IDEAS home Printed from https://ideas.repec.org/a/kap/qmktec/v13y2015i2p93-115.html
   My bibliography  Save this article

Display advertising’s competitive spillovers to consumer search

Author

Listed:
  • Randall Lewis
  • Dan Nguyen

Abstract

We find display advertising influences customer search for both the advertised brand and its competitors. We exploit a natural experiment that randomizes ad delivery on 500 million visits to the Yahoo! homepage and compare visitors’ subsequent activities on Yahoo! Search. In three advertisers’ campaigns, display ads increase searches for advertised brands by 30–45 % and for competitors’ brands by up to 23 %. Strikingly, the total number of incremental searches for competitors is 2–8 times the increase for advertisers’ brands. We discuss how these spillovers create strategic complementarities for search advertisers and reduce firms’ investments in advertising. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Randall Lewis & Dan Nguyen, 2015. "Display advertising’s competitive spillovers to consumer search," Quantitative Marketing and Economics (QME), Springer, vol. 13(2), pages 93-115, June.
    • Handle: RePEc:kap:qmktec:v:13:y:2015:i:2:p:93-115
    DOI: 10.1007/s11129-015-9155-0
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11129-015-9155-0
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11129-015-9155-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Nedungadi, Prakash, 1990. "Recall and Consumer Consideration Sets: Influencing Choice without Altering Brand Evaluations," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 17(3), pages 263-276, December.
    2. Avi Goldfarb & Catherine Tucker, 2011. "Online Display Advertising: Targeting and Obtrusiveness," Marketing Science, INFORMS, vol. 30(3), pages 389-404, 05-06.
    3. Avi Goldfarb & Catherine E. Tucker, 2011. "Privacy Regulation and Online Advertising," Management Science, INFORMS, vol. 57(1), pages 57-71, January.
    4. Thomas Blake & Chris Nosko & Steven Tadelis, 2015. "Consumer Heterogeneity and Paid Search Effectiveness: A Large‐Scale Field Experiment," Econometrica, Econometric Society, vol. 83, pages 155-174, January.
    5. Avi Goldfarb & Catherine Tucker, 2011. "Rejoinder--Implications of "Online Display Advertising: Targeting and Obtrusiveness"," Marketing Science, INFORMS, vol. 30(3), pages 413-415, 05-06.
    6. Kwoka, John E, Jr, 1993. "The Sales and Competitive Effects of Styling and Advertising Practices in the U.S. Auto Industry," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 649-656, November.
    7. Dina Mayzlin & Jiwoong Shin, 2011. "Uninformative Advertising as an Invitation to Search," Marketing Science, INFORMS, vol. 30(4), pages 666-685, July.
    8. Economides, Nicholas & Salop, Steven C, 1992. "Competition and Integration among Complements, and Network Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 105-123, March.
    9. Gene M. Grossman & Carl Shapiro, 1984. "Informative Advertising with Differentiated Products," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 63-81.
    10. Randall Lewis & David Reiley, 2014. "Online ads and offline sales: measuring the effect of retail advertising via a controlled experiment on Yahoo!," Quantitative Marketing and Economics (QME), Springer, vol. 12(3), pages 235-266, September.
    11. Mingyu Joo & Kenneth C. Wilbur & Bo Cowgill & Yi Zhu, 2014. "Television Advertising and Online Search," Management Science, INFORMS, vol. 60(1), pages 56-73, January.
    12. Avi Goldfarb & Catherine Tucker, 2011. "Search Engine Advertising: Channel Substitution When Pricing Ads to Context," Management Science, INFORMS, vol. 57(3), pages 458-470, March.
    13. Eyal Carmi & Gal OEstreicher-Singer & Arun Sundararajan, 2010. "Is Oprah Contagious? Identifying Demand Spillovers in Product Networks," Working Papers 10-18, NET Institute.
    14. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 465-491.
    15. Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 28, pages 1701-1844, Elsevier.
