Online display ads can increase both online and offline retail sales, providing valuable insight for future marketing decisions, a new study has claimed.
Researchers, including those from University of Rochester in the US, worked with an unnamed national apparel retailer to evaluate the effects of the retailer's advertising.
The large-scale field experiment involved over three million Yahoo users. For two weeks, Yahoo users in the experiment's treatment group saw branded apparel ads from the retailer whereas users in the control group saw ads for Yahoo Search.
Relative to the baseline established by the control group, the experiment showed that the retailer's campaign increased sales by 3.6 per cent or roughly three times the retailer's spending on ads.
"This apparel retailer approached us with an interesting problem: 'How do I know if my online ads work when 90 per cent of my sales are offline?'" said researchers.
They attacked this problem by matching customer records between the retailer and Yahoo.
Importantly, they combined customer-level online and offline sales data with a controlled experiment that allowed them to assess how much the consumers would have purchased in the absence of the ad campaign.
They determined that 84 per cent of the sales increase from the ads came from offline sales.
"Without the experiment, the retailer could have erroneously concluded that the ads only increased online sales and not offline sales. Ironically, this could have led to underinvestment in online advertising," researchers said.
The study notes that their novel experimental design can be valuable for companies seeking to measure advertising effectiveness.
"We had run experiments with this retailer before, but this was the largest experiment where we used 'control ads' to determine which control-group members would have seen the ads," researchers said.
"This allowed us to ignore statistical noise from the purchases of consumers who never saw the ads. We also discovered that we only needed to look at sales after the first ad because an ad can only affect you after you have seen it," they said.
The study was published in the journal Marketing Science.
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