Selling Numbers
Choosing to Discover the Unknown: The Effects of Choice on User Attention to Online Video Advertising
Cheng Luo et al.
Management Science, forthcoming
Abstract:
Online video platforms face the challenge of balancing the needs of their users with those of their advertisers. Although users typically prefer to have less intrusive ads, advertisers aim to effectively catch user attention. This paper investigates how the provision of ad choice affects the effectiveness of video advertising. We argue that allowing users to choose an ad to view may trigger a “conjecture-formation-and-confirmation” process that motivates users to pay more attention to the selected ad. Two online experiments and four laboratory experiments are conducted to test the theorized underlying mechanism of the ad choice effect. Study 1 finds when users are unfamiliar (versus familiar) with the content of ad options (i.e., they need to make conjectures about ad content), ad choice is more likely to increase user attention to the chosen ad. Study 2 and Study 3 show that the impact of ad choice on user attention is more likely to be positive when users are enabled to make conjectures about ad content, such as when choice options provide more relevant information about ad content. Study 4a and Study 4b provide more direct support for the underlying mechanism by showing that the ad choice effect is attenuated when users cannot form conjectures about ad content at the choice stage. Study 5 further demonstrates that the positive effect of ad choice is robust across different ad settings. Taken together, these studies show ad choice is more likely to boost the effectiveness of video advertising when the “conjecture-formation-and-confirmation” process is triggered.
Curvy Digital Marketing Designs: Virtual Elements with Rounded Shapes Enhance Online Click-Through Rates
Dipayan Biswas, Annika Abell & Roger Chacko
Journal of Consumer Research, forthcoming
Abstract:
With the growing prevalence of digital platforms for online shopping, advertising, and marketing activities in general, it is imperative to better understand how designs of virtual elements on digital interfaces influence click behavior. Websites and online advertisements contain virtual elements such as call-to-action buttons, images, and logos. This research examines how curved versus sharp angled shapes of virtual elements in online ads and on websites influence click-through rate (CTR) outcomes. The findings of a series of studies, including three field experiments and an eye tracking study, show that website and online ad elements in curved (vs. sharp angled) shapes generate higher CTR. Process evidence suggests that curved (vs. sharp angled) digital elements enhance visual appeal, leading to approach motivation and greater CTR. In terms of practical implications, the findings of this research have strong relevance for designing online ads and website interfaces and for digital marketing strategies. Specifically, digital marketers desiring higher click rates would benefit from having more curved (than sharp angled) virtual elements on websites and in online ads.
Co-Opetition and the Firm’s Information Environment
Brian Bushee, Thomas Keusch & Jessica Kim-Gina
Management Science, forthcoming
Abstract:
Some firms in the technology sector choose to cooperate with competitors (“co-opetition”) in standard setting organizations (SSOs). These SSOs create technology standards that facilitate rapid market penetration of new technologies such as Wi-Fi, Bluetooth, and 4G. Active participation in the standard setting process requires the exchange of proprietary information with competitors. Although the goal of such information sharing is to further a technology or a product market, firms potentially receive an additional benefit from access to competitor and industry information. We examine whether contributing to SSO committees enhances a firm’s information set and allows managers to better predict future sales. We find that the centrality of a firm’s location within the network of SSO collaborators is positively related to the accuracy of the firm’s sales forecasts. This relation is stronger when firms exchange more information with direct competitors and with larger firms, when forecasting is more difficult ex ante, and when firms forecast over longer horizons. Our findings show that collaborating with competitors in the product market provides an important additional benefit of improving the manager’s information set.
Targeting Nearby Influencers: the Acceleration of Natural Triadic Closure by Leveraging Interconnectors
Jacob Goldenberg et al.
Journal of Marketing, forthcoming
Abstract:
On user-generated content platforms, individuals and firms alike seek to build and expand their follower base to eventually increase the reach of the content they upload. The bulk of the seeding literature in marketing suggests targeting users with a large follower base -- the high-status influencers. In contrast, some recent studies find targeting lower-status influencers to be a more effective seeding policy. In this multi-method paper, we shift the focus from the follower base of the seeding target to the focal content creator. We propose accelerating natural triadic closure by leveraging the first-degree followers as interconnectors to target the second-degree followers -- i.e., the nearby (low-status) influencers (who are interconnected with the focal content creator). Empirical studies document that this seeding target is much more effective for building and expanding the follower base, compared to targeting influencers who are not interconnected with the focal content creator -- i.e., the remote (both high- and low-status) influencers by 2,300% and 46%, respectively. These studies on the acceleration of natural triadic closure are augmented by a pre-registered field experiment to obtain convergent validity of the findings.
How APIs Create Growth by Inverting the Firm
Seth Benzell, Jonathan Hersh & Marshall Van Alstyne
Management Science, forthcoming
Abstract:
Traditional asset management strategy has emphasized building barriers to entry or closely guarding unique assets to maintain a firm’s comparative advantage. A new “inverted firm” paradigm, however, has emerged. Under this strategy, firms share data seeking to become platforms by opening digital services to third parties and capturing part of their external surplus. This contrasts with a “pipeline” strategy where the firm itself creates value. This paper quantitatively estimates the effect of adopting an inverted firm strategy through the lens of application programming interfaces (APIs), a key enabling technology. Using both public data and those of a private API development firm, we document rapid growth of the API network and connecting apps since 2005. We then perform difference-in-difference and synthetic control analyses and find that public firms adopting public APIs grew an additional 38.7% over 16 years relative to similar nonadopters. We find no significant effect from the use of APIs purely for internal productivity: the pipeline strategy. Within the subset of firms that adopt public APIs, those that attract more third-party complementors and those that become more central to the network see faster growth. Using variation in network centrality caused by API degradation, an instrumental variables analysis confirms a causal role for APIs in firm market value. Finally, we document an important downside of public APIs: increased risk of data breach. Overall, these facts lead us to conclude that APIs have a large and positive impact on economic growth and do so primarily by enabling an inverted firm strategy.