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This study employs a randomized field experiment to causally identify what type of signal is likely to complement another signal in the context of financing technology ventures. The study examines the effect of product certification by expert intermediaries, prominent customers, and social proof (that is, others’ interest in investing in a venture) on interest in investing. These three signals are primarily signals of a venture’s product, market, and investment characteristics, respectively. The study finds that signals of product certification and prominent customers, and product certification and social proof are complements. In particular, investors who were able to view the combined product certification and prominent customer signals have a 72% higher likelihood of indicating an interest in making an equity investment than those who did not receive any of the three signals. Similarly, investors who were able to view the combined product certification and social proof signals have a 65% higher likelihood of indicating an interest in investing. These results suggest that in the context of technology ventures, a signal about product characteristics is the key to unlocking the value of signals of market or investment characteristics. This paper was accepted by Gustavo Manso, finance.

The success of a freemium model depends on the number of customers who purchase the premium version in the presence of the free version. The authors investigate the strategy of extending the premium product line to spur demand for the existing premium version. Extending the results of the standard product line model is insufficient in such cases because of the conceptual nuances in a freemium context. The authors conduct a randomized field experiment with an online content provider that offers book titles in a PDF version for free and sells the paperback version for a premium. The authors show that paperback titles accompanied by an additional premium version, either in e-book or hardcover format, have higher sales than those in the control condition. The positive impact on paperback sales is stronger for titles that are more popular or cheaper, and the effect of introducing the e-book version is higher when the e-book price is closer to the paperback price. By analyzing individual customer choices, the authors identify the existence of the compromise effect and the attraction effect in the extended product line setting, a significant contribution not only in the freemium context but also to the product line literature.

In collaboration with an online seller of home-improvement products, the authors conduct a large-scale randomized field experiment to study the effects of retargeted advertising, a form of internet advertising in which banner ads are displayed to users after they visit the advertiser's website. They find that switching on experimental retargeting causes 14.6% more users to return to the website within four weeks. The impact of retargeting decreases as the time since the consumer first visited the website increases—indeed, 33% of the effect of the first week's advertising occurs on the first day. Furthermore, the authors find evidence of the existence of complementarities in advertising over time: the effect of advertising in week 2 of the campaign is higher when the user was assigned to a nonzero level of advertising in week 1. The authors discuss mechanisms that can explain their findings and demonstrate a novel low-cost method that can be applied generally to conduct valid online advertising experiments.

Patients at risk for hepatocellular carcinoma or liver cancer should undergo semiannual screening tests to facilitate early detection, effective treatment options at lower cost, better recovery prognosis, and higher life expectancy. Health care institutions invest in direct-to-patient outreach marketing to encourage regular screening. They ask the following questions: (1) Does the effectiveness of outreach vary among patients and over time?; (2) What is the return on outreach?; and (3) Can patient-level targeted outreach increase the return? The authors use a multiperiod, randomized field experiment involving 1,800 patients. Overall, relative to the usual-care condition, outreach alone (outreach with patient navigation) increases screening completion rates by 10–20 (13–24) percentage points. Causal forests demonstrate that patient-level treatment effects vary substantially across periods and by patients’ demographics, health status, visit history, health system accessibility, and neighborhood socioeconomic status, thereby facilitating the implementation of the targeted outreach program. A simulation shows that the targeted outreach program improves the return on the randomized outreach program by 74%–96% or $1.6 million to $2 million. Thus, outreach marketing provides a substantial positive payoff to the health care system.

As consumers spend more time on their mobile devices, a focal retailer's natural approach is to target potential customers in close proximity to its own location. Yet focal (own) location targeting may cannibalize profits on inframarginal sales. This study demonstrates the effectiveness of competitive locational targeting, the practice of promoting to consumers near a competitor's location. The analysis is based on a randomized field experiment in which mobile promotions were sent to customers at three similar shopping areas (competitive, focal, and benchmark locations). The results show that competitive locational targeting can take advantage of heightened demand that a focal retailer would not otherwise capture. Competitive locational targeting produced increasing returns to promotional discount depth, whereas targeting the focal location produced decreasing returns to deep discounts, indicating saturation effects and profit cannibalization. These findings are important for marketers, who can use competitive locational targeting to generate incremental sales without cannibalizing profits. Although the experiment focuses on the effects of unilateral promotions, it represents an initial step in understanding the competitive implications of mobile marketing technologies.

