The Effectiveness of Post-Release Movie Advertising
28 Pages Posted: 22 Jan 2007 Last revised: 14 Sep 2010
Date Written: April 13, 2010
Frequent new product introductions and short product lifecycles lead to unusually high levels of advertising in the movie industry. We study the effectiveness of television advertisements aired after the theatrical opening of a motion picture (“post-release advertising”). We estimate an instrumental-variables, lagged effects model using a novel dataset constructed to obviate simultaneity concerns and temporal aggregation biases. We find that post-release movie advertising exhibits a high degree of heterogeneity across films, but generates substantial returns for some movies. Our findings suggest that studios may find it beneficial to experiment with higher post-release advertising budgets. Further, exhibitors may benefit from extended movie lifecycles if they share post-release advertising responsibility with studios.
Keywords: Advertising Effectiveness, Advertising/Sales Response, Econometrics, Endogeneity, Movies and Entertainment Marketing
JEL Classification: M37
Suggested Citation: Suggested Citation