B marketing commonly
communication communicated via
corporate websites and
social media and
sometimes via B2B ads
Leonidou et al. (2014) Green advertising of 383 green magazine ads 5 Deeply green ads are

Industrial Marketing Management 102 (2022) 252–265

industrial firms detailed, authentic, and
responsible, while
shallow green ads are
superficial, blurred, and
sometimes deceptive.
Differentiating
characteristics are the use
of focal points (relating to
a product, processes,
image, and facts), the
quality of raising the
issue (specific, strong,
substantive, and
acceptable), the lever
used (rational,
emotional, and moral
points), and the
(continued on next page)
 Table 1 (continued )

P. Guenther and M. Guenther

Study Topic Sample Number of industries Key findings pertaining to
B2B advertising

description sharpness of
driving forces (relating to
the planet and its flora,
fauna, and human
entities)
Karjaluoto et al. (2015) Importance of digital 6 firms 5 Managers currently do
industrial marketing not consider digital
communications communication,
including digital
advertising, as vital and
its implementation is not
planned well and
incomplete
Baack et al. (2016) Creativity in B2B ads 166 managers n/a More creative B2B ads
more strongly affect
attitudes and behavioral
intentions
Giakoumaki et al. (2016) B2B ingredient 320 students n/a Advertising B2B
advertising in consumer ingredients improves
ads consumer brands'
attitudes and purchase
intention
Swani and Iyer (2017) Global financial crisis 759 print ads n/a The global financial crisis
effects on B2B service reduced the use of
firms' print ads positive emotional
appeals and
257

tangibilization via
physical representation.
In general, strong use of
functional appeals, first-
person voice, and
tangibilization via
physical representation
and documentation;
small use of positive
emotions, website URLs,
phone numbers, and
tangibilization through
visualization.
Anaza et al. (2020) Narrative transportation 229 employees 23 Narrative transportation

Industrial Marketing Management 102 (2022) 252–265

in B2B ads increases decision
makers' trust, feeling of a
personal connection, and
propensity to refer
Ferguson and Mohan Celebrity persons in B2B 54 print ads n/a Celebrities usage
(2020) ads increases attention,
reduces brand recall and
utilitarian attitudes, and
promotes negative
hedonic attitudes

Note: n/a = the information is not provided in the study.

