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Do Sellers Benefit from Sponsored Product Listings? Evidence from an Online Marketplace

Author

Listed:
  • Mingyu Joo

    (School of Business, University of California, Riverside, California 92521)

  • Jiaqi Shi

    (Paul Merage School of Business, University of California, Irvine, California 92697)

  • Vibhanshu Abhishek

    (Paul Merage School of Business, University of California, Irvine, California 92697)

Abstract

Sponsored product listings on online marketplaces are third-party sellers’ ads blended in organic product listings. This paper investigates a seller’s managerial questions: whether a sponsored listing outperforms an organic listing and how the performance varies by positions. Our large-scale field study on a mobile app with experimental and natural variation finds that consumers prefer organic listings in the top-ranked positions to sponsored listings of the same product/position. Consumers become indifferent between sponsored and organic listings in the lower-ranked positions. A mechanism check suggests that top-ranked organic listings are perceived as more credible than seller-subsidized sponsored listings. Despite consumers’ preference for organic listings, a simulation analysis shows that an advertising seller may benefit financially if a lower-ranked organic listing can be replaced with a top-ranked sponsored listing.

Suggested Citation

  • Mingyu Joo & Jiaqi Shi & Vibhanshu Abhishek, 2024. "Do Sellers Benefit from Sponsored Product Listings? Evidence from an Online Marketplace," Marketing Science, INFORMS, vol. 43(4), pages 817-839, July.
    • Handle: RePEc:inm:ormksc:v:43:y:2024:i:4:p:817-839
    DOI: 10.1287/mksc.2021.0293
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