Location, Location, Location: Repetition and Proximity Increase Advertising Effectiveness
41 Pages Posted: 23 May 2013 Last revised: 3 Jun 2016
Date Written: June 2, 2016
We examine a large-scale field experiment that measures the effect of online display advertising. Yahoo! Research and an American apparel retailer collaborated on the experiment that tracked the online and offline sales of 3 million retailer customers. We measure the impact of the frequency of advertising exposure using a simple randomized experiment: users in the ‘Full’ treatment group see the retailer’s ads, users in the ‘Control’ group see unrelated control ads, and users in the ‘Half’ treatment group see an equal probability mixture of the retailer and control ads. We find strong benefits to repeated exposures among users who see up to 50 ads, with revenues increasing approximately linearly at a rate of 4¢ per exposure. We find especially high ad effectiveness for the retailer’s best customers and those who live closest to its brick-and-mortar locations; these findings are consistent with advertising in a Hotelling model of differentiated firms.
Note: A previously released draft was entitled “Add More Ads? Experimentally Measuring Incremental Purchases Due to Increased Frequency of Online Display Advertising.”
Keywords: advertising effectiveness, field experiments, digital advertising, ad frequency, targeting
JEL Classification: M37, C93, L81
Suggested Citation: Suggested Citation