Online ads and offline sales: measuring the effect of retail advertising via a controlled experiment on Yahoo!

Randall Lewis and David Reiley ()

Quantitative Marketing and Economics (QME), 2014, vol. 12, issue 3, 235-266

Abstract: A randomized experiment with 1.6 million customers measures positive causal effects of online advertising for a major retailer. The advertising profitably increases purchases by 5%. 93% of the increase occurs in brick-and-mortar stores; 78% of the increase derives from consumers who never click the ads. Our large sample reaches the statistical frontier for measuring economically relevant effects. We improve econometric efficiency by supplementing our experimental variation with non-experimental variation caused by consumer browsing behavior. Our experiment provides a specification check for observational difference-in-differences and cross-sectional estimators; the latter exhibits a large negative bias three times the estimated experimental effect. Copyright Springer Science+Business Media New York 2014

Keywords: Online advertising; Display advertising; Advertising effectiveness; Field experiment; Difference in differences; Codes: C93 - Field Experiments; M37 - Advertising; D12 - Consumer Economics: Empirical Analysis (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (71)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:qmktec:v:12:y:2014:i:3:p:235-266

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DOI: 10.1007/s11129-014-9146-6

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