Measuring the Effects of Advertising: The Digital Frontier

27 Pages Posted: 11 Oct 2013 Last revised: 2 Dec 2015

Randall A. Lewis

Netflix

Justin M. Rao

Microsoft Research; Microsoft Corporation - Microsoft Research - Redmond

David Reiley

Pandora

Date Written: October 2013

Abstract

Online advertising offers unprecedented opportunities for measurement. A host of new metrics, clicks being the leading example, have become widespread in advertising science. New data and experimentation platforms open the door for firms and researchers to measure true causal effects of advertising on a variety of consumer behaviors, such as purchases. We dissect the new metrics and methods currently used by industry researchers, attacking the question, "How hard is it to reliably measure advertising effectiveness?" We outline the questions that we think can be answered by current data and methods, those that we believe will be in play within five years, and those that we believe could not be answered with arbitrarily large and detailed data. We pay close attention to the advances in computational advertising that are not only increasing the impact of advertising, but also usefully shifting the focus from "who to hit" to "what do I get."

Suggested Citation

Lewis, Randall A. and Rao, Justin M. and Reiley, David, Measuring the Effects of Advertising: The Digital Frontier (October 2013). NBER Working Paper No. w19520. Available at SSRN: https://ssrn.com/abstract=2338892

Randall A. Lewis (Contact Author)

Netflix ( email )

Los Gatos, CA
United States
312-RA-LEWIS (Phone)

HOME PAGE: http://www.econinformatics.com/

Justin M. Rao

Microsoft Research ( email )

641 Avenue of Americas
7th Floor
New York, NY 11249
United States

Microsoft Corporation - Microsoft Research - Redmond ( email )

Building 99
Redmond, WA
United States

David H. Reiley

Pandora ( email )

2101 WEBSTER ST 16TH FLOOR
Oakland, CA 94612
United States

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