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http://ssrn.com/abstract=1007571
 
 

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Information or Persuasion? An Empirical Investigation of the Effect of Advertising on Brand Awareness and Perceived Quality Using Panel Data


Ulrich Doraszelski


Harvard University - Department of Economics; University of Pennsylvania - Business & Public Policy Department

C. Robert Clark


HEC Montreal

Michaela Draganska


Independent

July 2007

Stanford University Graduate School of Business Research Paper No. 1971

Abstract:     
We investigate the dominant role of advertising - whether it provides information or changes consumers' brand perceptions - for a wide range of product categories. For the empirical analysis, we assembled a panel data set that combines annual brand-level advertising expenditures for over three hundred brands with measures of brand awareness and perceived quality from a large-scale consumer survey. Advertising is modeled as a dynamic investment in a brand's stocks of awareness and perceived quality and we ask how such an investment changes brand awareness and quality perceptions. Our panel data allow us to control for unobserved heterogeneity across brands and to identify the effect of advertising from the time-series variation within brands. They also allow us to account for the endogeneity of advertising through recently developed dynamic panel data estimation techniques. We find that advertising has consistently a significant positive effect on brand awareness but no significant effect on perceived quality.

Number of Pages in PDF File: 31

Keywords: industrial organization, Advertising

JEL Classification: M3, D12

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Date posted: August 23, 2007  

Suggested Citation

Doraszelski, Ulrich and Clark, C. Robert and Draganska, Michaela, Information or Persuasion? An Empirical Investigation of the Effect of Advertising on Brand Awareness and Perceived Quality Using Panel Data (July 2007). Stanford University Graduate School of Business Research Paper No. 1971. Available at SSRN: http://ssrn.com/abstract=1007571 or http://dx.doi.org/10.2139/ssrn.1007571

Contact Information

Ulrich Doraszelski
Harvard University - Department of Economics ( email )
Littauer Center
Cambridge, MA 02138
United States
617-495-2896 (Phone)
617-495-8570 (Fax)
University of Pennsylvania - Business & Public Policy Department
3641 Locust Walk
Philadelphia, PA 19104-6372
United States

C. Robert Clark
HEC Montreal ( email )
3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
Michaela Draganska (Contact Author)
Independent
No Address Available
Feedback to SSRN


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