Where Does Advertising Content Lead You? We Created a Bookstore to Find Out
66 Pages Posted: 28 Dec 2022 Last revised: 9 Jan 2023
Date Written: December 20, 2022
We study how advertisements with varied content influence consumers' decisions. To this end, we create a simulated online bookstore that imitates a real online shopping experience. Consumers can browse the product list, use search tools such as queries and filters, explore books by visiting product pages, and place orders just like they normally would when shopping online. We then conduct a pre-registered and incentive-compatible experiment, in which we randomly expose consumers in our store to display ads, randomizing both advertising exposures and content. Our experimental results suggest that advertising content plays a major role in shaping advertising effects. When ads do not reveal product attributes, they encourage consumers to become informed about the advertised book by making its product page more easily accessible. Revealing the book's attributes generates additional effects on search and choice. Advertising a low price unambiguously increases demand for the advertised book. By contrast, advertising the book's genre induces some consumers to search and buy the book while making others discard this option without search. Our results suggest that researchers need to explicitly account for advertising content when estimating the effects of advertising on demand or assessing the impact of advertising regulations.
Keywords: Advertising, Consumer Search, Lab Experiment
JEL Classification: C83, C91, D12, D83, L00, M37
Suggested Citation: Suggested Citation