Show and Sell: Studying the Effects of Branded Cigarette Product Placement in TV Shows on Cigarette Sales

Abstract

We evaluate whether and how branded TV product placement affects sales for cigarette brands. We use data on product placement from TV shows and data on retail sales of cigarettes to estimate a demand model that incorporates the level of product placement exposure for each cigarette brand. We find that product placement has a small yet positive and statistically significant effect on both own-brand sales and competitor-brand sales: both of these elasticities are roughly 0.02. These results indicate that cigarette product placement affects demand for individual cigarette brands and that it also leads to greater overall cigarette use. This issue is of particular importance to policymakers because product placement is one of the few remaining ways that cigarette brands can reach a mass audience. To illustrate how these results could be used by policymakers, we use our model estimates to evaluate how cigarette sales would be affected by two hypothetical kinds of regulations. Limiting brands’ ability to be displayed on TV and forcing TV networks to instead use generic, unbranded cigarettes on screen would only reduce cigarette sales by about 2 percent, while forcing TV networks to eliminate all on-screen smoking activity would reduce cigarette sales by about 7 percent.

Keywords: Tobacco Marketing, Product Placement, Public Policy, Border Strategy, TV Advertising.

JEL Classification: D04, L38, M37, M38, M31