An Experimental Investigation of the Effects of Retargeted Advertising: The Role of Frequency and Timing

50 Pages Posted: 17 Oct 2016 Last revised: 10 Apr 2018

See all articles by Navdeep S. Sahni

Navdeep S. Sahni

Stanford Graduate School of Business

Sridhar Narayanan

Stanford Graduate School of Business

Kirthi Kalyanam

Santa Clara University

Date Written: January 2018

Abstract

In collaboration with an online seller of home-improvement products, we conduct a large-scale randomized field experiment to study the effects of retargeted advertising – a form of internet advertising in which banner ads are displayed to users after they visit the advertiser's web site. We find that retargeting causes 14.6% more users to return to the website in four weeks. The impact of advertising decreases as the time since the consumer first visits the website increases. 33% of the effect of first week's advertising occurs on the very first day. Further, we also find clear evidence of the existence of complementarities in advertising over time – the effect of advertising in week 2 of the campaign is higher when the user was assigned to a non-zero level of advertising in week 1. We discuss mechanisms that can explain our findings. In addition to the substantive findings, we demonstrate a novel low-cost method that can be applied generally to conduct valid online advertising experiments.

Keywords: Internet marketing; Online advertising; Field experiment; Timing of ads

JEL Classification: M3

Suggested Citation

Sahni, Navdeep S. and Narayanan, Sridhar and Kalyanam, Kirthi, An Experimental Investigation of the Effects of Retargeted Advertising: The Role of Frequency and Timing (January 2018). Stanford University Graduate School of Business Research Paper No. 16-47, Available at SSRN: https://ssrn.com/abstract=2852484 or http://dx.doi.org/10.2139/ssrn.2852484

Navdeep S. Sahni (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Sridhar Narayanan

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-9675 (Phone)

HOME PAGE: http://https://gsbapps.stanford.edu/facultybios/bio.asp?ID=409

Kirthi Kalyanam

Santa Clara University ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

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