The impact of food advertisements on changing eating behaviors: An experimental study

This research examines how three types of food advertising (healthy food, unhealthy food, and anti-obesity) impact consumers’ purchases of lunch items. The analysis is based on an economic experiment conducted with 186 adult non-undergraduate student subjects, each of which were randomly placed into either the control group or one of four treatments: (1) healthy food advertising, (2) anti-obesity advertising, (3) unhealthy food advertising, and (4) mixed (all three food) advertising. The results indicate that healthy, anti-obesity, and mixed food advertising reduced intakes of total calories, fat, sodium, and carbohydrates. Similarly, anti-obesity, healthy, and mixed food advertising results in increasing the probability of selecting more healthy items and fewer unhealthy items from a menu. Healthy food advertising has a stronger impact than anti-obesity or mixed food advertising.     

The degree of competition in the advertising industry

After a merger wave began among advertising agencies in the late 1960's, the Federal Trade Commission investigated the anticompetitive effects of the mergers and concluded that the industry would remain competitive. In this paper, we employ a method suggested by Bresnahan to investigate the issue of competition in the advertising industry. The method uses industry-level data over the period 1972–87 to consider the determinants of supply and demand for advertising messages and to calculate the degree of market power on the supply side of the market. Statistical results support the hypothesis that the industry was competitive over this period.We thank Robert Coen of McCann-Erickson, Inc., for providing data on advertising costs and expenditures and W. Bradford Todd of the Richards Group for information about the industry. Lacy Glenn Thomas directed us to McCann-Erickson. We also thank James C. Murdoch, two anonymous referees, and the Editor, William G. Shepherd. Pornpong Sumanun provided research assistance. The usual disclaimer applies.     

A Dynamic Model of Advertising and Product Differentiation

This paper analyses a differential game of duopolisticrivalry through time where firms can use advertisingand price as competitive tools. Two cases are consideredwhereby: (1) advertising has the main effect ofincreasing market size and firms differ in productionefficiency; (2) advertising has both predatory and cooperativeeffects in a symmetric market. The former shows thatmarket shares and advertising shares are positivelycorrelated and that market size increases with thedifference in firms' relative efficiency. The latterhighlights the differences in the feedback andopen-loop strategies. It is shown that firms' advertisingare strategic complements and that profits are higherin the feedback equilibrium because firms advertise more.The applicability of the model in markets wherefranchise contracts and dealership agreements operateis also discussed.     

Generic Advertising of Intermediate Goods: Theory and Evidence on Free Riding

We develop a model of generic advertising in the context of vertically dependent markets wherein producers of an intermediate good financially support, through voluntary contributions, a generic advertising campaign aimed at consumers of a final product. The Nash equilibrium is characterized by free riding on the part of upstream firms because of the nature of generic advertising, leading to its underprovision with respect to joint, industry-wide profit maximization. We test the model in the U.S. fluid milk industry focusing on the effects of generic advertising on the intermediate demand for milk, since dairy farmers support the generic advertising. Taking this approach, we find that generic advertising had a positive influence on farm-level demand for milk, but did not achieve joint profit maximization.     

Pricing with Endogenous Direct Advertising in a Monopoly

This paper develops a model of informative advertising in which a firm builds a database using its historical sales records in order to directly target ads on those consumers who have a high probability of purchasing its products. We show that the firm can use this type of direct advertising as a screening mechanism to identify high demand consumers. As a result, direct advertising can work essentially as a device to increase a firm's monopoly power. From a social point of view, this implies that the transition from traditional mass-advertising to direct advertising can generate a trade-off between higher advertising efficiency and greater monopoly power. We compute the model to shed light on the relative strength of these two forces, and find that while direct advertising might have a substantial negative impact on consumers, this advertising technology can only occasionally reduce welfare.     

Outdoor advertising for business markets

A review of the history and current prevalence of outdoor advertising suggests that although the medium is very effective it is not widely used in business-to-business markets. A case for using outdoor advertising is deductively made based on the unique characteristics of business markets such as: geographic concentration of buyers, need to target buying center members, advantages of having integrated communication, possibility of creating derived demand, and targeting trade shows. This paper offers recommendations on when and how to use outdoor advertising based on unique business market characteristics, industrial promotional objectives and business product classification. Research propositions and directions for future research are offered.     

Beer Advertising and Marketing Update: Structure,Conduct, and Social Costs

Beer advertising is a topic that has frequently attracted the attention of industrial organization economists. This update reviews major events, data trends, and research for each of three issues: (1) the importance of advertising and product differentiation for structural change in the brewing industry; (2) the manner and extent to which brewers can strategically alter market shares using advertising; and (3) the social costs of beer advertising and marketing, including advertising bans, targeting of underage youth, and recent changes in the three-tier system of alcohol distribution. Major legal decisions pertaining to commercial speech and other regulations also are discussed.JEL Classifications: L66, L13, M37     

Optimal pricing and advertising strategy for introducing a new business product with threat of competitive entry

