The Department of Economics invites you to a CBE & SOL Seminar with Ilya Morozov, Kellogg School of Management, Northwestern University. The seminar will take place at The Department of Economics.
We study how advertising content influences consumers' decisions. To this end, we create a simulated online bookstore that imitates a real online shopping experience. We then conduct a pre-registered and incentive-compatible experiment in which we randomly expose store visitors to display ads, randomizing both advertising exposures and content. We find that ad content plays a major role in shaping advertising effects. Ads that reveal the book's attributes generate substantial effects on search and choice, over and above the impact of ads that do not reveal these attributes. Ads that call attention to a book's low price reveal that the book is less expensive than consumers thought, universally increasing demand for the advertised book. By contrast, ads that highlight the book's genre induce some consumers to search and buy the book but lead others to reject this option without search. These polarized responses may increase or decrease the total number of searches and purchases of the advertised book depending on the share of consumers who favor the revealed genre. Overall, our findings suggest that advertisers should carefully choose which product attributes to reveal in their ad copies.