Effectiveness of Location-Based Advertising

56 Pages Posted: 17 Aug 2015 Last revised: 24 Feb 2020

See all articles by Dominik Molitor

Dominik Molitor

Fordham University - Gabelli School of Business

Martin Spann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business

Philipp Reichhart

Ludwig Maximilians University of Munich - Faculty of Business Administration (Munich School of Management)

Date Written: February 23, 2020

Abstract

Offline retailers increasingly use location-based coupons to target consumers in their vicinity in real-time. The rationale for the use of location-based coupons is that geographic proximity increases the relevance for consumers and, thus, the effectiveness of these campaigns. Two key interface-specific aspects of location-based coupon applications that influence their effectiveness are i) the provision of distance information and ii) the distance-based ranking of coupons. The aim of this paper is to study and quantify the impact of these two key aspects of interface design on the effectiveness of location-based coupons. We conduct a randomized field experiment with 399,913 observations, including 3,499 different coupon promotions offered by 3,930 different stores located in 2,392 ZIP code areas in a large Western European country. Our results show that the most effective interface design for location-based coupons is based on a distance-based ranking. Further, we find significant differences in the impact of distance and display rank based on the interface design and the actual geographic location of users. Our results thus contribute to the understanding of consumers’ behavioral responses to location-based advertising and provide important implications for the interface-design of location-based advertising applications.

Keywords: Randomized Field Experiment, Mobile Pull, Mobile Push, Mobile Analytics, Behavioral Effects, Interface Design

Suggested Citation

Molitor, Dominik and Spann, Martin and Ghose, Anindya and Reichhart, Philipp, Effectiveness of Location-Based Advertising (February 23, 2020). Available at SSRN: https://ssrn.com/abstract=2645281 or http://dx.doi.org/10.2139/ssrn.2645281

Dominik Molitor

Fordham University - Gabelli School of Business

113 West 60th Street
Bronx, NY 10458
United States

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

Martin Spann (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Ludwigstr. 28
Munich, 80539
Germany

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Philipp Reichhart

Ludwig Maximilians University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Ludwigstr. 28
Munich, 80539
Germany

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