Advertising Experiments at RestaurantGrades

Advertising Experiments at RestaurantGrades is an exercise in which students are asked to analyze and make a recommendation on the basis of simulated experimental data. The setting is a hypothetical restaurant review company called RestaurantGrades (RG), which shows advertisements above the organic search results when someone searches on the page. RG is trying to understand whether the current advertising package it sells to restaurants is effective at driving traffic—and whether an alternative advertising package might be better. To do this, RG ran an experiment with two treatment groups and a control group—with random assignment done at the restaurant level. Restaurants in the control group are provided with no advertising; restaurants in the first treatment group are given RG's current advertising package, and restaurants in the second treatment group are given an alternative advertising package. Students are provided with the resulting data—which includes an indicator for which arm a business was in, as well as outcomes at the monthly level for each business—and asked to assess which advertising package is more effective. The exercise provides students with an opportunity for experiential learning around the use of experiments to guide business decisions.