P. Guenther and M. Guenther
business environment (i.e., greater competitive advertising intensity)
could help change pre-existing norms regarding appropriate communi­
cation tools and establish advertising as an accepted communication
form, thereby increasing instead of decreasing its effectiveness.
Business markets are not immune to social norms that can have
profound effects on buyer and seller behaviors. Exemplary norms are
related to buyer and seller expectations concerning flexibility, recipro­
cation, information exchange, and avoidance of exploitative behaviors
in business relationships (Heide & John, 1992; Pervan, Bove, & Johnson,
2009). In addition, norms exist concerning appropriate forms of mar­
keting communication. In this regard, more novel, less established
communication forms are often less effective, since buyers do not want
to be first to rely on them owing to a desire to minimize risks and avoid
competitive disadvantages (Karjaluoto, Mustonen, & Ulkuniemi, 2015).
Development of new norms requires higher-level learning, which in­
volves shifts in organizational mindsets including questioning assump­
tions about the business environment and current practices. In general,
such shifts are more likely to occur when multiple firms versus idio­
syncratic firms engage in a novel practice in the sense of a shared bottom-
up transformational process (Storbacka & Nenonen, 2015).
Against this backdrop, we propose that buyers are more likely to
consider and react to B2B advertising when more selling firms use it,
since greater usage helps establish this emerging communication form as
an accepted new practice. Greater buyer consideration and reaction
means improved financial outcomes for advertising firms from their
advertising spending. Overall, this mechanism suggests a synergistic
interaction relationship between the advertising competition in an in­
dustry and an individual firm's payoff from its advertising spending.
H1. Competitive advertising intensity increases the positive sales
growth effect of a firm's B2B advertising spending.
On the flip side, when B2B advertising becomes more accepted and
drives sales, the sales generated through other forms of customer
communication are likely to decrease as a certain fraction of the sales a
firm generates through its marketing communication will now be earned
through advertising. In other words, the total sales growth associated
with marketing communication is likely to become more spread out
Fig. 2. Conceptual framework.
Note: Effects of main interest in this study are indicated in bold print.
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Industrial Marketing Management 102 (2022) 252–265
across different forms of communication.
For B2B contexts this means that sales previously mainly driven by
personal selling will now be associated with both personal selling and
advertising, as a certain fraction of the sales is driven by advertising
instead of personal selling (i.e., shifted to that form of communication).
In this regard, a complete loss of sales through the sales force is however
unlikely, since salespeople serve distinct purposes that B2B advertising
does not deliver such as providing personal support to identify solutions,
as well as building rapport and trust (La Rocca, Moscatelli, Perna, &
Snehota, 2016; Le Meunier-FitzHugh, Baumann, Palmer, & Wilson,
2011). Nevertheless, as advertising becomes more established, it can
take over certain functions of the sales force, such as the information
function, initial awareness creation, and, importantly, binding cus­
tomers to the selling firm through a strong brand image (Guenther &
Guenther, 2019; Herbst & Merz, 2011; Zablah, Brown, & Donthu, 2010).
Therefore, while greater advertising competition can help to establish
advertising as an emerging communication form and make it more
effective, it can at the same time decrease the sales effect of the sales
force as an established alternative communication form.
H2. Competitive advertising intensity decreases the positive sales
growth effect of a firm's B2B sales force spending.
4.2. Restricting the synergistic effect: Customer buy-task involvement
Buy-task involvement is associated with higher information re­
quirements which typically means customers prefer personal commu­
nication over impersonal communication with sellers (Appio & Lacoste,
2019; Bach & Lund Jepsen, 2007). These customer communication
preferences resulting from buy-task involvement hence can be consid­
ered a key conditioning force on the mechanisms discussed in the previous
sections. More specifically, advertising is less likely to be perceived by
customers as an effective form of communication when buy-task
involvement is high which may then restrict a change of existing
communication norms even if more sellers adopt advertising. As a result,
the synergistic effect of competitive advertising intensity should be
weaker in this context.
P. Guenther and M. Guenther
To examine whether customer buy-task involvement has a restricting
effect on the establishment of advertising as a marketing practice, we
investigate the synergistic effect of competitive advertising intensity for
complex vis-à-vis non-complex goods. Complex goods, such as industrial
machinery, usually cost more than non-complex goods and also
frequently require a certain level of customization to the buyer's oper­
ations (Kull, Oke, & Dooley, 2014; Mitchell, 1995), which should lead to
greater buy-task involvement and information requirements of buyers.
In particular, for complex goods buying organizations may find it
difficult to develop product specifications without the help of suppliers,
since the buyer may lack the detailed technical knowledge about those
goods, particularly with regard to the relative importance of different
parameters, their customizability and potential trade-offs among the
parameters (Klein, Obel, & Holm, 1979). Here, the sales force plays an
important boundary-spanning role to both identify and communicate
the value that the goods can create for the customer's business (Böhm,
Eggert, Terho, Ulaga, & Haas, 2020), and to eliminate risks perceived by
