The Market for Television Advertising: Model and Evidence

34 Pages Posted: 24 Feb 2020

See all articles by Robert L. Kieschnick

Robert L. Kieschnick

University of Texas at Dallas

B.D. McCullough

Drexel University - Department of Decision Sciences

Steven S. Wildman

Quello Center; Michigan State University; University of Colorado at Boulder

Date Written: November 14, 2001

Abstract

We provide a model of television advertising based on an explicit characterization of an advertisement's contribution to an advertiser's profits that suggests that each program faces a downward sloping demand for its ad time. Hence Fournier and Martin's (1983) "law of one price" does not hold in our model. We study these contrasting arguments about television advertising by examining the pricing of broadcast network advertising. In conducting this empirical examination we encounter and solve a severe multicollinearity problem. We conclude that the evidence supports the advertising model presented in this paper and demonstrates segmentation between cable and broadcast viewers in the national television advertising market.

Keywords: broadcast, cable, market segmentation, multicollinearity

Suggested Citation

Kieschnick, Robert L. and McCullough, B. D. and Wildman, Steven S., The Market for Television Advertising: Model and Evidence (November 14, 2001). Review of Marketing Science WP No. 2001731, Available at SSRN: https://ssrn.com/abstract=310891 or http://dx.doi.org/10.2139/ssrn.310891

Robert L. Kieschnick (Contact Author)

University of Texas at Dallas ( email )

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HOME PAGE: http://www.utdallas.edu/~rkiesch/

B. D. McCullough

Drexel University - Department of Decision Sciences ( email )

101 N. 33rd St.
Philadelphia, PA 19104
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Steven S. Wildman

Quello Center ( email )

409 Communication Arts & Sciences Building
East Lansing, MI 48824-1212
United States
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Michigan State University ( email )

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East Lansing, MI 48824-1122
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University of Colorado at Boulder ( email )

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Boulder, CO 80309
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