The Effects of Online advertisung

     Investigates the effects of online advertising on human behavior: clicks, new-account sign-ups, and retail sales. Five chapters cover natural and field experiments used to measure these effects for both display and search advertising. The first uses a natural experiment on the Yahoo! Front Page, aided by a flexible semi-users model, to identify the causal effects of display ad frequency on internet users' responses as measured at the individual level by clicks and new-account sign-ups.
       Performance is heterogeneous regarding frequency and click ability; some campaigns exhibit significant decreasing returns to scale after one or two impressions while others show constant returns to scale even after fifty impressions. For some campaigns, a simple  regression which ignores selection bias finds increasing returns to scale, but none is found with the model that uses exogenous variation in views.
       Conversely, many campaigns that appear to exhibit diminishing returns when failing to account for selection, in fact, show little to no wear-out. A controlled experiment on  existing customers measures the causal effect of advertising on actual purchases, overcoming the major hurdles regarding attribution typically encountered in advertising effectiveness research by exogenous varying exposure to the ads.
      Each customer was randomly assigned to treatment and control groups for an online advertising campaign for this retailer. Online brand advertising generated a statistically and economically significant effect on in-store sales for this retailer. The design of the experiment permits a demographic breakdown of the advertising's heterogeneous effects. Somewhat surprisingly, the effects are especially large for the elderly. Several possible explanations are proposed for this phenomenon, and directions for new theoretical models of sponsored search are suggested.