Does Online Search Predict Sales? Evidence from Big Data for Car Markets in Germany and the UK

CGR Working Paper series, 2016

43 Pages Posted: 31 Aug 2016

See all articles by Georg von Graevenitz

Georg von Graevenitz

Queen Mary, School of Business and Management; Center for Competition Policy; University of Glasgow - CREATe, RCUK Centre for Copyright and New Business Models in the Creative Economy

Christian Helmers

Santa Clara University - Department of Economics

Valentine Millot

Organization for Economic Cooperation and Development (OECD), Economics Department

Oliver Turnbull

University of Bristol

Date Written: August 15, 2016

Abstract

We use online search data to predict car sales in the German and UK automobile industries. Search data subsume several distinct search motives, which are not separately observable. We develop a model linking search motives to observable search data and sales. The model shows that predictions of sales relying on observable search data as a proxy for prepurchase search will be biased. We show how to remove the biases and estimate the effect of prepurchase search on sales. To assist identification of this effect, we use the introduction of scrappage subsidies for cars in 2008/2009 as a quasi-natural experiment. We also show that online search data are (i) highly persistent over time, (ii) potentially subject to permanent shocks, and (iii) correlated across products, but to different extent. We address these challenges to estimation and inference by using recent econometric methods for large N, large T panels.

Keywords: Online search, Google Trends, Serial correlation, Non-stationarity, Common Correlated Effects, Large Panels

JEL Classification: D83, L62, M31

Suggested Citation

von Graevenitz, Georg and Helmers, Christian and Millot, Valentine and Turnbull, Oliver, Does Online Search Predict Sales? Evidence from Big Data for Car Markets in Germany and the UK (August 15, 2016). CGR Working Paper series, 2016. Available at SSRN: https://ssrn.com/abstract=2832004 or http://dx.doi.org/10.2139/ssrn.2832004

Georg Von Graevenitz (Contact Author)

Queen Mary, School of Business and Management ( email )

Mile End
London, E1 4NS
United Kingdom

Center for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

University of Glasgow - CREATe, RCUK Centre for Copyright and New Business Models in the Creative Economy ( email )

10 The Square, Glasgow University
Glasgow, G12 8QQ
United Kingdom

Christian Helmers

Santa Clara University - Department of Economics ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

Valentine Millot

Organization for Economic Cooperation and Development (OECD), Economics Department ( email )

2 rue André Pascal
Paris, 75016
France

Oliver Turnbull

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
175
rank
167,478
Abstract Views
778
PlumX Metrics