Dynamic market impacts of generic dairy advertising

Generic advertising of fluid milk and cheese represents the principal promotional activity undertaken with the $370 million per year provided by dairy farmers and fluid milk processors. This article describes a stock-flow-feedback simulation model that includes 17 intermediate and final dairy products, short-term and long-term milk supply response and government policies that influence the impacts of generic advertising on net revenues for dairy farmers. Permanent increases in generic advertising expenditures increase net revenues for dairy farmers, with a cumulative net benefit to cost ratio of 2.8. Permanent decreases produce a larger reduction in net revenues and indicate a net benefit to cost ratio larger than 4.5. Spending a larger proportion of existing generic advertising funds on cheese rather than fluid milk would also markedly increased dairy farmer net revenues. Generic advertising increases net revenues for dairy farmers even when industry supply response and government regulation are accounted for.     

New product preannouncements,advertising investments,and stock returns

This study examines the synergistic effects of advertising spending and new product preannouncements (NPPAs) on stock market responses. The empirical results indicate that returns of preannouncing firms over both the short- and long-term could be improved by an increase in advertising expenditure. Additionally, the results also show that the positive impacts of earnings and revenues can be enhanced, while the negative influence of trading costs can be reduced, for preannouncing firms with higher advertising expenditures. The holding returns of institutional investors can also increase with greater spending on advertising. Therefore, marketing communication strategies that aim to reduce information asymmetry within NPPAs, coupled with greater advertising expenditures, would yield more favorable investor responses.     

Exploring the Effects of Compliance/Non-Compliance Message Framing,Desirability of End States,and Brand Zealotry on Consumers’ Responses to Wearables Advertising

Abstract

An experiment examined the combinatory effects of advertising message framing, desirability of end states, and brand zealotry on consumers’ responses to wearables advertising. The compliance framed ad elicited more favorable ad attitude, purchase intention, and word of mouth (WOM) intention compared with the noncompliance framed ad. Results also showed brand zealotry moderated the interaction between message framing and desirability of end states on WOM intention. Specifically, for low brand zealotry individuals, the compliance-framed ad elicited greater WOM intention than the noncompliance-framed ad regardless of the desirability of end-states. The desirable end-state ad triggered a greater WOM intention than the undesirable end-state ad regardless of message framing. For high brand zealotry individuals, the effect of message framing on WOM intention relied on the desirability of end-states. Theoretical and practical implications were discussed.     

Advertising and National Consumption: A Path Analytic Re-Examination of the Galbraithian Argument

Abstract

A relatively new analytic technique, PATHEVAL, is used to re-examine an old issue, the relationship between advertising and national consumption. Using cross-national annual data collected on 53 nations, the authors find little evidence for Galbraith's view of advertising as a most persuasive force in altering people's spending and savings habits. Four variables are included in the path analytic model: national income, energy use — a proxy for industrial development, disposable income, private final consumption, and national advertising expenditures. In the Galbraithian argument, disposable income and industrial development predict to advertising, which leads to consumption. The contentions of Galbraith's critics are supported by the analysis: income appears to lead to consumption, which in turn, leads to advertising.     

It pays to pay attention: How firm's and competitor's marketing levers affect investor attention and firm value

Investors' attention to a firm's stock has been demonstrated to influence stock returns (Da et al., 2011). But does a firm's marketing information draw attention to a firm's stock? Research in finance, accounting, and marketing has investigated advertising as one potential driver of investors' attention to a firm's stock. How about other potential marketing drivers? The authors develop hypotheses related to the impact of the changes in four marketing levers: advertising, product development announcements, WOM, and customer satisfaction on the change in investor attention to a firm's stock. Furthermore, they investigate the moderating role of competitors' marketing levers in these relationships.To test the hypotheses, they compile a panel dataset with 349 firms covering the 2007–2017 period. The results suggest that the changes in the focal firm's advertising and WOM have a positive and significant impact on the changes in investor attention to the focal firm’s stock. Furthermore, these effects are amplified when there is an increase in competitors' advertising spending and WOM, respectively. For the customer satisfaction lever, the results suggest that the change in competitors' customer satisfaction enhances the impact of the change in focal firm's customer satisfaction on investor attention. Collectively, the results suggest that investors attend to the firm's and its competitors' marketing information in a much more nuanced manner than previously thought.     

Is a website known by the banner ads it hosts?

While marketers often rely upon banner ads to generate revenues, it is unclear as to how these ads might influence consumer perceptions of host websites. In this paper, we conduct three studies to examine the effect of animation and brand advertised in a banner ad on consumers’ attitude towards a host website, as well as word-of-mouth behaviour. Results of the first study reveal that consumers are irritated with unfavourable banner brands and that irritation, in turn, negatively affects their attitude towards the host website. We demonstrate that banner brand and banner type serve as contextual cues that influence judgements of the host website due to a forward spillover effect. Findings of the second study demonstrate that a host website, corol- larily, serves as a context to negatively influence evaluations of favourable brands mainly for animated banner ads - a reciprocal spillover effect. The third study validates and extends the findings of the first study by adopting methodological pluralism through a different approach to stimuli selection and experimental manipulation. Results indicate that, while presence of animation has a negative influence on the host site and WOM behaviour when the brand advertised is an unfavourable one, it neither benefits nor hurts a host website evaluation and WOM behaviour when a favourable brand is advertised. Managerial implications of our findings are also discussed.     

