Online Ads and Offline Sales: Measuring the Effects of Online Advertising via a Controlled Experiment on Yahoo!
David Reiley will present the results of a randomized experiment with 1.6 million customers measuring positive causal effects of online advertising for a major retailer. The advertising profitably increases purchases by 5%. 93% of the increase occurs in brick-and-mortar stores; 78% of the increase derives from consumers who never click the ads. This large sample reaches the statistical frontier for measuring economically relevant effects. Econometric efficiency was improved by supplementing experimental variation with non-experimental variation caused by consumer browsing behavior. This experiment provides a specification check for observational difference-in-differences and cross-sectional estimators; the latter exhibits a large negative bias three times the estimated experimental effect.
David Reiley is a research scientist at Google. He is a pioneer in the use of field experiments in economics. Economics has historically been an observational rather than an experimental science, but David has been a leader in the movement to introduce experiments wherever possible. He designed field experiments to test theories of auction bidding and charitable fundraising before he began to focus on experimental measurement of the effects advertising on consumer behavior.
Before moving to Google in 2012, David spent five years at Yahoo! Research. He was previously the Arizona Public Service Professor of Economics at the University of Arizona. He has also taught at Vanderbilt University and at the Kellogg School of Management at Northwestern University.
In addition to his leadership in the area of field experiments, David also achieved recognition as the first academic expert on the economics of online auctions. He has also pursued microeconomic research on the effects of bus-driver incentives in Santiago, on the strategic play of professional soccer and poker players, and on the economics of email spam.
David is the co-editor of Field Experiments at Economic Inquiry, and has served as vice president of information for the Economic Science Association. He is a coauthor of the best-selling game theory textbook Games of Strategy, with Avinash Dixit and Susan Skeath. David holds a bachelor’s degree in astrophysical sciences from Princeton University and a Ph.D. in economics from MIT.
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