Is the Money Spent on Short-Form Video Social Platforms Worth It? The Role of Advertising Spillover in a Large-Scale Randomized Field Experiment on ByteDance

Short-form videos have taken over social media and attracted attention from advertisers. But doubts remain about the advertising efficacy on these platforms. In a large-scale randomized experiment on ByteDance, we show that advertising spillover plays a pivotal role in the advertising campaign. Most of the advertising effect comes from advertising spillover beyond ByteDance with exposed users being eight times more likely to convert from outside than from within ByteDance. When considering advertising spillover outside ByteDance, the average cost per conversion, which brands commonly use to evaluate the cost of campaigns, shrinks by 5 or 25 times, depending on the methods used to calculate it. Advertising spillover can also affect a brand’s targeting strategy. Whereas commonly used demographic variables by the automobile brand are effective for target marketing with only platform data, they are not when considering advertising spillover outside ByteDance. Instead, a behavioral variable proposed herein (prior brand home page visits) effectively moderates the advertising effect but has no impact when ignoring advertising spillover in the analysis. Our findings underscore the importance of information sharing between platforms and brands, which in practice is typically not the case.