What is Advertising Content Worth? Evidence from the Motion Pictures Industry
University of Oklahoma - Division of Marketing
Vithala R. Rao
Cornell University - Samuel Curtis Johnson Graduate School of Management
S. Abraham Ravid
Yeshiva University - Syms School of Business
September 11, 2011
Johnson School Research Paper No. 45-2011
The large literature on the impact of advertising on consumers and firm behavior in marketing and economics has tried to distinguish between the informative and the persuasive roles of advertising. The extant literature typically uses advertising expenditure and implicitly assumes that advertising content is homogeneous. We analyze the contents of print ads in the motion picture industry to see whether the persuasive content or the informative content is more impactful on revenues. We estimate a simultaneous equation system via the GMM method and find that the persuasive content (role) of advertising is more significant than the informative content (role). Overall, we find that content elements matter in different ways. External validation components – persuasive contents, are much more important than other ad contents for predicting revenues and returns. Thus, we provide an interesting insight to this debate.
Number of Pages in PDF File: 35working papers series
Date posted: November 3, 2011
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