nep-mkt New Economics Papers
on Marketing
Issue of 2023‒03‒06
one paper chosen by
Marco Novarese
Università del Piemonte Orientale

  1. Which Firms Gain from Digital Advertising? Evidence from a Field Experiment By Weijia Dai; Hyunjin Kim; Michael Luca

  1. By: Weijia Dai; Hyunjin Kim; 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.
    JEL: D8 M3
    Date: 2023–02

This nep-mkt issue is ©2023 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.