Price Dispersion and Legacy Discounts in the National Television Advertising Market

Sylvia Hristakeva () and Julie Mortimer
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Sylvia Hristakeva: UCLA Anderson School of Management, Los Angeles, California 90095

Marketing Science, 2023, vol. 42, issue 6, 1162-1183

Abstract: Advertising is an input for many final goods, and broadcast television comprises a significant portion of ad spending in the United States. Yet, advertisers face different costs when purchasing national television ads. We seek to empirically confirm differences in firms’ costs to advertise nationally. Network-advertiser contracts are secret, so we combine data on ad placements and average prices of program airings to analyze price dispersion. We document that “legacy” advertisers with established broadcast relationships receive favorable prices for equivalent ad inventories. This may benefit incumbents and potentially soften price competition from newcomers in product markets.

Keywords: B2B pricing; television advertising; price discrimination; legacy discounts (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:42:y:2023:i:6:p:1162-1183

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