Seminar Title: Does TV Advertising Increase Online Sales: The Role of Inter-temporal Substitution
Abstract: Firms increasingly aim to use offline advertising to drive online sessions and sales. However, while a recent literature has demonstrated a surge in online activity in the minutes following TV advertising, there is limited evidence on the extent to which offline advertising indeed leads to a significant uptake in website sessions and online sales when considering a longer time window. We investigate the effect of TV advertising on online travel purchases accounting both for the instant effect as well as for an aggregate effect across a time window covering multiple weeks. Using evidence from a field experiment conducted by a world's leading online travel company, we confirm similar findings as in previous literature that TV advertising has a positive instant effect on both online sessions and online sales. However, this instant effect does not translate into an increase in either sessions or sales over a period of multiple weeks, implying that the firm does not see an increase in either profit or revenue as a result of the TV advertising campaign. We document consumers' inter-temporal substitution as a mechanism behind this aggregate null effect. The findings indicate that marketing managers should be careful to consider a longer time window when evaluating the effectiveness of TV campaigns on online purchases rather than focusing on instantaneous spikes.
Lunch for registered attendees only from 12.00 - WBS staff lounge
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