The Effects of Price Rank on Clicks and Conversions in Product List Advertising on Online Retail Platforms

Abstract

In light of the critical role of price information in consumers’ decision making, this study investigates the effect of price rank on consumers’ responses to product list advertising (PLA). The research documents that the price rank is more influential than actual price for PLA. In addition, the research highlights a tradeoff in price-rank decisions: A price rank that drives more clicks does not necessarily lead to more conversions; to drive traffic, managers should strive for an extreme (i.e., either high or low) to elicit more clicks, then follow up with online engagement tools (e.g., cross-selling and product recommendations). To maximize direct revenue, managers instead should strive for moderate ranks to satisfy consumers’ desire for a compromise between price and quality. However, consumers without uncertainty tend to rely less on price rank, so the effects diminish among specific keywords and increase among popular keywords. In order to achieve the desired price ranks, firms participating in PLA might monitor and adjust their advertising offers. There are commonly two specific avenues: Change the product price if the required change is within a certain range or change the advertised product if the required price change is beyond a certain range.

Tales of Two Channels: Digital Advertising Performance Between AI Recommendation and User Subscription Channels

“…Our research suggests that this decision depends on the objective of the advertisers (e.g., whether to prioritize CTR or CR). Prior advertising literature suggests that CTRs and CRs indicate distinct strategic objectives: to drive traffic or to maximize revenue (Ghose and Yang 2009; Zhuang et al 2021), as they correspond to different stages of the online purchase funnel. CTR represents the retention rate of customers who pass the upper funnel (i.e., from impression to interests), and CR represents the retention rate of the lower funnel (i.e., from click to conversion; Wang, Xiong, and Yang 2019).…”

Impact of certification information on consumer behaviour in hybrid retail platforms: empirical evidence from JD.com

“…Platform reputation can persuade consumers of the quality and credibility of certified products, suggesting that certification information may alleviate consumer uncertainty ( € Ozpolat et al, 2013). Consumer purchase intentions can be observed through post-browsing conversion behaviours (Kwark et al, 2021), indicating a strong willingness to purchase (Zhuang et al, 2021). Therefore, we hypothesize that consumers are more likely to purchase products with single and dual certification information compared to those without certification information.…”

“…Cui et al (2020) find that removing high-quality delivery options from Alibaba platform reduces sales. Zhuang et al (2021) focus on how price rankings affect consumers' browsing and purchasing behaviour and find that consumers are more likely to click on very expensive options in the early stages and more likely to click on moderately priced options in the later stages. Lee and Hosanagar (2021) study the role of recommendation systems in the purchase stage.…”

“…The certification information on the product detail pages serves as a reference point, offering additional information (Xue et al, 2023). During the information search phase, consumers can compare products based on this reference point (Zhuang et al, 2021). For instance, products with certification information may represent high quality and therefore increase the number of clicks from consumers.…”

“…Unlike physical stores, consumers cannot physically interact with products during online shopping and rely on reviewing extensive digital information to reduce uncertainty (Amsl et al ., 2023a, b). However, consumers do not scrutinize each product meticulously during the information search phase (Zhuang et al. , 2021).…”