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TV Channel Search and Commercial Breaks

Journal of Marketing Research, Forthcoming

50 Pages Posted: 1 Feb 2015 Last revised: 14 Sep 2016

Song Yao

University of Minnesota - Twin Cities - Carlson School of Management

Wenbo Wang

Hong Kong University of Science & Technology

Yuxin Chen

New York University (NYU) - Department of Marketing

Date Written: September 10, 2016

Abstract

We investigate time lapses that interrupt product consumption. Preeminent examples are commercial breaks during television or radio programming. We suggest that breaks facilitate consumers searching for alternatives. Specifically, when there is so much uncertainty that consumers are unclear about utility levels of different products, they engage in costly search to resolve the uncertainty. For TV programming, breaks lower the opportunity cost of search, allowing the consumer to sample alternative channels without further interrupting the viewing experience on her current channel. Using data from the Chinese TV market, we estimate a sequential search model to understand consumer TV channel choice behavior. The data contain a quasi natural experiment due to the Chinese government's policy change on commercial breaks. The natural experiment created exogenous variations in the data that enable the empirical identification of heterogeneous consumer preference and search cost. The data patterns support that viewers search alternatives during commercial breaks. Based on the estimates, we investigate how the timing of breaks affects TV channels' viewership, offering insights about how to strategically adjust the timing of breaks.

Keywords: Advertising, Television, Consumer Search, Natural Experiment, Demand Estimation

Suggested Citation

Yao, Song and Wang, Wenbo and Chen, Yuxin, TV Channel Search and Commercial Breaks (September 10, 2016). Journal of Marketing Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2558202 or http://dx.doi.org/10.2139/ssrn.2558202

Song Yao (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Wenbo Wang

Hong Kong University of Science & Technology ( email )

Department of Marketing
Clear Water Bay, Kowloon
Hong Kong

Yuxin Chen

New York University (NYU) - Department of Marketing ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States
212-995-0511 (Phone)
212-995-4006 (Fax)

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