McShane et al. (2024)<\/a>, and many articles from other fields such as strategy, biology, and medicine.<\/p>\n\n\n\nIn addition to the guidelines currently available on the journal\u2019s <a href=https://www.ama.org/"https:////journals.sagepub.com//author-instructions//jmx/">submission guidelines page<\/a>\u00a0and on the <a href=https://www.ama.org/"https:////www.ama.org//journal-of-marketing-policy-for-research-transparency///">data transparency policy page<\/a>, JM<\/em> will implement the following new reporting guidelines:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>JM<\/em> submissions should report the actual p<\/em>-values (three digits) rather than the threshold p<\/em>-value in tables, running text, and in hypothesis testing.<\/li>\n\n\n\n<li>Submissions should refrain from adding asterisks that signify thresholds (e.g., *p<\/em> < .05, **p<\/em> < .01) to tables. Rather than using wording such as \u201cthe effect of X on Y is significant at .05,\u201d report the effect with the p<\/em>-value in parentheses. For example, \u201cthe effect of X on Y is .20 (p<\/em> = .047).\u201d Following a convention in experimental research, the p<\/em>-values would be reported as (for example), \u201cF(1, 200) = 5.27, p<\/em> = .023.\u201d<\/li>\n\n\n\n<li>Parameter estimates in tables should include the standard errors.<\/li>\n\n\n\n<li>Effect sizes need to be reported. This can be achieved by adding corresponding information to results tables, figures, or in text. Please note the following: a. Effect sizes are a means to demonstrate the substantive significance and to complement the statistical evaluation of empirical findings. They help to assess whether the findings are of an order of magnitude to relevant stakeholders (e.g., managers, consumers, policy makers, other societal stakeholders). b. Evaluating the substantive significance should take into account the strength of association between focal measures and\/or the impact size of one or more focal measures. JM<\/em> does not define what the appropriate effect size measure is; it is the authors\u2019 responsibility to provide evidence for the substantive significance of their findings based on their knowledge of the topic. Researchers from different domains have used different measures. For example, in experimental research, Cohen\u2019s d, r, eta-square, and the odds ratio are among the most commonly used effect size metrics. In econometric research, elasticity, standardized regression coefficient, and unstandardized regression coefficient in combination with a predetermined change in IV (one unit or one SD) are among the most commonly reported effect size metrics. The latter two are also commonly used in survey research.<\/li>\n<\/ol>\n\n\n\nThese guidelines are intended to help authors provide a more complete picture of their findings and demonstrate the potential impact of the research. Implementing Guidelines 1 and 2 reduces the incentives for p<\/em>-hacking, a counterproductive behavior that has been documented across many fields of science (e.g., economics, biology, medicine). Reporting actual p<\/em>-values also facilitates meta-analyses and is more precise. Guideline 3 gives readers and reviewers a better idea about the range of estimates they in their research might reasonably expect. Finally, Guideline 4 aligns with JM<\/em>\u2019s mission to develop and disseminate substantive knowledge to relevant stakeholders, which is hard to show on statistical grounds only. All these guidelines are designed to strengthen JM<\/em>\u2019s mission of reporting robust, relevant knowledge. It is this mission that makes JM<\/em> unique and impactful.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-reference\">Reference<\/h3>\n\n\n\nMcShane, Blakeley B., Eric T. Bradlow, John G. Lynch Jr., and Robert J. Meyer (2024), \u201c\u2018Statistical Significance\u2019 and Statistical Reporting: Moving Beyond Binary,\" Journal of Marketing<\/em>, 88 (3), 1\u201319.<\/p>\n","post_title":"Change in Journal of Marketing's Policy for Reporting Results","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"change-in-journal-of-marketings-policy-for-reporting-results","to_ping":"","pinged":"","post_modified":"2025-02-20 09:43:55","post_modified_gmt":"2025-02-20 15:43:55","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.ama.org\/?p=184736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":184574,"post_author":"204295","post_date":"2025-02-11 05:00:00","post_date_gmt":"2025-02-11 11:00:00","post_content":"\nDoes increased exposure to deteriorating urban air quality affect people's daily spending and choices? Despite extensive discussions on worsening air quality, little is known about the effects of air pollution on consumer behavior and economic activities.