buyers such as the financial risk of making an inadequate supplier se­
lection (Mitchell, 1995). Thus, the overall value customers expect to
gain from the relationship will be critically shaped by the quality of
personal interactions and individual salespeople capabilities. In
contrast, one-way forms of communication such as the advertisements
for the supplier brand might play an ancillary role in customers' decision
making. Therefore, customer communication needs are likely to restrict
customer acceptance of advertising by sellers, reinforcing existing norms
of mainly relying on sales force communication. We hence propose:
H3. The synergistic sales growth effect between the competitive
advertising intensity and a firm's advertising spending is weaker for firms
that sell complex B2B goods than for firms that sell non-complex B2B
goods.
H4. The antagonistic sales growth effect between the competitive
advertising intensity and a firm's sales force spending is weaker for firms
SalesGit+1 = β0 + β1 AdSit + β2 SfSit + β3 CompAdIit + β4 AdSit x CompAdIit + β5 SfSit x CompAdIit + β6 Patentsit
+ β7 CusBaseCit + β8 SlackRit + β9 FSizeit + β10 IndConcit + ΣβI Indi + ΣβY Yrt + εit,
that sell complex B2B goods than for firms that sell non-complex B2B
goods.
4.3. Enhancing the synergistic effect: Customer ability to assess quality
objectively
Besides buy-task involvement, customers' ability to assess quality
objectively is likely to be another important factor that shapes customer
communication preferences as a conditioning force that determines the
acceptance of advertising. In particular, when customers cannot fully
and readily evaluate the quality of their potential purchase, they are
likely to seek ways to reduce this uncertainty. As a result, customers
should generally be more open to additionally consider alternative sig­
nals of quality. Here, advertising spending can serve as such a quality
cue as only high-quality firms can recoup larger advertising investments
(Akdeniz, Calantone, & Voorhees, 2014). Their limited ability to assess
quality hence could be conducive to getting customers to consider
advertising as a valid communication form which might enhance the
synergistic effect of competitive advertising intensity.
To test the influence of quality assessability, we investigate the
comparative strength of the synergistic effect of competitive advertising
intensity for credence vis-à-vis non-credence services. Compared to
other services, credence business services (e.g., professional services)
are services whose outcomes are difficult to determine objectively by the
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Industrial Marketing Management 102 (2022) 252–265
customer even after service provision (Boyt & Harvey, 1997; Greenwood
et al., 2005). Examples of such services are management consulting,
software development, and engineering services. Customers' difficulty to
assess arises because the provision of credence business services requires
specialized knowledge, which customers do not have in-house, and often
has effects on the customer's business that do not materialize in the short
term, thereby increasing customers' uncertainty further.
Advertising credence services is likely to become accepted and
incorporated into customer decision making, especially, if this practice
is adopted more widely by sellers since this creates a stronger norm and
hence allows advertising to become an accepted signal that can serve as
an alternative quality cue for customers to base their purchase decision
on. In a similar vein, prior research has demonstrated that professional
service brands contribute to shareholder value, suggesting that adver­
tising can indeed increase the financial success of credence services
(Guenther & Guenther, 2019). We therefore expect that the synergistic
effect of competitive advertising intensity is stronger for credence ser­
vices than non-credence services whose quality is more readily assess­
able by customers. Moreover, when advertising becomes the norm and
positively influences sales, it will strip away some of the sales previously
generated by the sales force as explained before. Overall, we thus pro­
pose the following:
H5. The synergistic sales growth effect between the competitive
advertising intensity and a firm's advertising spending is stronger for
firms that sell credence B2B services than for firms that sell non-credence
B2B services.
H6. The antagonistic sales growth effect between the competitive
advertising intensity and a firm's sales force spending is stronger for firms
that sell credence B2B services than for firms that sell non-credence B2B
services.
5. Methodology
(1)
5.1. Sample
For our empirical examination, we focused on B2B firms, i.e. firms
that predominantly sell to business customers (> 70% of total revenue)
versus consumers. We sampled firms from the Compustat North America
database, which comprehensively provides key data required for our
measures. The Compustat database contains financial data for publicly
listed firms. To provide generalizable results, we focused on a long 25-
year period from 1990 to 2015 and, in our statistical model,
controlled for year-specific effects such as intertemporal differences
regarding the general economic situation. For an observation to be
included in our sample, we required four consecutive years of data in
order to use one-period ahead data for our outcome variable (sales
growth) and control for serial correlation, as we explain in the model
development section. In addition, data on all model variables needed to
be available. On the basis of these requirements, we sampled 15,259
firm-year observations related to 2723 B2B firms. In terms of median
values, these firms had $95 million in annual revenues and $114 million
in assets. The 10% smallest (largest) firms had $3.3 million ($3.0 billion)
in revenues and $3.9 million ($3.6 billion) in assets, meaning that
medium-sized as well as large-sized B2B firms are represented in the
sample.
P. Guenther and M. Guenther Industrial Marketing Management 102 (2022) 252–265

