Do Targeted Discount Offers Serve as Advertising? Evidence from 70 Field Experiments

For your marketing

Possible founder application

Measure discount-induced acquisition and spillovers separately from subsidized purchases. Include margin, timing shifts and post-promotion behavior when judging whether offers function as profitable advertising.

Reported result

What the study found

During the offer period, offers increased average expenditure by $3.03 (37.2%). The effect was larger among customers who had not transacted on the platform in the prior year. Spending also rose by $1.55 in the following week, and the study found cross-category effects on products not covered by an offer.

Research question

What the authors investigated

Do targeted emailed discounts only shift price-sensitive purchases, or can they also advertise products and stimulate additional demand?

Design

The authors analyze evidence from 70 field experiments involving emailed discount offers and measure spending during and after the promotion window.

Sample and setting

Customers of an online platform receiving targeted emailed offers; the accessible abstract excerpt does not state the total customer count.

Scope and transfer

Limitations to keep in view

A specific platform and promotion setting; the outcomes cover a defined promotion window and one week afterward. The effects do not establish that discounts are profitable after subsidy costs or will behave similarly in SaaS.

Research sources

Management Science abstract and bibliographic record; the 70 experiments and reported spending changes are stated in the abstract.

Additional research source ↗