I conduct an experiment which examines the impact of group norm promotion and social sanctioning on racist online harassment. Racist online harassment de-mobilizes the minorities it targets, and the open, unopposed expression of racism in a public forum can legitimize racist viewpoints and prime ethnocentrism. I employ an intervention designed to reduce the use of anti-black racist slurs by white men on Twitter. I collect a sample of Twitter users who have harassed other users and use accounts I control (“bots”) to sanction the harassers. By varying the identity of the bots between in-group (white man) and out-group (black man) and by varying the number of Twitter followers each bot has, I find that subjects who were sanctioned by a high-follower white male significantly reduced their use of a racist slur. This paper extends findings from lab experiments to a naturalistic setting using an objective, behavioral outcome measure and a continuous 2-month data collection period. This represents an advance in the study of prejudiced behavior.

We study the value of short-lived and experientially oriented pop-up stores, a popular type of omnichannel retail strategy, on both retailers that participate in pop-up store events and retailing platforms that host these retailers. We conduct a large-scale, randomized field experiment with Alibaba Group involving approximately 800,000 customers. We randomly assign customers to either receive a message about an upcoming weeklong pop-up store event organized by Alibaba’s business-to-consumer platform (Tmall.com) or not receive any message about the event. We find that our message increased foot traffic to the pop-up store and in turn boosted expenditure at participating retailers’ online stores at Tmall after the event ended. Furthermore, we use advanced Wi-Fi technology to track customers’ visits to the pop-up store—a missing component from past research that commonly relies on point-of-sale data. We find that pop-up store visits substantially increased customers’ subsequent expenditure at participating retailers’ Tmall stores. In addition, from a platform perspective we show that pop-up store visits increased customers’ purchases at retailers that sell related products on Tmall but did not participate in the pop-up store event. Additional analyses shed light on possible mechanisms underlying the cross-channel and spillover effects of pop-up stores and demonstrate that these effects were concentrated on prospective consumers. This paper was accepted by Vishal Gaur, operations management.

Mobile technologies enable marketers to target consumers by time and location. This study builds on a large-scale randomized experiment of short message service (SMS) texts sent to 12,265 mobile users. We draw on contextual marketing theory to hypothesize how different combinations of mobile targeting determine consumer responses to mobile promotions. We identify that temporal targeting and geographical targeting individually increase sales purchases. Surprisingly, the sales effects of employing these two strategies simultaneously are not straightforward. When targeting proximal mobile users, our findings reveal a negative sales-lead time relationship; sending same-day mobile promotions yields an increase in the odds of consumer purchases compared with sending them two days prior to the promoted event. However, when targeting nonproximal mobile users, there is an inverted-U, curvilinear relationship. Sending one-day prior SMSs yields an increase in the odds of consumer purchases by 9.5 times compared with same-day SMSs and an increase in the odds of consumer purchases by 71% compared with two-day prior SMSs. These results are robust to unobserved heterogeneity, alternative estimation models, bootstrapped resamples, randomization checks, consumer mobile usage behavior, and segmentation of consumer scenarios. In addition, we conducted follow-up surveys to delve into the psychological mechanisms explaining the findings in our field experiment. In line with consumer construal arguments, consumers who received SMSs close (far) in time and location formed a more (less) concrete mental construal, which in turn, increased their involvement and purchase intent. These findings suggest that understanding the when, where, and how of mobile targeting strategies is crucial. Marketers can save money by carefully designing their mobile targeting campaigns. This paper was accepted by Sandra Slaughter, information systems.

