The U.S. environmental horticulture industry, or green industry, comprises production and wholesale nurseries and wholesale/retail distribution centers, as well as marketing intermediaries (Hall et al., 2005). Although the green industry historically was one of the fastest growing sectors of the U.S. economy (Hall et al., 2005), Hall (2010) and Barton and Behe (2017) reported that some segments have become stagnant or declined. When industry markets decline, specialized industries that rely on niche markets often increase marketing expenditures to remain viable (Li et al., 2019). Palma et al. (2012) showed that most promotion and advertising expenditures were effective in increasing green industry sales. Six years later, Li et al. (2019) found the response function to be dependent on firm size with advertising expenditures increasing sales within a range of expenditures in small firms only. Yet managerial decisions regarding the decisions to invest in advertising, either conventional or electronic, have not been thoroughly investigated.
More people use technology in their daily lives, and therefore, technology-based marketing has become a more viable avenue for businesses to reach consumers. A recent study showed that 81% of American adults used the Internet; more than half of them were using two or more social media sites (Duggan et al., 2015). Nearly two-thirds of American adults use social media (Perrin, 2015). The Neilson Co. (2013) reported social networks and blogs were the top online destinations, accounting for most of the time online and reaching 80% or more of active Internet users. Additionally, consumers use multiple media simultaneously between 24% and 65% of the time they are using media (Foehr, 2006; Pilotta et al., 2004). Behe et al. (2013) showed that women were more likely to search online for both gardening and nongardening information, but men were more likely to make online gardening purchases. They also showed that having searched online for nongardening information increased the likelihood of an online purchase by 16%.
Social media marketing is broadly defined as any online service through which users can create and share a variety of content. Although social media sites have existed since 1981, they were most widely adopted after 2003 (Boyd and Ellison, 2008). Americans born between 1980 and 1990, or Generation Y, use of social media is already changing the marketplace, workplace and society (Bolton et al., 2013). Interaction through social media sites is a way for organizations to build relationships (Waters et al., 2009), particularly among digital natives. Social media activity leads consumers to engage with other online formats such as businesses’ websites, online purchases, and online newsletters (Pookulangara and Koesler, 2011). We defined online advertising as the allocation of resources to Internet-based advertising for promoting products and services through the Internet (Sridhar et al., 2016). Online advertising includes investments for websites, social media, e-newsletters, or paid advertisements.
The Internet has facilitated the growth of online advertising over the past decade, and online advertising has moved from being a peripheral to a central advertising medium because of its unique targeting capabilities (Doctorow et al., 2009). Reasonable costs and compatibility with traditional advertising have been important to increased online advertising in many industries (Peterson et al., 2018). Yet green industry firms struggle to integrate online advertising into their traditional advertising strategy (Danaher and Dagger, 2013).
Using online advertising strategies requires a change in traditional advertising processes (Burt and Sparks, 2003). First, business owners should integrate the use of computers and Internet in farm management, followed by adoption of online marketing tools such as advertisement of products and services through Facebook (Menlo Park, CA) and other social media. The 2017 Farm Computer Usage and Ownership report showed that more than 70% of U.S. farms had Internet access, but only 47% of the operations used it for farm business (U.S. Department of Agriculture, 2017). Given the tremendous potential influence of online marketing, several extension programs and industry conferences include the use of online tools in their training and educational efforts. For example, MS Bricks to Clicks was developed by extension specialists to train agricultural-based businesses on the adoption of online advertising activities (Barnes et al., 2014).
Some studies reported on the use of online tools in agricultural firms. Baer and Brown (2007) found while firm size increased the likelihood of website adoption for direct marketing, not all direct-market farms were interested in using the Internet as a marketing tool. Baer and Brown (2007) also found the number of advertising methods used, presence of high-speed Internet, and farm sales were positively related to website adoption while having an on-farm stand or store, selling produce or baked goods, and renting some land were negatively related to website use. Small farmers surveyed in 2000 used the Internet as a promotional tool to advertise their products (Ball and Duval, 2001). They reported findings that firms spent on average $565 for online direct marketing in 1997 with 65% reporting their online advertising efforts were somewhat or very successful.
Despite the opportunities online marketing can bring to green industry operations, little is known about the drivers of adopting online advertising and how those factors influence the amount invested in online advertising. In the context of Internet adoption, most studies are relatively outdated, and new research on drivers of online advertising adopted among businesses is needed. Reinartz (1996) found that nurseries/garden centers and florists employed few interactive and content features on their websites, although this is a main strength of the Internet. Only a few studies published recently have focused on the online advertising tools used by green industry businesses. Huang and Chen (2018) investigated the use of Facebook posts by florists in Taiwan. They showed florists were increasingly adopting social media advertising to engage with customers by advertising products and expressing gratitude. Peterson et al. (2018) found that most business owners used Facebook (91.4%) to engage with customers, followed by websites (81.5%), e-newsletters (60.3%), Twitter (San Francisco, CA) (29.8%), and blogs (23.2%). Most businesses advertising through these online tools used them once per week.
The aim of this article is to investigate the business and managerial characteristics that influence the decision to adopt online strategies among green industry firms. The objectives of this paper are to evaluate the business and owner characteristics most closely associated with investing in online advertising, and business and owner characteristics most closely associated with the amount invested in online advertising by green industry firms. We used a double-hurdle model to separate these decisions in two stages and estimate online advertising investing and the investment-associated amount.
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