Are Online and Offline Advertising Substitutes or Complements? Evidence from U.S. Food Industries

Xi He, Rigoberto Lopez and Liu Yizao ()
Additional contact information
Liu Yizao: Department of Agricultural Economics, Sociology, and Education, Pennsylvania State University, University Park, PA, USA

Journal of Agricultural & Food Industrial Organization, 2017, vol. 15, issue 2, 10

Abstract: This article investigates the substitution between online advertising (ONLA) and offline advertising (OFFLA) as well as the impact of adopting ONLA on the total cost of advertising. We estimate an advertising translog cost function at the product-brand level, using monthly observations between 2005 and 2011 for each of three industries: beer, ready-to-eat cereals, and carbonated soft drinks. Although in all three industries we find that traditional media (TV and print) advertisements are close substitutes, we also find that ONLA is a complement to, rather than a substitute for, both TV and print media advertising. This may be explained by ONLA’s targeting younger market segments and acting as a reinforcement of TV and print media advertising exposure. Further results show that the adoption of ONLA has lowered the cost of advertising for achieving a sales target and that its complementarity effect is weakening over time.

Keywords: advertising; online; food; cost; substitution (search for similar items in EconPapers)
JEL-codes: D22 L66 M37 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/jafio-2017-0031 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bjafio:v:15:y:2017:i:2:p:10:n:1

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/jafio/html

DOI: 10.1515/jafio-2017-0031

Access Statistics for this article

Journal of Agricultural & Food Industrial Organization is currently edited by Azzeddine Azzam

More articles in Journal of Agricultural & Food Industrial Organization from De Gruyter
Bibliographic data for series maintained by Peter Golla ().