Do Sellers Benefit from Sponsored Product Listings? Evidence from an Online Marketplace

54 Pages Posted: 18 Aug 2021 Last revised: 17 Sep 2023

See all articles by Mingyu Joo

Mingyu Joo

University of California, Riverside - School of Business

Jiaqi Shi

University of California, Irvine - Paul Merage School of Business

Vibhanshu Abhishek

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Date Written: September 15, 2023

Abstract

Sponsored product listings on online marketplaces are third-party sellers' ads blended in organic product listings. This paper investigates a seller's managerial question: whether a sponsored listing outperforms an organic listing, and how the performance varies by positions. Our large-scale field study on a mobile app with experimental and natural variation finds consumers prefer organic listings in the top-ranked positions to sponsored listings of the same product/position. Consumers become indifferent between sponsored and organic listings in the lower-ranked positions. A mechanism check suggests top-ranked organic listings are perceived as more credible than seller-subsidized sponsored listings. Despite consumers' preference for organic listings, a simulation analysis shows an advertising seller may benefit financially if a lower-ranked organic listing can be replaced with a top-ranked sponsored listing.

Keywords: Sponsored listings, online marketplace, field experiment, native ads, ad avoidance

Suggested Citation

Joo, Mingyu and Shi, Jiaqi and Abhishek, Vibhanshu, Do Sellers Benefit from Sponsored Product Listings? Evidence from an Online Marketplace (September 15, 2023). Available at SSRN: https://ssrn.com/abstract=3896716 or http://dx.doi.org/10.2139/ssrn.3896716

Mingyu Joo (Contact Author)

University of California, Riverside - School of Business ( email )

900 University Ave.
Riverside, CA 92521
United States

HOME PAGE: http://www.mingyujoo.com

Jiaqi Shi

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States

Vibhanshu Abhishek

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

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