<\/p>\n\n\n\nIn a <a href=https://www.ama.org/"https:////journals.sagepub.com//doi//10.1177//00222429241282998/" target=\"_blank\" rel=\"noreferrer noopener\">new Journal of Marketing<\/em> study<\/a>, we find that a higher level of air pollution is associated with greater spending. A quantitative analysis of credit card usage data and experimental evidence further reveals that this correlation is pronounced in hedonic (pleasure-seeking) categories, as products and services in these categories tend to lift the mood of consumers.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-benefits-for-retailers\">Benefits for Retailers<\/h2>\n\n\n\nThere are several notable ways retailers can benefit from an increase in consumer spending for hedonic categories. We define managerial implications for this group of stakeholders into two broad categories:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Promotion and advertising, and<\/li>\n\n\n\n<li>Corporate social responsibility and brand image building.<\/li>\n<\/ol>\n\n\n\nAn increase in demand linked to air quality fluctuations presents an opportunity for retailers to develop tailored marketing strategies. Marketers can consider the following examples:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>As soon as the rise in air pollution is noted from the Air Quality Index (AQI) tracking, retailers can leverage displays or signage catering to hedonic consumption and comfort. In-store events, such as a hobby workshop or a wellness product demonstration, can be planned in advance and ready to deploy at the opportune time.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Retailers can adjust store ambiance (e.g., music and in-store decorations) to serve current customer preferences more proactively.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Retailers can prepare point-of-sale promotions during periods of high air pollution. These may include instant markdowns, special offers on mood-lifting items, or bundles that include hedonic items of increased demand.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Retailers may also want to provide sales promotions to counteract an anticipated shrinkage in spending the day following higher air pollution (to correct for overspending) or from big spenders (who are less likely to spend after exposure to pollution).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-ideas-for-chief-marketing-officers\">Ideas for Chief Marketing Officers<\/h2>\n\n\n\nGiven the ambient nature of air quality, marketing strategies leveraging our results should be capable of quick and effective deployment over a short planning horizon. Chief marketing officers can consider implementing the following ideas:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Employ digital marketing tactics such as online ads, social media, or customized content. These may include: \n<ul class=\"wp-block-list\">\n<li>i) localized display or search ads for products offering enjoyment and comfort, such as gourmet snacks, entertainment gadgets, wellness products, or feel-good promotions on social media, and<\/li>\n\n\n\n<li>ii) customized content, such as timely emails advertising leisure activities.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Improve corporate social responsibility and brand image. For example, a company may want to launch a campaign that emphasizes the importance of self-care to address the effect of air pollution on individual well-being. They may partner with healthcare and wellness experts to generate content and resources that help consumers navigate stress and health concerns related to air quality. This campaign can tie into the idea that indulging in hedonic products responsibly is part of self-care during significant air quality drops.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Develop a line of hedonic goods and services that are environmentally sustainable, including organic luxury comfort foods or ecofriendly leisure activities. This initiative aligns with the increased demand for such items during periods of high air pollution and reinforces the company\u2019s commitment to sustainability.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-implications-for-policymakers\">Implications for Policymakers<\/h2>\n\n\n\nThis research is also valuable to policymakers for designing environmental and socioeconomic regulations.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>First, our main findings of increased spending due to deteriorating air quality raise public awareness about a major environmental crisis and its consequences for daily life, making the issue more relevant and urgent. Accordingly, policymaking institutions can develop campaigns that associate air quality with everyday consumer choices and illuminate how environmental health contributes to individual well-being and economic stability.