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Faculty & Research


Frontiers: Which Firms Gain from Digital Advertising? Evidence from a Field Experiment

Journal Article
Measuring the returns of advertising opportunities continues to be a challenge for many businesses. The authors design and run a field experiment on a large review platform across 18,294 firms in the restaurant industry to understand which types of businesses gain more from digital advertising. The authors randomly assign 7,209 restaurants to freely receive the platform’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. The authors find that restaurants that receive advertising observe on average a 7%-19% increase in a wide range of purchase intention outcomes, as well as a 5% increase in customer reviews. The authors 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.

Assistant Professor of Strategy