    16. Randall A. Lewis & Justin M. Rao, 2015. "The Unfavorable Economics of Measuring the Returns to Advertising," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(4), pages 1941-1973.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peitz, Martin & Reisinger, Markus, 2014. "The Economics of Internet Media," Working Papers 14-23, University of Mannheim, Department of Economics.
    2. Weijia Dai & Hyunjin Kim & Michael Luca, 2023. "Frontiers: Which Firms Gain from Digital Advertising? Evidence from a Field Experiment," Marketing Science, INFORMS, vol. 42(3), pages 429-439, May.
    3. Soberman, David A. & Xiang, Yi, 2022. "Designing the content of advertising in a differentiated market," International Journal of Research in Marketing, Elsevier, vol. 39(1), pages 190-211.
    4. Garrett A. Johnson & Randall A. Lewis & David H. Reiley, 2017. "When Less Is More: Data and Power in Advertising Experiments," Marketing Science, INFORMS, vol. 36(1), pages 43-53, January.
    5. Weijia Dai & Hyunjin Kim & Michael Luca, 2016. "Which Firms Gain from Digital Advertising? Evidence from a Field Experiment," Harvard Business School Working Papers 17-025, Harvard Business School, revised Jan 2023.
    6. Andre Veiga & Tommaso Valletti, 2020. "Attention, recall and purchase: Experimental evidence on online news and advertising," Working Papers 20-15, NET Institute.
    7. Serafin J. Grundl & You Suk Kim, 2017. "Consumer Mistakes and Advertising : The Case of Mortgage Refinancing," Finance and Economics Discussion Series 2017-067, Board of Governors of the Federal Reserve System (U.S.).
    8. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    9. Nathan M. Fong, 2017. "How Targeting Affects Customer Search: A Field Experiment," Management Science, INFORMS, vol. 63(7), pages 2353-2364, July.
    10. Serafin Grundl & You Suk Kim, 2019. "Consumer mistakes and advertising: The case of mortgage refinancing," Quantitative Marketing and Economics (QME), Springer, vol. 17(2), pages 161-213, June.
    11. Navdeep S. Sahni, 2015. "Effect of temporal spacing between advertising exposures: Evidence from online field experiments," Quantitative Marketing and Economics (QME), Springer, vol. 13(3), pages 203-247, September.
    12. Tucker, Catherine E., 2012. "The economics of advertising and privacy," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 326-329.
    13. Anna D’Annunzio & Antonio Russo, 2020. "Ad Networks and Consumer Tracking," Management Science, INFORMS, vol. 66(11), pages 5040-5058, November.
    14. Stephan Seiler & Song Yao & Wenbo Wang, 2017. "Does Online Word of Mouth Increase Demand? (And How?) Evidence from a Natural Experiment," Marketing Science, INFORMS, vol. 36(6), pages 838-861, November.
    15. Mariia I. Okuneva & Dmitriy B. Potapov, 2015. "The Effectiveness of Individual Targeting Through Smartphone Application in Retail: Evidence from Field Experiment," HSE Working papers WP BRP 47/MAN/2015, National Research University Higher School of Economics.
    16. Simon P. Anderson & Régis Renault, 2013. "The Advertising Mix for a Search Good," Management Science, INFORMS, vol. 59(1), pages 69-83, April.
    17. Alexandre Chirat, 2022. "Consumer sovereignty in the digital society," EconomiX Working Papers 2022-25, University of Paris Nanterre, EconomiX.
    18. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    19. Randall Lewis & Justin M. Rao & David H. Reiley, 2015. "Measuring the Effects of Advertising: The Digital Frontier," NBER Chapters, in: Economic Analysis of the Digital Economy, pages 191-218, National Bureau of Economic Research, Inc.
    20. Rex Yuxing Du & Mingyu Joo & Kenneth C. Wilbur, 2019. "Advertising and brand attitudes: Evidence from 575 brands over five years," Quantitative Marketing and Economics (QME), Springer, vol. 17(3), pages 257-323, September.

    More about this item

    Keywords

    Advertising; Natural experiment; Externality; Search; Competition; Complements; Strategic complements; M37; M31; D83; L86;
    All these keywords.

    JEL classification:

    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:qmktec:v:13:y:2015:i:2:p:93-115. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.