Table 2
Variable operationalizations and data sources.
Variable Definition/operationalization Source

Sales growth Sales revenuet+1 / sales revenuet Compustat

Advertising spending Advertising expenset / sales revenuet Compustat
Sales force spending (Selling, general, and administrativet – identifiable unrelated expensesta) / sales revenuet Compustat
( )2
Competitive advertising ∑ Advertising spending of firm jt Compustat
intensity Industry advertising competitive intensity index = (− 1) x Jj=1 (inversely
Total advertising spending in industryt
coded)
Patents Number of patentst (log) Bureau van Dijk Orbis
( )
Customer base concentration ∑J Sales revenue with major customer jt 2 Compustat Segment
Customer base concentration index = Files
j=1
Sales revenuet
Slack resources Current ratio = current assetst / current liabilitiest (log) Compustat
Firm size Total assets (log) Compustat
Industry concentration Herfindahl-Hirschman Index of market concentration Compustat
Industries Dummy variables for the industries (minus one) based on the four-digit SIC codes Compustat
Years Dummy variables for each of the years (minus one) from 1990 to 2015 Compustat
a
R&D as well as pensions and retirement.

5.2. Measures
The majority of our measures uses data from the Compustat North
America database. For two of our control variables, we matched data
from Bureau van Dijk's Orbis database and the Compustat Segment Files.
5.2.1. Sales growth
Sales growth is our dependent variable. To ensure that it is observed
after the independent variables, i.e. as an outcome, we used the one-
period ahead observation. Sales growth is measured as the ratio of the
one-period ahead sales revenue to the current period's sales revenue.
The sales revenue data are from the Compustat North America database.
5.2.2. B2B advertising spending
Similar to operationalizations in prior work, we measured adver­
tising spending with the ratio of a firm's advertising expenditure to its
sales revenue (e.g., Currim, Lim, & Kim, 2012). The Compustat North
America database provided the advertising expenditure data.
5.2.3. Sales force spending
Recent research shows that selling, general, and administrative ex­
penses (SG&A) are a valid proxy for firms' sales force spending, which is
an important finding considering that specific spending figures are
usually unavailable for the vast majority of firms (Ptok, Jindal, &
Reinartz, 2018). To refine the measure and make it comparable across
firms, we removed identifiable unrelated items such as R&D expenses
and expenses for pensions from SG&A and calculated the ratio to a firm's
sales revenue using data from the Compustat North America database.
5.2.4. Competitive advertising intensity
We used a competitive concentration index, similar to the
Herfindahl-Hirschman Index, to measure the advertising intensity in a
B2B firm's industry. The index is based on ‘advertising market shares,’ i.
e. a firm's advertising expenditure relative to the total advertising
expenditure of all firms operating in a certain industry. Specifically, the
index is the sum of the squared advertising market shares. The more of
the total advertising expenditure in an industry is spent by only one or a
few firms, the higher the concentration index. We therefore used the
reverse-coded index to measure competitive advertising intensity, such
that a smaller concentration score indicates higher competitive intensity
and vice versa.
5.2.5. Heterogeneity factors
To distinguish firms that predominantly sell complex versus non-
complex B2B goods and credence versus non-credence services, two
independent raters with substantial marketing knowledge (postgraduate
marketing students) coded the sample firms' offerings on the basis of
descriptions in annual reports and on the firm websites. For instance,
Deere & Company that owns the John Deere brand was rated as selling
complex B2B goods, since they generate 61% of their revenue from
specialized agricultural machinery sales and 29% from specialized
construction and forest machinery sales, while less than 10% of the
revenues are from financial services. In contrast, Intel was considered to
sell predominantly non-complex B2B goods, since their product port­
folio focuses on standard processors for laptop and desktop PCs that the
firm sells to PC manufacturers. Moreover, Accenture was coded as
selling predominantly credence services, which can be defined as ser­
vices that are difficult to evaluate even after purchase and consumption
(Alford & Sherrell, 1996), consistent with Accenture's focus on consul­
ting services. Finally, FedEx is an exemplary firm that was assessed as
selling non-credence services, since they mostly provide courier delivery
services, the quality of which can be readily assessed by customers. The
inter-rater reliability was high (Cohen's kappa >0.85) and initial
disagreement was resolved through discussion.
In addition, we validated the offerings categorizations using addi­
tional data. Specifically, complex goods are typically more expensive
than non-complex goods and firms selling more expensive goods usually
provide their customers with longer payment terms (Giannetti, Burkart,

