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Journal Selections from MSI

Advertising Spillovers: Evidence from Online Field Experiments

Ads increase the chance of consumers buying the advertised product, but also remind consumers of similar, nonadvertised options. In the Journal of Marketing Research, Navdeep S. Sahni analyzes the impact of online ads on the advertiser’s competitors, using data from randomized field experiments on a restaurant-search website. The experiment varies advertising and its intensity (the number of times an ad is displayed during a browsing session) for actual restaurants advertised in several markets.

Findings

  • Exposure to the experimental ad causes a statistically significant increase in page visits and sales leads for the advertiser’s competitors. The total cumulative spillover benefit to the competitors is large—five times the advertiser's gain from advertising.
  • Spillover benefits are concentrated on restaurants that serve the advertiser’s cuisine and have a high rating on the restaurant-search website; these restaurants gained sales leads by about 30% on average.
  • The extent of spillovers is largest when the intensity (frequency) of advertising is low. As the intensity increases, the spillovers disappear and the advertiser gains more sales.

Implications

The positioning of a product relative to other products is important for determining which players in the market gain from ad spillover and by how much. Furthermore, displaying an ad repeatedly might make the consumers focus on the advertiser rather than on the broad category. Thus, the advertiser might overcome the effects of spillovers by increasing ad intensity.

Download full article
Advertising Spillovers: Evidence from Online Field Experiments and Implications for Returns on Advertising by Navdeep S. Sahni, Journal of Marketing Research (free access until April 28, 2017)

View more in Journal Selections from MSI (April 2017)

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