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Second, increased spending might lead to social costs for the general public, such as overconsumption of pleasure-seeking categories. Insights from this research should help consumers be cautious of their continual and habitual consumption of hedonic goods and services during periods of higher air pollution, while policymakers can promote healthier and more environmentally conscious alternatives.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Third, our study has implications for household economics in that pollution-induced incidental spending, particularly overspending, may result in the accumulation of revolving debt.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Finally, our study suggests an opportunity for industry collaboration involving retailers and manufacturers. Joint campaigns could support the development of sustainable practices, providing incentives for consumers to engage in more sustainable consumption (e.g., emphasizing the benefits of sustainable products) and ecofriendly practices (e.g., highlighting the benefits of eco-friendly transportation), hence promoting responsible consumerism.<\/li>\n<\/ul>\n\n\n\nOverall, we advocate for the execution of marketing strategies with a strong focus on sustainability, aiming to balance business profits with societal values in the face of escalating environmental challenges and practice more responsible marketing for a better world.<\/p>\n\n\n\n\n\nSource:<\/strong> Sanghwa Kim and Michael Trusov, \u201c<a href=https://www.ama.org/"https:////journals.sagepub.com//doi//10.1177//00222429241282998/" target=\"_blank\" rel=\"noreferrer noopener\">The Impact of Air Pollution on Consum<\/a><a href=https://www.ama.org/"https:////doi.org//10.1177//00222429241282998/" target=\"_blank\" rel=\"noreferrer noopener\">er Spending<\/a>,\" <a href=https://www.ama.org/"https:////www.ama.org//journal-of-marketing///" target=\"_blank\" rel=\"noreferrer noopener\">Journal of Marketing<\/a><\/em>.<\/p>\n\n\n\nGo to the <a href=https://www.ama.org/"https:////www.ama.org//journal-of-marketing///" target=\"_blank\" rel=\"noreferrer noopener\">Journal of Marketing<\/a><\/em><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n","post_title":"How Does Air Pollution Affect Consumer Spending?","post_excerpt":"How does air pollution affect consumer behavior? This Journal of Marketing study finds that higher levels of air pollution actually drive consumer spending, especially for pleasure-seeking products.","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"how-does-air-pollution-affect-consumer-spending","to_ping":"","pinged":"","post_modified":"2025-02-11 14:09:17","post_modified_gmt":"2025-02-11 20:09:17","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.ama.org\/?p=184574","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":183062,"post_author":"203881","post_date":"2025-02-05 13:53:37","post_date_gmt":"2025-02-05 19:53:37","post_content":"\n\n\nThe <a href=https://www.ama.org/"https:////gdpr-info.eu///" target=\"_blank\" rel=\"noreferrer noopener\">General Data Protection Regulation (GDPR)<\/a> introduced by the European Union in 2018 marked a pivotal moment in privacy regulation, especially for online advertising practices. A <a href=https://www.ama.org/"https:////doi.org//10.1177//00222437231171848/" target=\"_blank\" rel=\"noreferrer noopener\">2024 Journal of Marketing Research<\/em> study<\/a> by Pengyuan Wang, Li Jiang, and Jian Yang investigates the early effects of GDPR compliance on display advertising, focusing on a large United States\u2013based publisher with global traffic using a pay-per-click (PPC) model. By analyzing a proprietary dataset containing over 3.7 billion ad impressions across 6,000 ad creatives and multiple industries, the study provides insights into GDPR's implications for ad performance, revenue, and the potential of contextual targeting as a mitigating strategy.<\/p>\n\n\n\nGDPR requires explicit user consent for personal data usage, fundamentally altering the landscape of behavioral targeting. Pre-implementation forecasts anticipated significant revenue declines, with some predicting annual ad revenue losses of up to 17%.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-gdpr-reduced-ad-performance\">GDPR Reduced Ad Performance <\/h2>\n\n\n\nWang et al. applied a difference-in-differences (DID) methodology to assess GDPR's impact, comparing data from EU users (treatment group) with non-EU users (control group) during five-week periods before and after April 18, 2018, when GDPR compliance was adopted. Key metrics analyzed as dependent variables included click-through rates (CTR), conversion rates, bid prices, and revenue per click.