Table 3
Descriptive statistics and correlations.
Variables Mean Standard deviation 1 2 3 4 5 6 7 8

1. Sales growth 1.20 0.79 1

2. Advertising spending 0.03 0.08 0.15 1
3. Sales force spending 0.41 0.34 − 0.01 − 0.01 1
4. Competitive advertising intensity − 0.07 0.11 0.10 0.30 − 0.02 1
5. Patents 1.15 1.81 0.02 − 0.06 0.04 − 0.07 1
6. Customer base concentration 0.05 0.15 − 0.04 − 0.09 − 0.06 0.03 0.06 1
7. Slack resources 2.11 2.02 − 0.02 − 0.06 − 0.00 0.01 0.09 0.17 1
8. Firm size 4.84 2.49 − 0.03 − 0.05 − 0.03 0.00 0.01 0.21 0.07 1
9. Industry concentration 0.24 0.17 − 0.04 − 0.14 − 0.08 − 0.40 0.15 0.25 0.13 0.13

Note: Correlations with an absolute value greater than 0.02 are significant at the p < .05 level.

260
P. Guenther and M. Guenther Industrial Marketing Management 102 (2022) 252–265

Table 4 & Ellingsen, 2011). This relation means that the receivable days, i.e. the
Sales growth effects of own and competitor B2B advertising. number of days until an outstanding customer invoice is paid, should be
Dependent variable: Sales growth significantly longer for complex than non-complex goods. A t-test con­
firms that the receivable days, measured with the ratio of accounts re­
Model 1 Model 2
ceivables to total revenues times 365 days, are significantly longer (t =
b t b t 10.32, p < .01) in the group of firms that we categorized as selling
Advertising spending 4.296 14.70 *** 6.395 18.37 *** complex goods versus the group of firms categorized as selling non-
Sales force spending 0.465 3.94 *** 0.428 3.16 *** complex goods, providing empirical support of the categorization's
Competitive
− 0.532 − 2.66 *** − 0.499 − 2.49 ** validity. Regarding credence versus non-credence services, recent
advertising intensity
Advertising spending x literature indicates that firms offering the former can usually charge a
competitive 24.355 5.18 *** premium price since these services are knowledge intensive and require
advertising intensity expert human capital to be provided (Greenwood et al., 2005; Guenther
Sales force spending x & Guenther, 2019). A t-test confirms that the price premium, measured
competitive − 7.809 − 2.49 **
advertising intensity
with the gross profit margin, is significantly higher (t = 3.21, p < .01) in
Controls the group of firms that we categorized as offering credence services
Patents − 0.010 − 2.33 ** − 0.010 − 2.49 ** compared with the group of firms categorized as offering non-credence
Customer base service, supporting the validity of the categorization.
− 0.025 − 0.46 − 0.026 − 0.46
concentration
Slack resources 0.011 3.50 *** 0.012 3.64 ***
Firm size 0.010 2.84 *** 0.011 3.26 *** 5.2.6. Control variables
Industry concentration 0.088 1.29 0.094 1.36 Prior B2B research that examines sales growth as the dependent
Endogeneity control,
− 3.659 − 11.91 *** − 7.413 − 13.92 *** variable highlights several important control variables and we take
advertising spending these factors into account in our statistical model (e.g., Kohtamäki,
Endogeneity control,
sales force spending
− 0.408 − 3.42 *** 0.173 0.90 Partanen, Parida, & Wincent, 2013). In particular, we used a firm's
Endogeneity control, number of patents, downloaded from Bureau van Dijk's Orbis database,
competitive 0.434 1.99 ** − 1.929 − 1.64 * to control for innovation resources. We addressed skewness in the data
advertising intensity by means of a standard log-transformation (log) (e.g., Zuo, Fisher, &
Endogeneity control,
Yang, 2019). In addition, we took into account the concentration of a
advertising spending
x competitive
1.378 2.29 ** − 22.884 − 4.83 *** firm's customer base, since firms with a more diverse base may be able to
advertising intensity grow faster. Specifically, we followed prior work and used as the con­
Endogeneity control, centration index the sum of the squared revenue shares of a firm's major
sales force spending customers (e.g., Patatoukas, 2012). The more of its revenues a firm
0.030 0.20 7.841 2.50 **
x competitive
advertising intensity
generates from only one or a few customers, the higher it scores on the
Serial correlation customer-base concentration index. The customer revenue data are from
control, predicted e 1.201 7.67 *** 1.198 7.68 *** the Compustat Segment Files. Furthermore, we controlled for a firm's
(et− 1) slack resources, since these can allow the firm to seize emerging growth
Serial correlation
opportunities more fully. A firm has greater slack, the more its quickly
control, predicted e 2.957 9.64 *** 2.892 9.47 ***
(et− 2) liquefiable current assets (i.e., cash and short-term investments) exceed
Intercept 0.501 2.54 ** 0.881 4.82 *** its short-term payment obligations (e.g., Guenther & Guenther, 2020).
Industries Controlled Controlled Therefore, we measured slack resources with the ratio of current assets
Years Controlled Controlled to current liabilities and employed a log-transformation to address
Model statistics
Observations 15,259 15,259
skewness in the data. Moreover, we considered market power effects by
Firms 2723 2723 controlling for firm size measured with total assets (log) and industry
R2 0.1065 0.1137 concentration using the sum of the squared market shares of all firms
Adj. R2 0.0934 0.1005 operating in a particular industry. Finally, we controlled for idiosyn­
F-value 8.11 *** 8.65 ***
cratic effects related to individual industries and years by using corre­
Notes: For legibility reasons, the effects of individual industries and years are not sponding dummy variables. The industry dummy variables are based on
reported due to the large number of effects. Predicted e(et− x) refers to the pre­ firms' four-digit SIC codes.
diction of the model error term on the basis of its xth lag to control for serial The variable operationalizations are summarized in Table 2.
correlation. The significance of the t-statistics is based on two-tailed tests and Following recommendations in the literature, all variables are winsor­
indicated as: *p ≤ .10, **p ≤ .05, and ***p ≤ .01.
ized at the 1% level to mitigate the impact of extreme values (e.g., Wies,
Hoffmann, Aspara, & Pennings, 2019). The ‘average firm’ in our sample

