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Display advertising’s competitive spillovers to consumer search

Author

Listed:
  • Randall Lewis

    (Google)

  • Dan Nguyen

    (University of Chicago Booth School of Business)

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.

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:d:10.1007_s11129-015-9155-0
    DOI: 10.1007/s11129-015-9155-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Advertising; Natural experiment; Externality; Search; Competition; Complements; Strategic complements;
    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

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