Tensile Promotions in Display Advertising

54 Pages Posted: 17 Oct 2016 Last revised: 10 Nov 2017

See all articles by Anja Lambrecht

Anja Lambrecht

London Business School

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS)

Date Written: November 7, 2017

Abstract

Firms often advertise the maximum discount offered storewide, rather than a specific discount offered for a single product. However, it is unclear how such tensile discount claims of, for example, 'up to 70%' off, perform. On the one hand, promoting the maximum discount may help ads grab consumer attention. On the other hand, consumers may be looking for credible and specific signals in price promotions, not non-specific tensile claims. We use data from an online retailer that varied whether they advertised the maximum price discount they offered, or the actual discount on a specific item in their display advertising. We find that tensile price claims are on average, less effective than specific claims. A tensile price claim, relative to a specific claim, reduces a consumer's likelihood of clicking on an ad and conditional on clicking, reduces the consumer's likelihood of adding a product to the shopping cart. We present evidence that tensile price claims perform better than specific price claims only in instances when consumers are likely to have little price knowledge.

Keywords: Price Promotion, Online Advertising, Targeting, Tensile Promotions

Suggested Citation

Lambrecht, Anja and Tucker, Catherine E., Tensile Promotions in Display Advertising (November 7, 2017). Available at SSRN: https://ssrn.com/abstract=2852807 or http://dx.doi.org/10.2139/ssrn.2852807

Anja Lambrecht (Contact Author)

London Business School ( email )

Regent's Park
London, NW1 4SA
United Kingdom

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS) ( email )

100 Main St
E62-536
Cambridge, MA 02142
United States

HOME PAGE: http://cetucker.scripts.mit.edu

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