Publications
Publications
- May–June 2023
- Marketing Science
Which Firms Gain from Digital Advertising? Evidence from a Field Experiment
By: Weijia Dai, Hyunjin Kim and Michael Luca
Abstract
Measuring the returns of advertising opportunities continues to be a challenge for many
businesses. We design and run a field experiment in collaboration with Yelp across 18,294
firms in the restaurant industry to understand which types of businesses gain more from digital
advertising. We randomly assign 7,209 restaurants to freely receive Yelp’s standard ads package
for three months. The scale of the experiment gives us a unique opportunity to assess the
heterogeneity in advertising effectiveness across a variety of business attributes. We find that
restaurants that receive advertising on Yelp observe on average a 7–19% increase in a wide range
of purchase intention outcomes, as well as a 5% increase in customer reviews. We find that gains
are heterogeneous across firms, with independent and higher-rated businesses observing larger
gains, as well as those with more reviews and higher pre-experiment organic traffic.
Keywords
Citation
Dai, Weijia, Hyunjin Kim, and Michael Luca. "Which Firms Gain from Digital Advertising? Evidence from a Field Experiment." Marketing Science 42, no. 3 (May–June 2023): 429–439.