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Advertising Effectively Influences Older Users: How Field Experiments Can Improve Measurement and Targeting

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  • Randall Lewis
  • David Reiley

Abstract

Does advertising measurably affect sales? New technologies for tracking individuals’ sales and ad exposure facilitate studying a nationwide retailer’s online brand advertising effectiveness. A controlled experiment on 1,577,256 existing customers measures the causal effect of advertising on purchases, overcoming the attribution problem by exogenously varying ad exposure. The advertising produced a statistically and economically significant effect on in-store sales. The experiment permits a demographic breakdown. Surprisingly, the effects are large for the elderly. Customers aged 65+, comprising only 5 % of customers, increased purchases by 20 % due to the advertising. This represented 40 % of the total effect among all ages. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Randall Lewis & David Reiley, 2014. "Advertising Effectively Influences Older Users: How Field Experiments Can Improve Measurement and Targeting," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 147-159, March.
    • Handle: RePEc:kap:revind:v:44:y:2014:i:2:p:147-159
    DOI: 10.1007/s11151-013-9403-y
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    References listed on IDEAS

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    1. Joseph O. Eastlack, Jr. & Ambar G. Rao, 1989. "Advertising Experiments at the Campbell Soup Company," Marketing Science, INFORMS, vol. 8(1), pages 57-71.
    2. Law, Sharmistha & Hawkins, Scott A & Craik, Fergus I M, 1998. "Repetition-Induced Belief in the Elderly: Rehabilitating Age-Related Memory Deficits," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 25(2), pages 91-107, September.
    3. Levitt, Steven D. & List, John A., 2009. "Field experiments in economics: The past, the present, and the future," European Economic Review, Elsevier, vol. 53(1), pages 1-18, January.
    4. Dirk Bergemann & Alessandro Bonatti, 2011. "Targeting in advertising markets: implications for offline versus online media," RAND Journal of Economics, RAND Corporation, vol. 42(3), pages 417-443, September.
    5. 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.
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    Cited by:

    1. Lorenzo Coviello & Uri Gneezy & Lorenz Götte, 2017. "A Large-Scale Field Experiment to Evaluate the Effectiveness of Paid Search Advertising," CESifo Working Paper Series 6684, CESifo.
    2. 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.
    3. Eiji Yamamura, 2015. "Is university sports an advertisement in the higher education market? An analysis of the Hakone long-distance relay road race in Japan," ISER Discussion Paper 0922, Institute of Social and Economic Research, Osaka University.
    4. 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.
    5. Natalie Cox & Benjamin Handel & Jonathan Kolstad & Neale Mahoney, 2015. "Messaging and the Mandate: The Impact of Consumer Experience on Health Insurance Enrollment through Exchanges," American Economic Review, American Economic Association, vol. 105(5), pages 105-109, May.
    6. 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.

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