The problem of optimal joint pricing and advertising decision making for a new product facing potential competitive entry has received inadequate attention. We propose a model that attempts to find the optimal price-advertising frontier in the face of potential competitive entry that maximizes total discounted profits for pre- and post-entry periods. We find that a firm would charge the price that equates price elasticity to marginal revenue product of advertising (as predicted by [Dorfman, R. and Steiner, P.O. (1954), Optimal Advertising and Optimal Quality, American Economic Review, 44(5), 826-836.]) only when the potential effects of pricing and advertising on its market share are not considered. Under optimal conditions, aware that market share is subject to erosion, the firm charges a somewhat lower price than the profit maximizing price, and sets an advertisement expense that is somewhat higher than the profit-maximizing advertising level as predicted by Cournot's monopolistic setting. We illustrate the applicability of our model using business product examples taken from several industries including operating systems, software, pharmaceutical, and telephone switching. Directions for future research with implications for B2B managers (for example, the possible effects of preannouncement to forestall competitive entry) are discussed.     

论品牌延伸对市场份额和广告效率的影响——基于Smith-Park模型的实证分析研究

Smith-Park模型是国际上知名度较高的品牌延伸效果测定模型。本文选择江苏地区的40家消费品生产企业为调查样本,利用该模型分析了中国市场企业采取品牌延伸策略对品牌的市场份额和广告效率的影响。验证了在中国市场品牌延伸受延伸产品原品牌的特征、延伸产品的特征以及延伸产品的市场特征干扰状态;当市场上竞争者较多时,品牌延伸对市场份额的相关影响比市场上竞争者少时要大;市场份额和广告效率都不受延伸产品之间的相似性的影响;母品牌强度与延伸产品市场份额呈正相关,但却不影响广告花费的效用;现金流上的差别会随着时间的变化而变化等结论。本文的研究系统地验证了SP模型对我国制造业行业的市场适用性,并通过实证研究修正了SP模型的部分参数偏差。     

Profitability and Media Advertising in Greek Food Manufacturing Industries

The effect of advertising intensity in four media(television, radio, newspapers and magazines) on profitability is examined in this paper. Aprofitability model is tested using a unique 1993–1996panel data set of 350 Greek food manufacturing firms.Fixed effects results for the full model show thatonly television advertising increases profitabilitysignificantly. The results for eight major foodcategories estimated separately show importantdifferences between consumer and producer groups;television advertising effects on profitability arepositive and significant only in the consumerindustries where television advertising intensity ishigh. These findings show that television is the onlymedia where persuasive advertising exists in Greekfood manufacturing firms.     

The untapped potential of B2B advertising: A literature review and future agenda

Academic research has not kept pace with the growth of and investment in B2B advertising. Important topics need to be addressed and critical questions remain unanswered. This review systematically analyzes, consolidates and identifies knowledge gaps in prior research related to B2B advertising in order to motivate dedicated future study. Based on a methodical, concept-centric approach, B2B advertising literature is categorized by: 1) type of article; 2) theories applied; 3) message appeals, content, and strategies used; 4) media selected; 5) effectiveness and performance measurement; and 6) budgeting approaches. The review indicates limited and outdated research on several topics including message strategies and appeals, advertising budgets, advertising effective measures related to buyer and financial outcomes, and media usage. Furthermore, research on overall B2B integrated marketing communications strategies is lacking. The review highlights research opportunities and questions with the potential to provide guidance to B2B marketing managers.     

The Effect of Advertising on Pharmaceutical Innovation

Although there is much controversy in the economic literature about how advertising affects market competition, little is known about the effect of advertising on product innovation. We examined the relationship between advertising expenditures and the research and development activities of pharmaceutical firms using empirical data from eight therapy areas. This study finds that detailing advertising may have a significant positive effect on the number of new products entering into clinical development. Markets of chronic disease with high levels of detailing advertising were more attractive to pharmaceutical firms. However, the effect of advertising on new product novelty remains inconclusive.     

基于传播视角的广告效果实证研究

广告效果的测定是广告活动必不可少的一个步骤，是对广告进行检验和评价的重要环节，然而实践中却为很多广告主和制作者所忽视。导致这种现象存在的原因除广告主和制作者在这方面的意识薄弱外，没有完整的广告效果测量方法也是原因之一。本文建立了基于传播视角的广告效果测量模型，并以央视Y广告为实证研究对象，论述了进行广告效果测量的变量和分析内容，并结合Y广告效果测量的实证结果提出了当前广告投放工作中应注意的问题。     

Price control and advertising in franchising chains

This study investigates how franchising chains use advertising to enhance coordination and improve their control over prices set at franchised outlets. We argue that chains use price advertising to inform customers about their desired prices, thereby influencing franchisees to adopt the advertised prices although they are not contractually required to do so. We test our hypotheses using rich outlet‐level price data collected before and after a U.S. nationwide advertising campaign by McDonald's. Our findings indicate that advertising is an effective mechanism that franchising chains use to improve their control over franchisees, enhance uniformity, and reduce franchisee free‐riding. Copyright © 2013 John Wiley & Sons, Ltd.     

