Contemporaneous and Delayed Sales Impact of Location-Based Mobile Promotions

Information Systems Research, 26(3), 552-564. DOI: 10.1287/isre.2015.0586

30 Pages Posted: 21 Dec 2016 Last revised: 3 Jan 2017

Zheng Fang

Sichuan University - Business School

Bin Gu

Arizona State University (ASU) - Department of Information Systems

Xueming Luo

Temple University

Yunjie (Calvin) Xu

Fudan University

Date Written: 2015

Abstract

Can location-based mobile promotion (LMP) trigger contemporaneous and delayed sales purchases? As mobile technologies can reach users anywhere and anytime, LMP becomes a promising new channel. We unravel the dynamic sales impact of LMP on the basis of a randomized field experiment with 22,000 mobile users sponsored by one of the largest mobile service providers in the world. Our identification strategy is to gauge the marginal increases in consumer purchases of the geo-fenced treatment group of users who received LMP, above and beyond the baseline control groups. There are two controls: one group who received the same LMP but not in the virtual geo-fencing locational range (nongeo-fenced control), and the other who did not receive the LMP but in the geo-fencing range (geo-fenced control). The latter control serves as an organic holdout baseline from the similar population, i.e., counterfactual test of what if without the mobile LMP intervention, to identify the actual “lift” of incremental purchases caused by the treatment with the mobile LMP intervention. Findings suggest that LMP treatment has a significantly stronger impact on contemporaneous (same-day) purchases and delayed (subsequent-days) purchases than the controls. The randomized experiment design renders these findings robust to alternative explanations such as mobile usage behavior heterogeneity, product effects heterogeneity, nonrandomized sample-selection bias, and endogeneity concerns. Follow-up surveys with the field experiment users explore the nuanced mechanisms via which LMP may induce the impulsive, same-day purchases, and create product awareness for the planned subsequent-days purchases. LMP can generate six times more purchases than nongeo-fenced control with the LMP intervention, and 12 times more than geo-fenced control without the LMP intervention. LMP has a delayed sales effect for 12 days after the mobile promotions.

The total sales impact of LMP could be underestimated by 54% if excluding the delayed sales impact and only including the contemporaneous impact. These findings are new to the literature and often neglected in mobile promotion practices, proffering novel implications on the sales value of LMP in the mobile era.

Keywords: mobile computing; mobile promotion; location-based mobile promotion; advertising; dynamic impact; randomized field experiment

Suggested Citation

Fang, Zheng and Gu, Bin and Luo, Xueming and Xu, Yunjie (Calvin), Contemporaneous and Delayed Sales Impact of Location-Based Mobile Promotions (2015). Information Systems Research, 26(3), 552-564. DOI: 10.1287/isre.2015.0586. Available at SSRN: https://ssrn.com/abstract=2888499

Zheng Fang

Sichuan University - Business School ( email )

China

Bin Gu

Arizona State University (ASU) - Department of Information Systems ( email )

Tempe, AZ
United States

Xueming Luo (Contact Author)

Temple University ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

HOME PAGE: http://www.fox.temple.edu/mcm_people/xueming-luo/

Yunjie Calvin Xu

Fudan University ( email )

Beijing West District Baiyun Load 10th
Shanghai, 100045
China

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