Table 5
Heterogeneity concerning B2B offering types.
Firm group N Advertising Sales force Competitive advertising Advertising spending x competitive Sales force spending x competitive
spending spending intensity advertising intensity advertising intensity

B2B goods
- Complex 3601 4.09 * 0.58 *** − 1.00 8.41 − 1.07
- Non-complex 5602 5.60 *** 0.58 *** 0.08 30.54 *** − 12.89 ***
B2B services
- Credence 2112 6.58 *** 0.57 *** 0.15 20.75 *** − 11.92 ***
- Non-credence 3944 6.52 *** 0.64 *** − 1.05 * 25.62 *** − 12.66 ***

Note: The results were estimated using a multi-group analysis. The significance of the t-statistics is based on two-tailed tests and indicated as: *p ≤ .10, **p ≤ .05, and
***p ≤ .01.

261
P. Guenther and M. Guenther
grows its sales revenue, spends just over 3% of its revenue on advertising
and substantially more on the sales force, faces significant advertising
competition, holds more than one patent, has a low customer base
concentration, can draw on meaningful slack resources, has a medium to
large firm size, and operates in an industry with low market concen­
tration. Yet, there is substantial variation between firms with regard to
these variables, meaning that the specific relationships are interesting to
examine via a regression model, which we develop next.
5.3. Model development
Our final regression model is based on the following initial specifi­
cation:
where SalesGit+1 is firm i's one-period ahead sales growth, AdSit is
the advertising spending, SfSit is the sales force spending, CompAdIit is
the competitive advertising intensity, Patentsit is the number of patents,
CusBaseCit is the customer base concentration, SlackRit are the slack
resources, FSizeit is the firm size, IndConcit is the industry concentration,
Indi and Yrt are year and industry dummy variables, and εit is the model
error term.
We improved this initial model specification based on the results of
econometric tests for serial correlation, heteroskedasticity, and endo­
geneity. Serial correlation can occur when changes in an outcome var­
iable are persistent, as is often the case for financial performance
variables, such as sales growth, since firms that perform well or unsat­
isfactorily often do so over a few years. To assess serial correlation, we
performed the Cumby-Huizinga test, which showed serial correlation in
the model residuals up to a lag of two (p < .10), turning insignificant at
lag three. Therefore, we saved and added the one-period and two-
periods lagged residuals, εit− 1 and εit− 2, as additional regressors to
explicitly account for the serial correlation that our tests detected
(Neter, Kutner, Nachtsheim, & Wasserman, 1996).
Moreover, the Breusch-Pagan test (Breusch & Pagan, 1979) indicated
heteroscedasticity in the model (p < .01). Heteroscedasticity does not
affect regression coefficient estimates which are consistent in the pres­
ence of heteroscedasticity. However, the estimated standard errors need
to be corrected. Therefore, we used Newey-West standard errors which
are adjusted for heteroskedasticity (Wooldridge, 2012).
Finally, the Durbin-Wu-Hausman test showed that our key variables
of interest, i.e. advertising spending, competitive advertising intensity,
and the interaction terms (including with sales force spending), are
endogenous (p < .01). The test detects endogeneity by assessing the
differences between the estimates of the efficient but potentially
inconsistent—due to endogeneity—OLS model and the estimates of the
consistent but less efficient instrumental variable model. We followed
prior work and used one-period lagged observations as instruments
(Rubera & Kirca, 2017). Since endogeneity was detected, we used the
instrumental variable specification, instead of the OLS specification, to
estimate our results. Specifically, we regressed each of the model's
advertising terms on its lagged observation and added the residuals as
control variables to the main model, consistent with the control function
approach that redresses endogeneity (Wooldridge, 2012).
We used multigroup analysis to investigate the extent to which ef­
fects differ (i.e., are heterogeneous) for complex goods and non-complex
goods as well as for credence services and non-credence services. A
multigroup analysis estimates the model specified in Eq. (1) separately
for each group of firms with the corresponding offering type.
6. Results
Table 3 displays the descriptive statistics and, in terms of model-free
relationships, the correlations. Advertising spending, competitive
advertising intensity, and patents, are positively correlated with sales
growth, while sales force spending, the concentration of the customer
262
Industrial Marketing Management 102 (2022) 252–265
base, slack resources, firm size, and industry concentration are nega­
tively correlated. Yet, the regression model results, which we discuss in
the following, are required to draw more robust conclusions regarding
effects since they consider effects simultaneously and account for the
econometric issues that we identified above. Nevertheless, the correla­
tions show that the independent variables have low to moderate overlap,
as indicated by the correlations that are substantially below the standard
cut-off value (0.70), demonstrating that multi-collinearity is no concern
in the regression model (Nunnally, 1978).
6.1. Competitive advertising intensity and the sales effects of advertising
spending and sales force spending
The full model that we estimated is Model 2 in Table 4, while Model 1
only includes main effects to allow for a comparison. Both models
adequately fit the data (F > 8.1; p < .01). Model 2 fits the data better in
terms of the model's R2 value, adjusted R2 value, and F value. We
therefore focus our discussion on Model 2. We used Stata 17 for the
analyses.
We estimated a positive interaction effect between competitive
advertising intensity and a firm's advertising spending (β = 24.355, p <
.01) and a negative interaction effect between competitive advertising
intensity and a firm's sales force spending (β = − 7.809, p < .05) on sales
growth. These results confirm H1 and H2 and are consistent with the
view that increased use of advertising in a business market establishes
this alternative form of communication in the market, increasing
advertising effectiveness whilst reducing the effect of alternative,
established communication forms such as the sales force.
Focusing only on the B2B advertising-related variables, the syner­
gistic sales growth effect between own and competitor advertising
counteracts the negative direct effect that a larger competitive adver­
tising intensity has on a firm's sales growth (β = − 0.499, p < .05). Our
results indicate that without the positive synergistic effect (e.g., when
the focal firm does not advertise), an increase in the competitive
advertising intensity by one standard deviation reduces a firm's sales
growth by approximately 5%. This reduction can be fully mitigated
through the positive synergistic effect, resulting in a net positive sales
growth effect of 3%. The effect is in addition to own advertising's pos­
itive main effect on sales growth (β = 6.395, p < .01).
With regard to the additional variables in our model, we estimated a
positive significant sales growth effect of sales force spending (β =
0.428, p < .01), a small but significant negative effect of patents (β =
− 0.010, p < .05), a negative but non-significant effect of the customer
base concentration (β = − 0.026, p > .10), positive significant effects of
slack resources (β = 0.012, p < .01) and firm size (β = 0.011, p < .01), as
well as a positive but non-significant effect of industry concentration (β
