Do Sellers Benefit from Sponsored Product Listings? Evidence from an Online Marketplace

Mingyu Joo (), Jiaqi Shi () and Vibhanshu Abhishek ()
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Mingyu Joo: School of Business, University of California, Riverside, California 92521
Jiaqi Shi: Paul Merage School of Business, University of California, Irvine, California 92697
Vibhanshu Abhishek: Paul Merage School of Business, University of California, Irvine, California 92697

Marketing Science, 2024, vol. 43, issue 4, 817-839

Abstract: Sponsored product listings on online marketplaces are third-party sellers’ ads blended in organic product listings. This paper investigates a seller’s managerial questions: whether a sponsored listing outperforms an organic listing and how the performance varies by positions. Our large-scale field study on a mobile app with experimental and natural variation finds that consumers prefer organic listings in the top-ranked positions to sponsored listings of the same product/position. Consumers become indifferent between sponsored and organic listings in the lower-ranked positions. A mechanism check suggests that top-ranked organic listings are perceived as more credible than seller-subsidized sponsored listings. Despite consumers’ preference for organic listings, a simulation analysis shows that an advertising seller may benefit financially if a lower-ranked organic listing can be replaced with a top-ranked sponsored listing.

Keywords: sponsored listings; online marketplace; field experiment; native ads; ad avoidance (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:43:y:2024:i:4:p:817-839

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