<\/p>\n\n\n\nThe results revealed moderate but significant declines in ad performance and revenue following GDPR compliance. Revenue per click dropped by 5.7%, primarily due to reduced bid prices and fewer active advertisers. The CTR and conversion rates decreased by 2.1% and 5.4%, respectively, signalling diminished user engagement and conversion efficiency. These findings highlight the challenges posed by restricted access to personal data in ad targeting.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-content-and-industry-factors\">Content and Industry Factors<\/h2>\n\n\n\nThe study identifies content-based targeting as a mitigating factor. Ads contextually aligned with webpage themes, such as sports ads on sports-related pages, were less impacted by the GDPR. Contextual targeting offset approximately 44% of the conversion rate decline and 42% of the revenue-per-click loss caused by the absence of personal data. This underscores the strategic value of content-based targeting as a privacy-compliant alternative, offering a degree of resilience for publishers navigating GDPR\u2019s constraints.<\/p>\n\n\n\nThe study also highlights varying impacts across industries. Sectors such as travel and financial services experienced greater performance decline compared to retail and consumer packaged goods (CPG). This disparity reflects differences in reliance on granular audience segmentation, with industries requiring precise targeting (such as travel and finance) being more adversely affected by GDPR's restrictions.<\/p>\n\n\n\nDespite these declines, the advertiser return on investment (ROI) under the PPC model remained stable. This stability suggests that publishers rather than advertisers endured most of GDPR's economic effects. Reduced bid prices primarily impacted publisher revenues, while advertisers continued to pay proportional costs per click.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\">\nReduced bid prices primarily impacted publisher revenues, while advertisers continued to pay proportional costs per click.<\/p>\n<\/blockquote>\n\n\n\nThrough robust analysis and a large real-life dataset, Wang et al. contribute valuable insights at the crossroads of privacy regulations, targeting strategies, and economic outcomes in display advertising. Their findings quantify GDPR\u2019s initial impact and highlight the resilience and adaptability of advertising practices in response to stringent privacy norms. As policymakers and industry professionals navigate the implications of GDPR and similar regulations, this study offers a roadmap for managing challenges and leveraging opportunities in the evolving digital advertising landscape. <\/p>\n\n\n\nFor more insights, check out this interview with lead author Pengyuan Wang:<\/strong><\/p>\n\n\n\nQ: Your paper highlights how a limitation in access to personal data only caused a limited negative impact on ad performance, bid prices, and ad revenue. Do you think personal data in online advertising contexts is overrated by the industry?<\/em><\/strong><\/p>\n\n\n\nA:<\/strong> I don\u2019t think that personal data is overrated by the industry. The entire internet ecosystem and the free content model we all benefit from are, to some extent, built based on online advertising. The efficiency and revenue growth of online advertising have been significantly enhanced by the use of personal data. Personal data acted as a catalyst, not only for online advertising but also for the development of the IT industry.<\/p>\n\n\n\nWe have been using personal data for years, and now we are moving toward a more privacy-conscious era to\u00a0ensure that our personal data is used responsibly and aligns with each user\u2019s preference. This is good and necessary, but it does not eliminate the critical role of personal data in online advertising.<\/p>\n\n\n\nQ: The results of the effect of personal data found in the literature vary significantly in magnitude. Do you find this surprising and why do you think that is?<\/em><\/strong><\/p>\n\n\n\nA:<\/strong> It is not surprising to me. Companies use personal data in different ways. The impact of personal data is highly context-dependent and is affected by factors such as the industry, nature of the advertising campaigns, and the sophistication of the algorithms used to analyze and apply the data.<\/p>\n\n\n\nQ: Your work distinguishes itself from the previous research by using a natural experiment instead of self-reported purchase intentions. Why in your opinion is there such a discrepancy between the self-reported data and actual measures?