Lead Offer Spillovers
51 Pages Posted: 11 Dec 2017
Date Written: December 5, 2017
Price promotions are typically offered in groups on websites, mailings and circulars, but little is known about how proximate promotion offers affect each other. Across two large scale field experiments (N=66,184) conducted on a multi-brand coupon website, we find that when lead promotions present high-value deals, consumers are more likely to print subsequent offers, a finding we call a "lead offer spillover." In the first field experiment, doubling the value of three lead offers increased the printing of subsequent offers by 18%. In the second, doubling the value of a single lead offer increased subsequent offer prints by 11%. Lead offer spillovers primarily result from attracting new users, rather than increasing activity among existing users, and occur even among consumers who are unlikely to print the lead offer. We investigate several mechanisms that could generate lead offer spillovers by combining additional online experiments with deeper analysis of the field experiment data. The results show that lead offer spillovers are primarily driven by increased consumer search for subsequent promotions in the group.
Keywords: price promotions; consumer search; attention; spillovers; field experiments; lab experiments
JEL Classification: M30, M31
Suggested Citation: Suggested Citation