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Is paid search overrated? When bricks-and-mortar-only retailers should not use paid search

Darius Schlangenotto (), Dennis Kundisch () and Nancy V. Wünderlich ()
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Darius Schlangenotto: Paderborn University
Dennis Kundisch: Paderborn University
Nancy V. Wünderlich: Paderborn University

Electronic Markets, 2018, vol. 28, issue 4, No 3, 407-421

Abstract: Abstract While bricks-and-mortar-only retailers do not offer online purchasing, they often take advantage of multi-channel management strategies to reach consumers in a pre-purchase phase. We investigate whether paid search can increase the sales of brick-and-mortar retailers who promote their offers via an informational website. Although a sizeable one third of all retailers still trade without an online-shop, previous work has been silent about the effects of paid search for them. We make use of a randomized field experiment and an end-to-end tracking mechanism to investigate the cross-channel behavior of individual consumers. Our empirical results suggest that, whilst paid search increases the number of potential customers through enhancing the reach of marketing initiatives, store sales are not increased. We conclude that customers who search online to buy offline primarily use paid search as a navigational shortcut to the retailer’s website. Consequently, bricks-and-mortar-only retailers seeking to increase store purchases should approach paid search with caution.

Keywords: Paid search; Consumer behavior across channels; Substitution effects; Field experiment; Bricks-and-mortar-only (search for similar items in EconPapers)
JEL-codes: M37 L81 L86 (search for similar items in EconPapers)
Date: 2018
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