<\/em><\/strong><\/p>\n\n\n\nA:<\/strong> Both self-reported data and actual measures provide valuable information, and I don\u2019t think one is inherently superior to the other. As for the discrepancy between studies based on self-reported data and actual measures, again, all studies have different contexts, which can significantly affect the outcomes. In addition, there is a fundamental distinction between what people say and do. Privacy, by itself, is important. However, when people need to choose between free content and privacy, there is a trade-off to make. Thus, personally I think self-reported data might tend to overestimate the importance of privacy protection.<\/p>\n\n\n\nQ: The study spans five weeks before and after GDPR compliance. Are there indications of how GDPR's impact might evolve over a longer period? Do you anticipate that publishers will adopt new strategies as they adapt to the GDPR constraints?<\/em><\/strong><\/p>\n\n\n\nA:<\/strong> During the study period, I did not observe any clear indications of GDPR\u2019s impact evolving over time. I do expect publishers to adopt new strategies gradually, but it takes time for publishers to develop and experiment with these new strategies.<\/p>\n\n\n\nQ: The study notes a decrease in both bid prices and number of active advertisers. Could you discuss the potential implications of this trend for market competitiveness and pricing strategies in online advertising?<\/em><\/strong><\/p>\n\n\n\nA:<\/strong> During the study period, the observed decreases in bid prices and number of active advertisers suggest reduced market competitiveness. This finding suggests that advertisers may be less willing to invest in online advertising when tighter regulations on personal data are implemented. However, I do not think it will always be like this. Online advertising remains a powerful tool, and the industry is evolving too to develop ad strategies that rely less on personal data or to use people\u2019s personal data in ways that still protect privacy. For example, there are papers on how to use data anonymization techniques (such as k-anonymization) for online advertising, which allows for user targeting while protecting individual privacy. Many other approaches such as differential privacy and federated learning are also under development for online advertising. I am confident that online advertising will continue to thrive as the industry adapts to these challenges.<\/p>\n\n\n\nQ: Do you think CPC pricing models are more impacted by limited access to personal data compared to CPM? Could it be inferred that CPA also suffers\u00a0from a lack of behavioral-based data? In other words, does this impact conversion-based campaigns compared to branding and awareness campaigns? Could that explain why Google has many times delayed the plan for cookie deprecation, given their core business on search ads?<\/em><\/strong><\/p>\n\n\n\nA:<\/strong> The company in this study employed CPC pricing models, so I don\u2019t have data on the impact of GDPR on the CPM model. My conjecture is that stricter regulations would protect user privacy at the cost of ad efficiency. This will also affect CPM models, as it may reduce the likelihood of reaching high-intent buyers with the same number of impressions.<\/p>\n\n\n\nFor the CPA model, again, I don\u2019t have data from businesses operating under this model, but I can offer some conjectures. If we define the \u201cA\u201d (action) here as something very close to a purchase, I conjecture that the CPA metric itself might be stable, because CPA represents the value of an action, which should be stable. However, it might be more difficult to perform the action. So CPA might be stable, but the total number of users completing these actions could decrease, ultimately leading to lower revenue. Therefore, I think that companies with CPA models would also see some impact.<\/p>\n\n\n\nAs for Google\u2019s decision to delay its plans for cookie deprecation, I cannot comment on their internal business decisions since I don\u2019t have access to this information. That being said, cookies have historically played a significant role in collecting user information and enhancing Google\u2019s advertising efficiency. The delay might reflect the challenges of transitioning away from such a tool while maintaining ad effectiveness.<\/p>\n\n\n\nQ: We often discuss the different approaches taken by Europe and the United States in regulating technology and its impact on innovation and the economy. Do you think GDPR-like regulations stifle or foster innovation?<\/em><\/strong><\/p>\n\n\n\nA:<\/strong> I believe regulations such as GDPR need to be implemented at the right time. In the early stages of the internet and online advertising industries, when companies were still developing ways to leverage personal data to enhance ad efficiency, when they needed to quickly generate revenue and accumulate capital for re-investment, stricter regulations could have hampered growth. For example, if the GDPR was\u00a0implemented in 2008, it might have stifled innovation and slowed the development of the broader internet economy.