An Experimental Investigation of the Effects of Retargeted Advertising: The Role of Frequency and Timing
Kirthi Kalyanam, L.J. Skaggs Distinguished Professor of Marketing
Sahni, N. S., Narayanan, S., & Kalyanam, K. (2019). An Experimental Investigation of the Effects of Retargeted Advertising: The Role of Frequency and Timing. Journal of Marketing Research, 56(3), 401–418. https://doi.org/10.1177/0022243718813987
Abstract
In collaboration with an online seller of home-improvement products, the authors conduct a large-scale randomized field experiment to study the effects of retargeted advertising, a form of internet advertising in which banner ads are displayed to users after they visit the advertiser’s website. They find that switching on experimental retargeting causes 14.6% more users to return to the website within four weeks. The impact of retargeting decreases as the time since the consumer first visited the website increases—indeed, 33% of the effect of the first week’s advertising occurs on the first day. Furthermore, the authors find evidence of the existence of complementarities in advertising over time: the effect of advertising in week 2 of the campaign is higher when the user was assigned to a nonzero level of advertising in week 1. The authors discuss mechanisms that can explain their findings and demonstrate a novel low-cost method that can be applied generally to conduct valid online advertising experiments.