= 0.094, p > .10). Our control terms for the endogeneity of the four
advertising-related terms have significant effects (p < .10), indicating
that the endogeneity has been accounted for in the model and, therefore,
does not bias the model estimates. In addition, the two terms modelling
inter-temporal correlation in sales growth are significant (p < .01),
demonstrating that these terms capture this correlation.
6.2. Effects of conditioning forces
Table 5 shows the results of the multigroup analyses. In terms of H3
and H4, we proposed that the buyer's buy-task involvement and asso­
ciated information needs can shift customer preference toward personal
communication, a key conditioning force restricting the acceptance of
B2B advertising as an appropriate emerging communication form. In
this regard, we estimated non-significant synergistic (between compet­
itive advertising and own advertising spending) and antagonistic (be­
tween competitive advertising and own sales force spending) effects for
complex goods, while the effects are significant for non-complex goods.
Consistent with H3 and H4, the synergistic (X2 = 4.37, df = 1, p < .05)
and antagonistic (X2 = 3.94, df = 1, p < .05) effects are significantly
P. Guenther and M. Guenther
weaker for complex than for non-complex goods. These results show that
sellers of complex goods do not benefit when more firms in their in­
dustry advertise, indicating that this form of communication fails to
establish itself as an accepted communication form, supposedly because
buyers of complex goods have higher buy-task involvement and,
therefore, are less accepting of non-personal, non-interactive commu­
nication forms such as advertising.
In terms of H5 and H6, we proposed that buyers' inability to assess an
offering's quality objectively can create a greater need for advertising as
an alternative quality signal for the buyer to draw on, with this prefer­
ence being a key conditioning force enabling the acceptance of B2B
advertising as an appropriate emerging communication form. We esti­
mated significant synergistic (between competitive advertising and own
advertising spending) and antagonistic (between competitive adver­
tising and own sales force spending) effects for both credence services (i.
e., low ability to assess objectively) and non-credence services (i.e., high
ability to assess objectively). However, the estimated effects do not
differ statistically (X2advertising spending x competitive advertising intensity = 1.02
and X2sales force spending x competitive advertising intensity = 0.85, df = 1, p >
.10), meaning that H5 and H6 are not supported by the data. These re­
sults show that both sellers of credence and non-credence services
benefit in terms of their advertising effectiveness, which reduces the
sales effect of the sales force, when more firms advertise and thereby
establish this emerging communication form.
7. Discussion and implications
Research on B2B advertising just gained momentum recently, since
advertising can be characterized as an emerging communication form in
business markets compared to established forms such as contact through
the sales force (Brown, Swani, & Mudambi, 2020; Guenther & Guenther,
2020; Mora Cortez, Gilliland, & Johnston, 2020). While first studies
have shown that B2B advertising can pay off financially for a firm
(Guenther & Guenther, 2020; Rahman et al., 2020), we argue that these
pay offs may not be fully determined without paying attention to B2B
advertising's emerging nature and the role that competitor advertising
activity plays in this context. Using the lens from the NEST (nested
business environment) framework of a bottom-up transformational
process that can change industrial marketing communication norms, we
have empirically tested the proposition that, counter to common wis­
dom from B2C contexts (Danaher et al., 2008), competitor advertising
activity can improve instead of hurt a firm's advertising effectiveness by
contributing to establish advertising as an accepted new communication
form in business markets.
Our results confirm the proposition by demonstrating that B2B firms'
own advertising effectiveness can benefit from competitors' advertising
efforts. At the same time, increased competitor advertising activity re­
duces the sales growth effect of sales force spending, consistent with the
notion that greater activity establishes advertising as a new communi­
cation form, meaning that the sales generated through existing
communication forms such as the sales force naturally decline (i.e., now
are shared with advertising).
However, our results also demonstrate important boundary condi­
tions. Specifically, for complex goods (versus non-complex goods), we
find that increased competitive advertising activity neither benefits nor
hurts a firm's advertising effectiveness and sales force effectiveness, in
line with the conceptual consideration that customers' higher buy-task
involvement, and hence information requirements, can reduce the
chances of advertising to establish itself as a communication form in
these industry contexts. However, in contrast to conceptual consider­
ations, our data do not support the notion that increased difficulty to
assess an offering objectively, as is the case for credence services (versus
non-credence services), improves B2B advertising's chances to establish
itself as a new communication form. A firm's advertising effectiveness
for its B2B services benefits from greater competitor advertising irre­
spective of the service type.
263
Industrial Marketing Management 102 (2022) 252–265
Our study makes several important contributions to the literature.
First, we contribute to emerging literature that empirically assesses
advertising as a source of competitive advantage for B2B firms
(Guenther & Guenther, 2020; Rahman et al., 2020). By considering
firms' competitive advertising environment and offering types, our study
contributes to expanding conceptual knowledge regarding when
advertising adds to firms' financial success and when its impact is
smaller than previous findings suggest. Thus, we add a contingency view
to the empirical B2B advertising literature that future work can build on
with the aim to further improve the predictive accuracy of conceptual
models in this emerging research area.
Second, from a theoretical perspective, our study demonstrates that
B2C advertising theory cannot simply be assumed to hold true for B2B
advertising contexts. To this end, we drew on the dynamic NEST
framework, particularly pertaining to institutionalization processes, to
propose a synergistic effect of competitor advertising on firms' own
advertising effectiveness in business markets, contrary to the antago­
nistic interference effect prevalent in B2C contexts. We further demon­
strate the value of the dynamic NEST framework for investigating B2B
advertising by showing how the theory's logic concerning conditioning
forces can be used to derive accurate predictions regarding the lack of a
synergistic effect in certain B2B contexts, namely when buy-task
involvement is high. However, being the first study to apply the the­
ory, our research is only a starting point, providing a springboard for
further work to study additional contexts to confirm and expand our
findings as well as to apply additional components of the theory to the
emerging B2B advertising context.
Third, our study contributes to the literature on the marketing of B2B
goods. Recent studies show that firms actively advertise these products,
suggesting that the investment pays off (e.g., Bach & Lund Jepsen, 2007;
Ferguson & Mohan, 2020). In this regard, our findings confirm this
