Do Media Consumers Really Dislike Advertising? An Empirical Assessment of the Role of Advertising in Print Media Markets

34 Pages Posted: 26 Feb 2009

See all articles by Ulrich Kaiser

Ulrich Kaiser

University of Zurich; ZEW – Leibniz Centre for European Economic Research; University of Copenhagen - Centre for Industrial Economics; Government of the Kingdom of Denmark - Centre for Economic and Business Research

Minjae Song

Bates White Economic Consulting

Date Written: September 18, 2008

Abstract

This paper uses data on German consumer magazines observed between 1992 and 2004 to analyze the extent to which consumers (dis-)like advertising. We estimate logit demand models separately for the six most important magazine segments in terms of circulation. We find little evidence for readers disliking advertising. On the contrary, we show that readers in many magazine segments appreciate advertising. Readers of Women's magazines, Business and politics magazines as well as Car magazines - market segments where advertisements are relatively more informative - appreciate advertising while advertising is nuisance to readers of Adult magazines, a segment where advertisements are particularly uninformative. Demand for interior design magazines is not well identified. Our logit demand estimates are confirmed by logit demand models with random coefficients and by magazine-specific monopoly demand models.

Keywords: two-sided markets, advertising, Mean Group Estimation, random coefficients model, media markets, nuisance

JEL Classification: C23, L11

Suggested Citation

Kaiser, Ulrich and Song, Minjae, Do Media Consumers Really Dislike Advertising? An Empirical Assessment of the Role of Advertising in Print Media Markets (September 18, 2008). International Journal of Industrial Organization, Forthcoming, Simon School Working Paper No. FR 09-08, Available at SSRN: https://ssrn.com/abstract=1349962

Ulrich Kaiser (Contact Author)

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Copenhagen - Centre for Industrial Economics ( email )

University of Copenhagen, Building 26
Øster Farimagsgade 5
Copenhagen K., DK-1353
Denmark

Government of the Kingdom of Denmark - Centre for Economic and Business Research ( email )

Langelinie Alli 17
DK-2100 Copenhagen
Denmark

Minjae Song

Bates White Economic Consulting ( email )

1300 I Street NW
Washington, DC DC 20005
United States
2027471404 (Phone)

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