Advertising and Steiner’s Dual Stage Model: Our Assessment

Between 1967 and 1979, we produced a number of studies that explored different facets of the economics of advertising. This work culminated in our 1974 book entitled Advertising and Market Power. Our leading hypothesis was that heavy advertising expenditures often but not always had anti‐competitive effects. And our primary empirical evidence in support of this hypothesis was that industries with heavy advertising expenditures also reported higher profit rates, which we interpreted as indicating that higher prices followed when manufacturers can effectively spend large amounts on advertising. Since that time, Robert Steiner has developed a model of firm behaviour for consumer goods industries. He finds that distribution margins are generally higher where manufacturer prices are lower. Furthermore, heavy manufacturer advertising is likely to depress distribution margins for heavily advertised products. While our earlier work implicitly assumed that distribution margins are generally the same regardless of the volume of advertising, Steiner’s results raise doubt on this assumption. Steiner’s model must therefore be acknowledged when interpreting our earlier findings.     

Advertising Spending Efficiency of Beauty-Care Product Companies: Comparison Between Local Companies and Multinational Companies in the U.S. Market

ABSTRACT

In this study, the authors apply data envelopment analysis (DEA) to evaluate the financial efficiency of U.S. beauty-care companies and foreign companies based on their media advertising expenditures in eight key media outlets (i.e., magazines, newspapers, outdoor, network TV, spot TV, syndication TV, cable TV, and radio) and their revenues in the U.S. market. The analyses revealed that 47.4% of the companies examined advertised efficiently. Companies that advertised inefficiently could save, on average, 75% of their advertising spending. The results also indicated that although U.S. companies are more efficient overall than are non-U.S. companies in terms of advertising spending, the competitiveness of non-U.S. companies should not be underestimated because some of them advertised efficiently (e.g., Kao Corporation from Japan) or almost efficiently.     

Impacts of Generic and Brand Advertising in the U.S. Potato Market

Abstract

The impacts of generic and branded advertising in the U.S. fresh potato, retail frozen potato, and potato chip markets are examined under exogenous and endogenous raw potato supply. The Almost Ideal Demand System is used to estimate the demand components. The general equilibrium elasticities derived from the complete model are used in a simulation analysis to assess the cross-commodity effects of incremental increases in advertising expenditures on equilibrium prices, quantities, revenues, and profits in each sector. The endogeneity of grower supply mitigate the impacts of advertising in the raw commodity sector and in the retail sectors.     

Assessing customer passion,commitment, and word-of-mouth intentions in digital assistant usage: The moderating role of technology anxiety

Consumers develop a passion for the use of innovations, which is a critical determinant of their success. Research has largely examined drivers of initial acceptance of digital assistants (DAs) and has yet to fully understand the factors driving or deterring consumers’ passion towards DAs and the behavioural outcomes. Drawing on the stimulus-organism-response framework, this study examines a unique set of factors (usefulness, ease of use, privacy concern, and localisation) that act as stimuli to drive an organismic state of passion for DAs, and how this produces behavioural responses of word-of-mouth (WOM) intention and commitment to DA use. The study also examines how technology anxiety moderates passion’s impact on WOM intentions and commitment. The findings show that usefulness, ease of use, privacy concern, and localisation are significant explanatory variables of consumers’ passion towards DAs. Furthermore, passion towards DAs results in WOM intentions and commitment to its use. The findings further show that passion’s effect on DAs in explaining WOM intentions and commitment is weakened by technology anxiety. Lastly, passion is the mediating mechanism through which usefulness, ease of use, privacy concern, and localisation impact WOM intentions and commitment. The implications of these findings for theory and practice are highlighted.     

Brand personality appeal,brand relationship quality and WOM transmission: a study of consumer markets in Vietnam

This study investigates the impact of brand personality appeal on both brand relationship quality and word-of-mouth (WOM) transmission in Vietnam. It also examines the role of consumer attitudes towards advertising and public relations on brand personality appeal as well as brand relationship quality. An empirical test with a sample of 477 consumers by means of structural equation modelling reveals that brand personality appeal has a positive impact on both brand relationship quality and WOM transmission and that brand relationship quality has a positive effect on WOM transmission. Furthermore, attitudes towards public relations have positive impacts on both brand personality appeal and brand relationship quality. Finally, attitudes towards advertising have a positive impact on brand personality appeal but not on brand relationship quality.     