<\/p>\n\n\n\nHowever, by 2018, when GDPR became effective, online advertising reached a certain level of maturity. The industry had accumulated sufficient capital and expertise, allowing companies to bear temporary impacts on revenue and invest in new technologies. This timing provided an opportunity for innovation in privacy-preserving ad strategies such as data anonymization or federated learning.<\/p>\n\n\n\nTherefore, restrictive regulations can hinder innovation if introduced prematurely. When they are applied at the right stage of industry maturity, they could drive the development of creative solutions and ethical practices.<\/p>\n\n\n\n\n\nSource:<\/strong> Pengyuan Wang, Li Jiang, and Jian Yang (2024), \"<a href=https://www.ama.org/"https:////doi.org//10.1177//00222437231171848/" target=\"_blank\" rel=\"noreferrer noopener\">The Early Impact of GDPR Compliance on Display Advertising: The Case of an Ad Publisher<\/a>,\" <a href=https://www.ama.org/"https:////www.ama.org//journal-of-marketing-research///" target=\"_blank\" rel=\"noreferrer noopener\">Journal of Marketing Research<\/a><\/em>, 61 (1), 70\u201391. <a href=https://www.ama.org/"https:////doi.org//10.1177//00222437231171848/" target=\"_blank\" rel=\"noreferrer noopener\">https:\/\/doi.org\/10.1177\/00222437231171848<\/a><\/p>\n\n\n\nGo to the <a href=https://www.ama.org/"https:////www.ama.org//journal-of-marketing-research///" target=\"_blank\" rel=\"noreferrer noopener\">Journal of Marketing Research<\/a><\/em><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n","post_title":"How GDPR Changed the Game for Display Advertising","post_excerpt":"A Journal of Marketing Research study finds that GDPR led to significant declines in ad performance, but content-based targeting may be the answer.","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"how-gdpr-changed-the-game-for-display-advertising","to_ping":"","pinged":"","post_modified":"2025-02-05 16:12:41","post_modified_gmt":"2025-02-05 22:12:41","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.ama.org\/?p=183062","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":183862,"post_author":"131040","post_date":"2025-02-04 05:00:00","post_date_gmt":"2025-02-04 11:00:00","post_content":"\nBuy-Now-Pay-Later (BNPL) is an increasingly popular payment method, allowing customers to spread payment into interest-free installments over a few weeks or months. Worldwide BNPL spending was $316 billion in 2023 and is expected to grow to $450 billion by 2027. With major retailers such as Walmart and H&M partnering with BNPL providers like Affirm, Klarna, and Afterpay, over 45 million U.S. customers have adopted this payment method.<\/p>\n\n\n\nWhen customers choose BNPL installments at the checkout of a participating retailer, the bill is paid in full by the BNPL provider to the retailer. Customers pay the BNPL provider for the first installment at the time of purchase and repay the remaining interest-free installments over a short time period.<\/p>\n\n\n\nHowever, despite the growing popularity of BNPL installment payments, little is known about their impact on retail sales.<\/p>\n\n\n\nIn a <a href=https://www.ama.org/"https:////doi.org//10.1177//00222429241282414/" target=\"_blank\" rel=\"noreferrer noopener\">new Journal of Marketing<\/em> study<\/a>, we use transactional data from a major U.S. retailer and find that BNPL installment payments boost spending. By allowing customers to pay for purchases in smaller, interest-free installments, BNPL boosts both the number of purchases and the average amount spent.<\/p>\n\n\n\nWe compare installment payments with upfront and delayed lump sum payments. We find that BNPL installment payments consistently boost spending across various products (e.g., party supplies, apparel, flights, mugs, coffee pods) and number of installments (e.g., three installments, four installments, six installments).