inference only for non-complex B2B goods, while effects are only weakly
significant (advertising's direct effect) or non-significant (the synergistic
effect from competitors' advertising) for complex B2B goods. Although
additional evidence from future studies is needed to draw definite
conclusions, our findings qualify previous findings regarding the
financial benefits of B2B advertising and can contribute to explaining
mixed effects found in earlier work for different B2B industries
(Guenther & Guenther, 2020). Similarly, with regard to literature on the
branding of B2B goods (e.g., Bendixen, Bukasa, & Abratt, 2004;
Blombäck & Axelsson, 2007; Brown, Zablah, Bellenger, & Johnston,
2011), the result suggests that branding via advertising is likely to be
less effective for complex goods while it is more effective for non-
complex goods.
Fourth, our research contributes to literature on generating firm
growth from B2B services. Prior studies have investigated the impact of
the service type, e.g. product-attached services or operations services
(Raddats & Easingwood, 2010); service-benefit categories, including
functional, emotional, and social benefits (Candi & Kahn, 2016); selling
channels, such as in-person or digital channels (Wang, Malthouse,
Calder, & Uzunoglu, 2019); and the quality of customer relationships
(Doney Patricia, Barry James, & Abratt, 2007; Gounaris, 2005). Our
study adds to this stream by demonstrating that a firm can generate
additional sales growth from its B2B services by advertising them.
Importantly, our findings show that competitive advertising dynamics
play an important reinforcing role for the sales growth that can be
generated from advertising and that this positive synergistic effect ap­
pears to be independent of service type (credence and non-credence).
For managers, our findings have important implications concerning
their advertising investment decisions. Our main results indicate that
B2B advertising should play a growing role in the marketing commu­
nication mix to drive sales. The synergistic effect of competitive adver­
tising intensity on a firm's advertising effectiveness shows that greater
uptake of this practice leads to stronger sales response effects of cus­
tomers, indicating a shift away from a personal selling dominant mar­
keting communication mix. Managers who are not responsive to this
P. Guenther and M. Guenther
shift will suffer a significant reduction in sales growth (approximately
5% in our sample) through the direct negative effect of competitive
advertising intensity. However, for firms that invest in advertising, the
synergistic effect on a firm's advertising effectiveness exceeds the direct
negative effect from competitor advertising by approximately 3%,
meaning that advertising firms on the bottom line benefit from com­
petitors' advertising efforts.
In addition, managers need to meticulously track competitors'
advertising spending and not further increase their firms' sales force
spending when advertising becomes increasingly established as a
communication form for their offerings. These actions are necessary
since our results show that with greater uptake of advertising, the sales
growth generated by the sales force declines and this should be reflected
in a stronger prioritization of advertising in the budgeting of a firm's
communication activities. Managers can use advertising data dash­
boards or competitor dashboards augmented with advertising spending
data as tools to keep track of the competitive advertising intensity in
their industry (Fischer, Albers, Wagner, & Frie, 2011; LaPointe, 2005;
Miller & Cioffi, 2004).
With regard to contextual effects, our results indicate that firms
selling non-complex B2B goods or B2B services should invest in adver­
tising, which, due to a synergistic competitive advertising effect, appears
to be even more effective in driving financial performance than recent
research suggests (Guenther & Guenther, 2020; Rahman et al., 2020).
On average, the synergistic effect that we found translates into 6% (5%)
higher sales growth for firms selling non-complex B2B goods (B2B ser­
vices) and hence is economically significant.2
In contrast, the sales growth of complex B2B goods does not sub­
stantially benefit from, nor is hurt by, own and competitor advertising
spending. Our findings imply that, in order to create customer prefer­
ence and sales growth for these offering types, managers should use
alternative communication means with personal contact such as the
sales force instead of advertising. Buyers of these offerings are likely to
engage in highly elaborate purchase decision-making, suggesting ad­
vantages of communication forms that allow for an in-depth, two-way
conversation concerning detailed offering specifications.
8. Limitations and directions for further research
Our data and methodology have limitations that create opportunities
for further research. First, firms in our sample are U.S.-based firms with
publicly traded equity. Although our data allow for generalizations
across industries and time periods, further research could investigate
effects for non-U.S. firms and private firms. Second, our methodology
uses secondary observational data, meaning that the research setting is
less controllable than, for instance, a laboratory experiment setting.
While we tested for econometric issues (i.e., endogeneity, heterogeneity,
and serial correlation) and addressed the corresponding effects, trian­
gulation of the results through interviews with managers would be
useful to further corroborate the findings.
In addition, we propose the following further research avenues. First,
we only made a start on the identification of factors that may restrict or
enable the establishment of advertising as a common communication
practice. Besides buy-task involvement and quality assessability, what
other factors exist that could explain when advertising becomes an
established practice? Interviews with managers in customer firms could
be particularly useful to explore additional enabling or restricting con­
ditioning forces and thereby shed more light on the contexts in which
advertising matters more or less strongly.
Second, synergistic benefits that we found for competitors' adver­
tising in certain B2B offering categories may also occur for other
competitor activities, which warrants further examination. For instance,
2
All percentage effects are for a one standard deviation increase in both own
advertising spending and the competitive advertising intensity.
264
Industrial Marketing Management 102 (2022) 252–265
is it also possible for B2B firms to benefit from competitors' social media
engagement or efforts in other emerging communication areas?
Third, our results indicate that B2B advertising does not pay off for
complex B2B goods, raising the question regarding what are the most
efficient tactics to market these products? Our results show that personal
contact via the sales force is a communication form of choice. However,
the sales force is expensive, as recent research on sales force productivity
and cost efficiency suggests (Chan, Li, & Pierce, 2014; Claro & Kama­
kura, 2017), such that alternative communication forms may contribute
to more effectively generate additional sales growth by complementing
the sales force. Future research could, for instance, explore the
comparative net financial effects of non-paid online communication
through social media and webcasts.
Funding
This research did not receive any specific grant from funding
agencies in the public, commercial, or not-for-profit sectors.
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