We study whether and how a firm can enhance social contagion simply by varying the message shared by customers with their friends. We focus on two key components of information contained in the message—information about the sender’s purchase status prior to referral and information about the existence of referral rewards—and their impacts on the recipient’s purchase decision and further referral behavior. In collaboration with an online daily-deal platform, we design and conduct a large-scale randomized field experiment involving more than 75,000 customers to identify the causal effect of different message designs on creating social contagion. We find that small variations in message content can have a significant impact on both recipients’ purchase and referral behaviors. Specifically, we find that (1) adding only information about the sender’s purchase status increases the likelihood of the recipient’s purchase but has no impact on follow-up referrals, (2) adding only information about referral reward increases the recipient’s follow-up referrals but has no impact on purchase likelihood, and (3) adding information about both the sender’s purchase and the referral rewards increases neither the likelihood of purchase nor follow-up referrals. We build a model to analyze the tradeoff between more adoption and more diffusion and implement the best-performing message design in a production system with millions of shared messages per year (with a projected increase in net profits of more than US$1 million per year). We further exploit the rich heterogeneity in deal, recipient, sender, and social-tie characteristics and examine the mechanisms underlying the effect of message design. The results suggest that both social learning and social utility are at work, and the attenuation in the recipient’s purchase is mainly driven by a decrease in social learning resulting from credibility concerns. The findings of the study provide actionable guidelines to firms for optimal design of messages at the aggregate and more granular levels. This paper was accepted by Anandhi Bharadwaj, information systems.

The underlying premise of referral marketing is to target existing ostensibly delighted customers to spread awareness and influence adoption of a focal product among their friends who are also likely to benefit from adopting the product. In other words, referral programs are designed to accelerate organic word-of-mouth (WOM) exposure using financial incentives. This poses a challenge, in that it mixes an intrinsically motivated process (stemming from the desire to share a customer’s delight with a product or a service) with an extrinsic trigger in the form of a financial incentive. In this paper, we demonstrate how firms can benefit from framing calls-to-action for referral programs in such a way as to move closer to the original intent of organic, intrinsically motivated WOM marketing, and yet at the same time reap the benefits of using a financial incentive to increase referral rates. In particular, via two large-scale randomized field experiment involving 100,000 customers each, we show the efficacy of a prosocial call-to-action over some of the more commonly used calls-to-action observed in practice. Additional mechanism-level analysis confirms the importance of an altruistic element in generating a higher quality of advocacy and reducing referral frictions. The underlying premise of referral marketing is to target existing, ostensibly delighted customers to spread awareness and influence adoption of a focal product among their friends who are also likely to benefit from adopting the product. In other words, referral programs are designed to accelerate organic word-of-mouth (WOM) exposure using financial incentives. This poses a challenge, in that it mixes an intrinsically motivated process (stemming from the desire to share a customer’s delight with a product or a service) with an extrinsic trigger in the form of a financial incentive. Prior research has shown that mixing intrinsic and extrinsic motivations can lead to suboptimal outcomes, which, in turn, presents a conceptual dilemma in the design of referral programs. In this paper, we demonstrate how firms can benefit from framing calls-to-action for referral programs in such a way as to move closer to the original intent of organic, intrinsically motivated WOM marketing and yet at the same time reap the benefits of using a financial incentive to increase referral rates. In particular, given a fixed incentive scheme, ceteris paribus , we show the efficacy of a prosocial call-to-action over some of the more commonly used calls-to-action observed in practice. We posit, and causally demonstrate via a large-scale randomized field experiment involving 100,000 customers, that an intrinsically prosocial element in framing the call-to-action to initiate the referral process is a necessary condition for success. When contrasted with egoistic and equitable framing of calls-to-action, the prosocial framing yields a significantly higher propensity to initiate a referral, as well as a significantly higher number of successful referrals. Additional mechanism-level analysis that interacts the treatments with customer characteristics such as repeat purchase, net promoter score, and time since last purchase, an additional field experiment with more attractive referral reward and an Amazon Mechanical Turk experiment confirm the importance of an altruistic element in generating a higher quality of advocacy and reducing referral frictions. Subjects in the prosocial group report lower levels of guilt associated with sending a referral and are more able to identify family and friends’ benefit as a motive for sharing referrals and therefore are more selective in sharing the referral message.