Generalizable and Robust TV Advertising Effects

44 Pages Posted: 16 Nov 2018 Last revised: 26 Feb 2019

See all articles by Bradley Shapiro

Bradley Shapiro

University of Chicago - Marketing Management

Günter J. Hitsch

University of Chicago - Booth School of Business

Anna Tuchman

Northwestern - Kellogg

Date Written: February 19, 2019

Abstract

We provide generalizable and robust results on the causal sales effect of TV advertising based on the distribution of advertising elasticities for a large number of products (brands) in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of anti-trust and public policy makers. A single case study cannot provide generalizable results, and hence the marketing literature provides several meta-analyses based on published case studies of advertising effects. However, publication bias results if the research or review process systematically rejects estimates of small, statistically insignificant, or “unexpected” advertising elasticities. Consequently, if there is publication bias, the results of a meta-analysis will not reflect the true population distribution of advertising effects. To provide generalizable results, we base our analysis on a large number of products and clearly lay out the research protocol used to select the products. We characterize the distribution of all estimates, irrespective of sign, size, or statistical significance. To ensure generalizability we document the robustness of the estimates. First, we examine the sensitivity of the results to the approach and assumptions made when constructing the data used in estimation from the raw sources. Second, as we aim to provide causal estimates, we document if the estimated effects are sensitive to the identification strategies that we use to claim causality based on observational data. Our results reveal substantially smaller effects of own-advertising compared to the results documented in the extant literature, as well as a sizable percentage of statistically insignificant or negative estimates. If we only select products with statistically significant and positive estimates, the mean or median of the advertising effect distribution increases by a factor of about five. The results are robust to various identifying assumptions, and are consistent with both publication bias and bias due to non-robust identification strategies to obtain causal estimates in the literature.

Keywords: Advertising, Publication Bias, Generalizability

JEL Classification: L00, L15, L81, M31, M37, B41, C55, C52, C81, C18

Suggested Citation

Shapiro, Bradley and Hitsch, Guenter J. and Tuchman, Anna, Generalizable and Robust TV Advertising Effects (February 19, 2019). Available at SSRN: https://ssrn.com/abstract=3273476 or http://dx.doi.org/10.2139/ssrn.3273476

Bradley Shapiro (Contact Author)

University of Chicago - Marketing Management ( email )

Chicago, IL 60637
United States

HOME PAGE: http://www.chicagobooth.edu/faculty/directory/s/bradley-shapiro

Guenter J. Hitsch

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Anna Tuchman

Northwestern - Kellogg ( email )

Kellogg School of Management
2001 Sheridan Rd.
Evanston, IL 60208
United States

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