Washington D.C. [USA], Feb. 4 : For retailers, if you want to increase your retail sales, start investing in online advertising, as a study finds that online display ads can increase both online and offline retail sales, providing valuable insight for future marketing decisions.
The study was authored by Garrett Johnson of the University of Rochester in the U.S., Randall Lewis from Netflix and David Reiley of Pandora, who were all conducting research for Yahoo! at the time of the study.
The experiment showed that the retailer's campaign increased sales by more than three times the retailer's spending on ads.
It was also determined that 84 percent of the sales increase from the ads came from offline sales. The Yahoo! researchers worked with an unnamed national apparel retailer to evaluate the effects of the retailer's advertising.
They collaborated on a large-scale field experiment involving over 3 million Yahoo! users. For two weeks, the users in the experiment's treatment group saw branded apparel ads from the retailer, whereas users in the control group saw ads for Yahoo! Search.
"This apparel retailer approached us with an interesting problem: 'How do I know if my online ads work when 90 percent of my sales are offline?," said Reiley.
"Without the experiment, the retailer could have erroneously concluded that the ads only increased online sales and not offline sales.
Ironically, this could have led to underinvestment in online advertising," Reiley added. The team attacked this problem by matching customer records between the retailer and Yahoo! and combined online and offline sales data with a controlled experiment that allowed them to assess how much the consumers would have purchased in the absence of the ad campaign.
"For managers, this improvement could be the deciding factor in learning whether online advertising has a clear and statistically significant positive impact.
We hope the ideas in our design can help firms invest confidently in ad campaigns when they are likely to be profitable," Johnson explained.