The End of the Print Store Flyer? Going Digital in an RCT

The End of the Print Store Flyer? Going Digital in an RCT

Abstract: Skyrocketing paper and printing costs are leading retailers to reduce reliance on weekly print flyers by switching to digital ads to communicate price promotions. Some retailers, however, revoke this strategic decision later on, raising questions about profitability. We conduct a randomized controlled trial with a large German retailer to study revenue and store visit effects of replacing the store flyer with digital ads. Holding budget, promoted products, and targeted postal codes constant, we find daily revenue decreases by-5.4% over the treatment period. We show treatment needs time to build up to-8%, is largely driven by indirect effects on unpromoted products, and affects the customer-product fit. Store visits, as measured by mobile phone tracking, decline by 4.6%. The effect is driven by visits from the stores' postal code, whereas the number of visits from adjacent postal codes are unaffected. Our results imply a company-wide switch to digital ads is unprofitable. We highlight the possibility of a gradual switch in less affected catchment areas, such that retailers may improve digital ad effectiveness through improvements in targeting and products to promote. We also discuss advantages of measuring store visits with mobile phone tracking versus loyalty programs.

More information on Dr. Simon Schulten can be found here.

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