Online Ads and Offline Sales: 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
Measuring the Effects of Retail Advertising via a Controlled Experiment on Yahoo!
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.
Winner of the 2015 Dick Wittink Prize for the best paper published in Quantitative Marketing and Economics.
This paper previously circulated under the title "Does Retail Advertising Work?"
First version: 21 August 2008
This version: 27 February 2014