Abstract

References (42)

Beta

Citations (1)

Beta

One-Click Download | Share | Email | Add to Briefcase

Dynamics of Retail Advertising: Evidence from a Field Experiment

Duncan Simester
MIT Sloan School of Management

Yu Jeffrey Hu
Purdue University - Krannert School of Management

Erik Brynjolfsson
Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Eric Anderson
Northwestern University - Department of Marketing

October 2007

Economic Inquiry, Forthcoming

Abstract:
We present findings from a controlled field experiment that allows us to investigate the dynamic effects of retail advertising. The experimental design overcomes limitations that have hindered previous investigations of this issue. Our study uncovers dynamic advertising effects that have not been previously considered in the literature. We find that current advertising does affect future sales but surprisingly, the affect is not always positive; for the firm's best customers the long-run outcome may be negative. We argue that this finding reflects two competing effects: brand-switching and intertemporal substitution. The study also provides evidence of cross-channel substitution, with the firm's best customers switching demand to the ordering channel that corresponds to the advertising.

Keywords: Advertising, Direct Mail, Field Experiment, Internet, Catalog, long-run demand

JEL Classifications: C93, M31, M37, L81, L15, O30, L2

Working Paper Series

Date posted: January 19, 2006 ; Last revised: February 19, 2008

Suggested Citation

Simester, Duncan, Hu, Yu Jeffrey, Brynjolfsson, Erik and Anderson, Eric, Dynamics of Retail Advertising: Evidence from a Field Experiment (October 2007). Economic Inquiry, Forthcoming. Available at SSRN: http://ssrn.com/abstract=875396

Export to: Export Citation What's this?

Contact Information

Duncan Simester (Contact Author) MIT Sloan School of Management ( email ) Management Science Cambridge, MA 02142 United States 617-258-0679 (Phone) 617-258-7597 (Fax)
Eric Anderson Northwestern University - Department of Marketing ( email ) Kellogg School of Management 2001 Sheridan Rd. Evanston, IL 60208 United States
Erik Brynjolfsson Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email ) E53-313 Cambridge, MA 02142 United States 617-253-4319 (Phone) HOME PAGE: http://digital.mit.edu/erik
National Bureau of Economic Research (NBER) ( email ) 1050 Massachusetts Avenue Cambridge, MA 02138 United States
Yu Jeffrey Hu Purdue University - Krannert School of Management ( email ) 1310 Krannert Building West Lafayette, IN 47907-1310 United States 765-494-7907 (Phone)