Generalizable and Robust TV Advertising Effects

42 Pages Posted: 17 Aug 2020

See all articles by Bradley Shapiro

Bradley Shapiro

University of Chicago - Booth School of Business

Günter J. Hitsch

University of Chicago - Booth School of Business

Anna Tuchman

Northwestern - Kellogg

Multiple version iconThere are 2 versions of this paper

Date Written: August 2020

Abstract

We provide generalizable and robust results on the causal sales effect of TV advertising for a large number of products 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 policy makers. 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 assumptions made when constructing the data used in estimation. Second, we document whether the estimated effects are sensitive to the identification strategies that we use to claim causality based on observational data. Our results reveal substantially smaller advertising elasticities compared to the results documented in the extant literature, as well as a sizable percentage of statistically insignificant or negative estimates. Finally, we conduct an analysis of return on investment (ROI). While our results show that many brands perform better with their observed advertising than they would without advertising, we document considerable over-investment in advertising at the margin.

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Suggested Citation

Shapiro, Bradley and Hitsch, Guenter J. and Tuchman, Anna, Generalizable and Robust TV Advertising Effects (August 2020). NBER Working Paper No. w27684, Available at SSRN: https://ssrn.com/abstract=3675236

Bradley Shapiro (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

HOME PAGE: http://faculty.chicagobooth.edu/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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