# Retail Advertising Works! - David Reiley

4m ago
18 Views
3.04 MB
36 Pages
Last View : 6d ago
Transcription

Next we exploit the panel nature of our data by using a Difference-in-Differences (DID)model. This allows us to estimate the effects of advertising on sales while controlling forthe heterogeneity we have observed across individuals in their purchasing behavior. OurDID model makes use of the fact that we observe the same individuals both before andafter the start of the ad campaign. We begin with the following equation:.In this equation, Salesi,t is the sales for individual i in time period t, SawAdsi,t is thedummy variable indicating whether individual i saw any of the retailer’s ads in timeperiod t, γt is the average effect of viewing the ads, βt is a time-specific mean, αi is anindividual effect or unobserved heterogeneity (which we know happens to be correlatedwith viewing ads), and εi,t is an idiosyncratic disturbance. Computing time-seriesdifferences will enable us to eliminate the individual unobserved heterogeneity αi.We consider two time periods: (1) the “pre” period of two weeks before the start ofcampaign #1, and (2) the “post” period of two weeks after the start of the campaign. Bycomputing first differences of the above model across time, we obtain:Since no one saw ads in the “pre” period, we know that SawAdsi,pre 0. So the differenceequation simplifies to:We can then estimate this difference equation via ordinary least squares (OLS). The betacoefficient is directly comparable to the previous “rescaled” estimates, as i

Retail Advertising Works! Measuring the Effects of Advertising on Sales via a Controlled Experiment on Yahoo! Randall Lewis and David Reiley* This Version: 7 January 2009 Abstract A randomized experiment performed in cooperation between Yahoo! and a major retailer allows us to measure the effects of online advertising on sales. We exploit a .

Related Documents:

sales, so that regressions to determine advertising's effects on sales are plagued by the possibility of reverse causality. Berndt (1991) reviews a substantial econometric literature on this topic. After multiple years of interactions with advertisers and advertising sales representatives

Bellamy Young Ben Feldman Ben McKenzie Ben Stiller Ben Whishaw Beth Grant Bethany Mota Betty White Bill Nighy Bill Pullman Billie Joe Armstrong Bingbing Li Blair Underwood . David Koechner David Kross David Letterman David Lyons David Mamet David Mazouz David Morrissey David Morse David Oyelowo David Schwimmer David Suchet David Tennant David .

the advertising is placed, the language of the advertising, and the release date identified in the advertising. Advertising that is intended for international audiences may nonetheless be subject to these Rules if, in the opinion of the senior executive of the Advertising Administration, the advertising is being made available to a significant