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-power-of-perceived-financial-constraints\">The Power of Perceived Financial Constraints<\/h2>\n\n\n\nWe uncover two main reasons why BNPL installment payments lead to more spending:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>BNPL\u2019s impact on spending stems from alleviating perceived financial constraints. In particular, BNPL installment payments increase spending among customers who previously relied more on credit cards and tended to buy smaller baskets of goods. Customers who pay in BNPL installments feel less financially constrained than those who pay an equivalent amount in a lump sum, both upfront and delayed. Customers may focus on the segregated installments (\u201cfour installments of $15\u201d) and judge these as less costly than the aggregate term (\u201ctotal cost of $60\u201d). By alleviating perceived financial constraints, BNPL installment payments encourage customers to spend more. <\/li>\n\n\n\n<li>Moreover, BNPL facilitates budget control. It is often easier to estimate budgets for shorter time frames (''next month'') than for longer time frames. Unlike traditional credit card payments (a single lump sum due at the end of the month), installment payments are segregated into shorter time frames (four weekly payments). By highlighting a shorter time frame, BNPL can give customers a sense of greater control over their budgets. By making payments appear less costly and facilitating budget control, we discover that BNPL installment payments feel less financially constraining. Consequently, this reduction in financial constraints translates into greater spending.<\/li>\n<\/ol>\n\n\n\nPrevious studies have focused on framing prices in aggregate terms ($60\/month) or segregated terms ($15\/week) and demonstrated that segregating versus aggregating prices has consequential effects on perceptions and purchase intentions. Our work differs from these studies in the following ways.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>BNPL installments go beyond segregated price frames, requiring customers to make actual segregated payments across the specified time periods (''Pay $60 in four biweekly installments of $15'').<\/li>\n\n\n\n<li>Our research leverages transactional retailer data to study how segregating payments into BNPL installments impacts customers' actual spending over time. This further enables us to answer managerially relevant questions about how shoppers will likely change their spending (i.e., depending on historical basket size and credit card use).<\/li>\n\n\n\n<li>Segregating payments makes customers feel more in control of their budgets, alleviating perceived financial constraints. By working through additional mechanisms, our effects not only apply to recurring consumption (e.g., car leases) but also generalize to purchases consumed on a one-off basis (e.g., a flight ticket)<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-lessons-for-chief-marketing-officers\">Lessons for Chief Marketing Officers<\/h2>\n\n\n\nOur research offers actionable insights for various stakeholders:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Consumers can benefit by using BNPL installments as a tool for managing expenses by making them feel more in control of their budgets and less financially constrained.<\/li>\n\n\n\n<li>Retail managers should consider integrating BNPL options to boost sales. Retailers benefit because adoption of installment payments leads to more frequent purchases and larger basket amounts. The difference is significant, with an increase in purchase incidence of approximately 9% and a relative increase in purchase amounts of approximately 10%.<\/li>\n\n\n\n<li>Policymakers need to be aware of the significant impact BNPL has on consumer spending to ensure that regulations protect consumers while fostering financial flexibility.<\/li>\n\n\n\n<li>Societal stakeholders, including consumer advocates, should monitor BNPL\u2019s growing influence to promote responsible spending practices.<\/li>\n<\/ul>\n\n\n\nUnderstanding the benefits and potential risks associated with BNPL is crucial as this payment method continues to reshape the retail landscape.<\/p>\n\n\n\n\n\nSource: <\/strong>Stijn Maesen and Dionysius Ang, \u201c<a href=https://www.ama.org/"https:////doi.org//10.1177//00222429241282414/" target=\"_blank\" rel=\"noreferrer noopener\">Buy Now Pay Later: Impact of Installment Payments on Customer Purchases<\/a>,\u201d <a href=https://www.ama.org/"https:////www.ama.org//journal-of-marketing///" target=\"_blank\" rel=\"noreferrer noopener\">Journal of Marketing<\/a><\/em>.<\/p>\n\n\n\nGo to the <a href=https://www.ama.org/"https:////www.ama.org//journal-of-marketing///" target=\"_blank\" rel=\"noreferrer noopener\">Journal of Marketing<\/a><\/em><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n","post_title":"\"Buy Now, Pay Later\" Increases Customer Spending","post_excerpt":"A Journal of Marketing study finds that \"buy now, pay later\" (BNPL) leads to more purchases in larger amounts.","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"buy-now-pay-later-increases-customer-spending","to_ping":"","pinged":"","post_modified":"2025-02-03 12:47:16","post_modified_gmt":"2025-02-03 18:47:16","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.ama.org\/?p=183862","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}]" />

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