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Sponsored brands video rings up clicks and sales in the short and long run

By Koen Pauwels, Michael Peran, Zee Shah, German Schnaidt, Dauwe Vercamer
2023
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Video ads are increasingly popular in digital marketing, but advertisers are unsure about how much 8 they improve performance over static ads and which consumer response, such as unmuting or 9 watching through the end, matters most. Using data from the online retail site Amazon.com, we 10 apply causal inference methods to both a monthlong and yearlong time horizon and find support 11 for our hypotheses. First, brands that invested in Sponsored Brands video (SBv) ads in addition to 12 sponsored ads static ads had a 25% higher click-through rate (CTR) and 10% higher year-over13 year sales growth. Second, individual consumer CTR depends on ad format (video vs. static), 14 unmuting, and time watched. For audiences in 15 countries across North America, Europe, the 15 Middle East, Asia, and Australia, we find a 17.7 times higher CTR on SBv versus static images, 16 especially for unmuted versus muted SBv. Furthermore, the muted consumer CTR increases with 17 the viewed video length, with a substantial increase at a viewed video length longer than 5 seconds. 18 Surprisingly, the unmuted CTR remains over 3 times that of muted CTR at all viewed video 19 lengths, showing only a CTR uptick when the video was completed. Thus, if the ad is not watched 20 with sound for its full length (the best-case scenario), advertisers should strive for video ads that 21 (1) are unmuted, even for a short time, or (2) play at least 5 seconds on mute.
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