Application of PLS in Marketing: Content Strategies on the Internet

In an empirical study the strategies are investigated that content providers follow in their compensation policy with respect to their customers. The choice of the policy can be explained by the resource based view and may serve as recommendations. We illustrate how a strategy study in marketing can be analyzed with the help of PLS thereby providing more detailed and actionable results. First, complex measures have to be operationalized by more specific indicators, marketing instruments in our case, which proved to be formative in most cases. Only by using PLS it was possible to extract the influence of every single formative indicator on the final constructs, i.e., the monetary form of the partnerships. Second, PLS allows for more degrees of freedom so that a complex model could be estimated with a number of cases that would not be sufficient for ML-LISREL. Third, PLS does not work with distributional assumptions while significance tests can still be carried out with the help of bootstrapping. We recommend the use of PLS for future strategy studies in marketing because it is possible to extract the drivers at the indicator level so that detailed recommendations can be given for managing marketing instruments.