Post-Release Advertising, Movie Quality, and Word-of-Mouth

40 Pages Posted: 12 Mar 2015 Last revised: 19 May 2015

Ryan Lampe

California State University, East Bay - Department of Economics

Date Written: May 19, 2015

Abstract

Marketing is a crucial determinant of product success, particularly in the film industry where marketing budgets are comparable to production budgets. A rich theoretical literature predicts a positive relationship between advertising and product quality (e.g. Nelson, 1974). I examine this relationship by exploiting changes in the product quality information available to the distributors of 1,156 movies released between 1995 and 2003. Variation in weekly television advertising expenditures indicate that marketing expenditures react sharply to new information about film quality that is revealed during a film's opening weekend, including the results of exit polling, which studios use to infer word-of-mouth.

Keywords: advertising, quality, movies

JEL Classification: M31, M37

Suggested Citation

Lampe, Ryan, Post-Release Advertising, Movie Quality, and Word-of-Mouth (May 19, 2015). Available at SSRN: https://ssrn.com/abstract=2576550 or http://dx.doi.org/10.2139/ssrn.2576550

Ryan Lampe (Contact Author)

California State University, East Bay - Department of Economics ( email )

25800 Carlos Bee Blvd.
Hayward, CA 94542
United States

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