Disclaiming responsibility: How platforms deadlocked the Federal Election Commission's efforts to regulate digital political advertising

Digital advertisements used to interfere in the 2016 U.S. presidential election lacked disclaimers stating who paid for them. This was deliberate on the part of the platforms: Facebook and Google actively sought exemptions from mandatory disclaimer requirements that are standard for print and broadcast media. While prior research has placed blame squarely on the Federal Election Commission (FEC) for their lack of oversight of digital advertising, this paper demonstrates the way in which the platforms–Facebook in particular–engineered this regulatory failure in the form of capture on this specific issue. An analysis of documents submitted to the FEC demonstrates that Facebook and Google put profit ahead of the public interest in seeking exemptions from disclaimer requirements, refusing to change the size of their advertisements and downplaying the deceptive potential of political ads. Due to partisan gridlock and a lack of technological expertise, the FEC failed to rule decisively on exemptions or agree on alternative means of disclaimers for Facebook and mobile app ads, setting the stage for electoral interference in 2016. Implications for current regulatory efforts are discussed.     

An empirical note from case documents on the economies of network television advertising

Economists have argued for many years about the extent of economies of geographic scope in television advertising. This paper maintains that previous studies could not correctly resolve this issue because they employed list prices, rather than transactions price data. In contrast to previous research, this paper reports transaction based prices from internal company documents. These transaction based data indicate that network advertising was substantially less costly per viewer than equivalent coverage using local spot television advertising. Local firms, unable to use network advertising as did their national competitors, faced high per viewer advertising costs as a result.     

Industry self-regulation of food advertisement to children: Compliance versus effectiveness of the EU Pledge

This research examines the effectiveness of the EU Pledge, a self-regulation initiative of leading food companies at the European level, in restricting television advertising of food and drink products high in fat, sugar or salt (HFSS) to children. In October 2011 and 2014, television program of ten German television networks was recorded on a weekday and a weekend day. Data was analyzed using content and regression analysis. Advertised products were examined for their compliance with the nutrient criteria of the EU Pledge and the UK OFCOM nutrient profile model. The sample contains 88 h of advertising with a total of 697 child-targeted food and beverage advertising (CFBA). The results indicate that the number of CFBA broadcasted in television program declined from 2011 to 2014 for both Pledge signatory and non-signatory companies with an overall stronger reduction in children’s compared to non-children’s program. Our findings demonstrate that CFBA broadcasted in children’s program by Pledge members comply by and large with the EU Pledge nutritional criteria in 2014. However, in the same year the probability of CFBA aired by signatory companies in non-children’s program to meet the nutrient profile criteria of the EU Pledge was low. Furthermore, the majority of CFBA of signatory companies do not meet the OFCOM nutritional criteria even in the children’s program. Thus, the effectiveness of the EU Pledge in reducing children’s exposure to child-targeted advertising of HFSS foods and drinks is limited by the focus on children’s program and the relative lenient nutritional criteria agreed on by signatory companies. Based on our results we derive recommendations for industry and policy.     

Tell me a story: The role of narrative transportation and the C-suite in B2B advertising

This research investigates stories about buyer-seller experiences in B2B advertising. In two studies, the authors explore the impact of stories and narrative transportation in advertising on decision makers’ attitudinal responses. In Study 1, findings from a Fortune 100 company’s buyer panel indicate that stories told using narrative advertising were positively related to the decision maker’s trust in the supplier, ability to form personal connections with the supplier and the tendency to advocate for the supplier. Moreover, the organizational status of the decision maker (C-suite versus non-C-suite executives) was examined. Results demonstrate that the effect of these relationships were stronger for C-level decision makers than non-C-level decision makers. In Study 2, depth interviews were conducted with C-level decision makers. Findings reinforce results from Study 1 and provide additional insight into C-level decision makers’ perspectives on stories and narrative transportation. Implications for how stories about buyer-seller relationships can benefit organizational decision making are discussed.     

Market share,advertising, R&D,and profitability: An empirical analysis of leading industrial firms in Japan

This paper develops a dynamic model of a leader firm which chooses the time paths of R&D and advertising inputs so as to maximize the present value of expected profits. From this theoretical model simultaneous-equations system for market share, advertising, R&D, and profitability is derived and estimated using the data on the leading industrial firms in Japan. Our results show that, as far as top firms are concerned, market share and demand growth have significant positive effects on profitability, and an increase in the stock of goodwill increases market share as well as profitability.This study was financially supported by the Ministry of Education in Japan. Helpful comments were provided by H. Odagiri. Also I am indebted to an anonymous referee for advice and criticism on various points.     

The diffusion of television advertising

This study is an empirical examination of the diffusion of the use of network television advertising by manufacturing firms. The results indicate that manufacturers of consumer goods were likely to make use of television advertising sooner than manufacturers of producer goods and that, among producers of consumer goods, those producing more easily differentiable products were likely to adopt sooner than those producing more standardized products. Manufacturers of products sold in larger geographic markets were found to adopt sooner than those producing products sold in smaller markets. Larger market share was also found to induce earlier adoption of television advertising.