Information Content of Advertising: Empirical Evidence from the OTC Analgesic Industry

38 Pages Posted: 25 Jul 2010 Last revised: 18 Dec 2012

See all articles by Simon P. Anderson

Simon P. Anderson

University of Virginia - Department of Economics

Federico Ciliberto

University of Virginia - Department of Economics; Centre for Economic Policy Research (CEPR)

Jura Liaukonyte

Cornell University

Date Written: December 18, 2012

Abstract

We empirically study the information-persuasion trade-off in advertising using data on the information content of advertisements, which we measure with the number of information cues in ads. We propose a simple theoretical framework to motivate an ordered probit model of information content. We find that stronger vertical differentiation is positively associated with the delivery of more product information in a brand’s advertisements: brands with higher levels of quality include more information cues. Next, comparative advertisements contain significantly more product information than self-promotional advertisements. Finally, brands with higher market shares and brands competing against strong generic substitutes have less information content.

Keywords: Information Content, Advertising, Comparative Advertising, Content Analysis, Ordered Probit.

JEL Classification: L13, M37, L65

Suggested Citation

Anderson, Simon P. and Ciliberto, Federico and Liaukonyte, Jura, Information Content of Advertising: Empirical Evidence from the OTC Analgesic Industry (December 18, 2012). Available at SSRN: https://ssrn.com/abstract=1647825 or http://dx.doi.org/10.2139/ssrn.1647825

Simon P. Anderson

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
804-924-3861 (Phone)
804-982-2904 (Fax)

Federico Ciliberto (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Jura Liaukonyte

Cornell University ( email )

347 Warren Hall
Ithaca, NY 14853
United States

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