M edia multitasking competes with television advertising for consumers' attention, but may also facilitate immediate and measurable response to some advertisements. This paper explores whether and how television advertising influences online shopping. We construct a massive data set spanning $3.4 billion in spending by 20 brands, measures of brands' website traffic and transactions, and ad content measures for 1,224 commercials. We use a quasi-experimental design to estimate whether and how TV advertising influences changes in online shopping within two-minute pre/post windows of time. We use nonadvertising competitors' online shopping in a difference-in-differences approach to measure the same effects in two-hour windows around the time of the ad. The findings indicate that television advertising does influence online shopping and that advertising content plays a key role. Action-focus content increases direct website traffic and sales. Information-focus and emotion-focus ad content actually reduce website traffic while simultaneously increasing purchases, with a positive net effect on sales for most brands. These results imply that brands seeking to attract multitaskers' attention and dollars must select their advertising copy carefully.
For marketers, television remains the most important advertising medium. This paper proposes a two-sided model of the television industry. We estimate viewer demand for programs on one side and advertiser demand for audiences on the other. The primary objective is to understand how each group's program usage influences the other group. Four main conclusions emerge. First, viewers tend to be averse to advertising. When a highly rated network decreases its advertising time by 10%, our model predicts a median audience gain of about 25% (assuming no competitive reactions). Second, we find the price elasticity of advertising demand is -2.9, substantially more price elastic than 30 years ago. Third, we compare our estimates of advertiser and viewer preferences for program characteristics to networks' observed program choices. Our results suggest that advertiser preferences influence network choices more strongly than viewer preferences. Viewers' two most preferred program genres, Action and News, account for just 16% of network program hours. Advertisers' two most preferred genres, Reality and Comedy, account for 47% of network program hours. Fourth, we perform a counterfactual experiment in which some viewers gain access to a hypothetical advertisement avoidance technology. The results suggest that ad avoidance tends to increase equilibrium advertising quantities and decrease network revenues.advertising, broadcasting, demand estimation, empirical industrial organization, endogeneity, entertainment marketing, media, television, two-sided markets
Product recalls tend to damage the stock price of the recalling firm. This article proposes and empirically demonstrates that adjustments to prerecall advertising spending can be used as a tool to moderate this financial damage. Using data on automobile recalls and detailed advertising expenditures from 2005 to 2012, the authors show that adjustments to a firm's prerecall advertising expenditure can either mitigate or amplify the negative effect of the recall on stock market value, depending on the direction of advertising adjustment and the recall characteristics. Boosting ad spending before a recall announcement softens the stock price loss when the recall involves a newly introduced product with a minor hazard but sharpens the loss when the recalled product is an established model with a major hazard. Cutting prerecall advertising worsens the stock price loss when the recall involves a new product, regardless of the hazard. This research also reveals that in product-harm crisis management, profit maximization and shareholder value maximization can conflict with each other, underscoring the importance of developing an integrated crisis management strategy.
Digital advertising markets are growing and attracting increased scrutiny. This article explores four market inefficiencies that remain poorly understood: ad effect measurement, frictions between and within advertising channel members, ad blocking, and ad fraud. Although these topics are not unique to digital advertising, each manifests in unique ways in markets for digital ads. The authors identify relevant findings in the academic literature, recent developments in practice, and promising topics for future research.
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