Generalizable and Robust TV Advertising Effects

Abstract

We provide generalizable and robust results on the causal sales effect of TV advertising for a large number of products in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of policy makers. To provide generalizable results, we base our analysis on a large number of products and clearly lay out the research protocol used to select the products. We characterize the distribution of all estimates, irrespective of sign, size, or statistical significance. To ensure generalizability, we document the robustness of the estimates. First, we examine the sensitivity of the results to the assumptions made when constructing the data used in estimation. Second, we document whether the estimated effects are sensitive to the identification strategies that we use to claim causality based on observational data. Our results reveal substantially smaller advertising elasticities compared to the results documented in the extant literature, as well as a sizable percentage of statistically insignificant or negative estimates. Finally, we conduct an analysis of return on investment (ROI). While our results show that many brands perform better with their observed advertising than they would without advertising, we document considerable over-investment in advertising at the margin.

How Good Are We At Evaluating Communicated Information?

“…In terms of amounts invested, advertising dwarves political campaignsyet it does not seem to have stronger persuasive power. A recent study of the effects of TV advertising, which was comprehensive and methodologically superior to its predecessors, revealed that the effects of the vast majority of TV ads were small at best, with 'a sizable percentage of statistically insignificant or negative estimates' (Shapiro et al, 2019). Another recent and large scale studywith billions of observationsof online display ad effectiveness also points to very small or null effects for the vast majority of ad campaigns, with a few positive outliers, and half of the (limited) effect of advertising being to merely make people buy earlier a product they would have bought anyway (Johnson et al, 2017).…”

Drug Firms' Payments and Physicians' Prescribing Behavior in Medicare Part D

“…4 As emphasized in Shapiro et al (2020), impacts of marketing can very widely across products. Because many policies that regulate pharmaceutical marketing do not target individual drugs or therapeutic classes, it can be important to have estimates based on all drugs to understand likely impacts of broad policies.…”

A Survey on Privacy-Preserving Blockchain Systems (PPBS) and a Novel PPBS-Based Framework for Smart Agriculture

“…This also links to the latest evidence questioning the effectiveness of advertising, and in particular digital advertising [18], [19]. Repeated studies have shown TV ads [20] and search words digital advertising [19] to be not as effective as suggested by the advertisement empires that run them. The future of linking producers and consumers through a transformative new platform like blockchain, which enables enhanced information, and guarantees the quality of information, without the endogeneity effect of advertising, enables a very different role for marketing.…”