Generalizable and Robust TV Advertising Effects

Bradley Shapiro, Günter J. Hitsch and Anna Tuchman

No 27684, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: B41 C18 C52 C55 C81 L00 L15 L81 M31 M37 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-ind and nep-ore
Note: IO PR
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Citations: View citations in EconPapers (7)

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