Impact of Television Advertising for Freemium Services on Consumer Purchases:

Abstract

In freemium platforms where the basic usage fee is free, operators have the advantage of acquiring users without incurring advertising costs. However, Japanese operators often place TV advertisements, which are generally considered to be expensive. Therefore, an empirical study on the effectiveness of advertising in freemium services was conducted. Specifically, the impact of TV advertising on manga purchases of free members or non-members was analyzed, based on single source data for TV advertisement viewership and membership status at two time points for two freemium manga app companies. The results showed that the number of TV advertisements watched during the week when viewers converted to paying purchasers, and the interaction with the number of TV advertisements watched one to two weeks prior, had a positive impact on purchases. These results suggest that advertising is effective, even for freemium platforms where network effects can be expected. This indicates the possibility and need for development of marketing strategies that integrate network effects and advertising theories.

Keywords

• network effect
• conversion rate
• single source data
• adstock