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Published on May 23, 2014
Navdeep Sahni, Assistant Professor of Marketing, Stanford Graduate School of Business
Using a large-scale experiment on a search engine, this paper shows that advertising can cause significant benefit for the advertiser's competitors. Specifically, strong competitors in the advertiser's category are likely to gain the most from the spillovers. The extent of spillovers also depends on the intensity of the advertising effort. The spillovers are largest when the intensity of advertising is low. As the intensity increases, the spillovers disappear and the advertiser gains more.