The Impact of Advertising Along the Conversion Funnel

41 Pages Posted: 22 Feb 2017 Last revised: 27 Sep 2018

See all articles by Stephan Seiler

Stephan Seiler

Imperial College Business School; Centre for Economic Policy Research

Song Yao

Washington University in St. Louis - John M. Olin Business School

Date Written: June 21, 2017

Abstract

We assemble a unique data set that combines information on supermarket feature advertising with path-tracking data on consumers' movement within the store as well as purchase information. Using these novel data, we trace out how advertising affects consumer behavior along the path-to-purchase. We find advertising has no significant effect on the number of consumers visiting the category being advertised. The null effect is precisely estimated. At the upper bound of the confidence interval, a one-standard-deviation shift in advertising increases category traffic by only 1.3%. We do find a significant effect at the lower end of the conversion funnel. A one-standard-deviation change in advertising (evaluated at the point estimate) increases category-level sales by 10%. We further decompose the impact on sales and find the increase is driven by the same number of consumers buying a larger number of products of the same brand. We find no evidence of spillover effects of advertising between categories that are stocked in proximity of each other, nor between different products in the same category. Two mechanisms are consistent with these patterns: consumers retrieve memory of the ad only when interacting with the category or only consumers wanting to purchase the brand choose to consume the ad.

Keywords: Advertising, Conversion Funnel, Spillovers, Path-tracking Data

Suggested Citation

Seiler, Stephan and Yao, Song, The Impact of Advertising Along the Conversion Funnel (June 21, 2017). Quantitative Marketing and Economics, 15(3), pp. 241-278., Stanford University Graduate School of Business Research Paper No. 17-17, Available at SSRN: https://ssrn.com/abstract=2920953 or http://dx.doi.org/10.2139/ssrn.2920953

Stephan Seiler

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research ( email )

London
United Kingdom

Song Yao (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

HOME PAGE: http://www.songyao.org

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