The Consumer Welfare Effects of Online Ads: Evidence from a 9-Year Experiment

Abstract

Research on the effects of online advertising on consumer welfare is limited due to challenges in running large-scale field experiments. We analyze a long-running field experiment on Facebook in which a random subset of users received no ads in their newsfeeds.  Using an incentive-compatible deactivation experiment, we find no significant differences in users’ valuation of Facebook across a representative sample of 53,083 Facebook users in the ads and no ads groups.  Our sample size allows for precise estimates, suggesting that either the disutility of ads is relatively small or that there are offsetting benefits, such as product discovery.