The Effect of House Ads on Multichannel Sales

Abstract

Similar to in-store displays in brick-and-mortar stores, house ads promote a set of specific products for customers who have reached the website. In contrast to general display advertising whose primary goal is to bring traffic to the website, these self-promotional ads are aimed to highlight specific products and enhance conversion. We analyzed more than 300 house ad campaigns to study the effect of this type of promotional display on customer behavior across channels. We included not only direct effects on SKU sales in all channels, but also the promotional effect at the category level. Our model uses aggregated data that are easy to collect for most multichannel retailers, facilitating its implementation in similar settings. We found that (1) despite observing positive cross-channel effects, the primary effect occurs on online sales, (2) the effects are usually short-lived, and (3) there are no spillover effects on the corresponding category. We characterize the effects that house ads have on the whole system in terms of design variables such as type of display, and scope and duration of the campaign. Our evidence suggests that the effectiveness depends on the product category and that regular banners are the most effective in generating traffic. Interestingly, the depth of the promotion plays no role on the effect of the house ads' effectiveness. Based on the results, we provide suggestions for improving routine promotional planning. (C) 2018 Direct Marketing Educational Foundation, Inc. dba Marketing EDGE. All rights reserved.