Examining the Relationship Between Advertising Expenditures and Sales of Quick-Service Restaurants in the United States

The United States fast-food industry represents an important business sector with respect to national and international economics. Due to the low levels of product differentiation and high industry competition, fast-food companies heavily engage in advertising and branding activities. Quick-service restaurants (QSR) are the largest and growing segment of the fast-food industry. The current study examined the longitudinal relationship between advertising expenditures and sales revenues for the QSR industry and leading QSR brands in the United States from 1986 to 2007. Hypotheses were tested using a time-series regression analysis. Managerial, research, and policy implications of the results are provided.     

Mixed emotional appeal enhances positive word-of-mouth: The moderating role of narrative person

Underpinned by feelings-as-information theory and construal level theory, this present research examines the effect of mixed emotions in advertising on word of mouth (WOM) and the moderating role of a narrative person. Two experiments were conducted featuring two different products (cake mix in Study 1; watch in Study 2) and different narratives to elicit mixed emotions. The objective of Study 1 was to confirm the moderating effect of the narrative person on the relationship between mixed emotion and positive WOM. Study 2 aimed to provide stronger empirical evidence for the findings of Study 1 and test the mediating effects of inspiration (when it uses a third-person narration) and discomfort (when it uses the first-person narration). In general, the results show that a mixed emotional appeal is more effective than pure happiness in increasing positive WOM when the third-person narration is used. The relationship between mixed emotions and WOM is mediated by inspiration (when using a third-person narration) and discomfort (when using the first-person narration). This extends previous research which provides inconclusive evidence on the consequences of mixed emotional appeal. The current study also broadens the application of linguistics in emotion and consumer behavior literature while providing important implications for marketers in their advertising strategy.     

Does advertising indicate product quality? Evidence from prelaunch and postlaunch advertising in the movie industry

Literature on the informative role of advertising indicates that advertising quantity can serve as an indicator of product quality. As product life cycles grow shorter, firms in many industries spend significant amounts on advertising during the prelaunch period to create large initial demand. Thus, the role of prelaunch advertising may differ from that of postlaunch advertising, and a proper understanding of these differences is important. This study provides an empirical investigation of whether advertising is a reliable indicator of quality before and after product launches, using the data from the movie industry. Analyses of 1078 movies released during 2003–2011 show that postlaunch advertising is a reliable quality indicator and increases revenues, whereas prelaunch advertising is not a reliable quality indicator, even if it leads to higher revenues.     

Advertising to a social network

Direct advertising—sending promotional messages to individual customers—is increasingly used by marketers as a result of the recent improvements in consumer reachability. Most current methods to calculate optimal budgets for such advertising campaigns consider customers in isolation and ignore word-of-mouth communication (WOM). When the customer base forms a network (as is the case in telecom or social network databases) ignoring WOM clearly leads to suboptimal advertising budgets. This paper develops a model to help address this challenge. We assume that firms know the network structure formed by customers but do not know (or are not allowed to use) data on individuals’ connections. Under this scenario, we compare the optimal campaign of a monopolist to that of firms competing in simultaneous-move or sequential-move games. The analysis provides two key insights: (i) we show that ignoring the existence of WOM leads to significant profit loss for firms and this is more so under competition. In particular, knowing the “density” of consumer connections is crucial for the design of optimal campaigns. (ii) Competition in direct advertising exhibits strong first-mover advantages and, even in a simultaneous-move game between identical firms, highly asymmetric outcomes are possible. The paper also explores two extensions. First, we study the nature of the trade-off between increasing network size versus increasing the connectivity between existing network members. Second, we investigate how firms’ advertising activity may endogenously grow the membership base.     

The Effect of Online Shopping Platform Strategies on Search,Display, and Membership Revenues

Most online shopping platform firms generate revenue from three sources: pay-per-click search advertising, pay-per-impression display advertising, and membership fees. The strategies that influence these revenue sources typically are studied individually, rather than in a holistic fashion. In response, this study uses time-series data with 18 million buyers and sellers from 2010 to 2011 and undertakes a quasi-experiment to analyze how the distinct effects of buyer- and seller-side strategies on revenues (1) vary across all three revenue sources and (2) depend differentially on a platform’s upmarket repositioning strategy. The results show that buyers that purchase through direct traffic (e.g., typing in the site address) yield more display advertising and membership fee revenues than those gained through organic traffic (e.g., landing from a search engine). Engagement strategies that appeal to established sellers (i.e., value-added services) yield more search advertising and membership revenue than those that appeal to new sellers (i.e., social forums). An upmarket repositioning strategy (i.e., eliminating low quality sellers) enhances the revenue effects of buyer traffic generation and seller engagement strategies. Post hoc analyses suggest that a 1% increase in direct traffic generates an additional $151,506 in display advertising revenue after (vs. before) the repositioning.     

Consistency and commonality in advertising content: Helping or Hurting?

Scholars and practitioners widely argue that strong, successful brands are built on consistent and unique positioning, which should be reflected in the brands’ advertising. Surprisingly, however, little empirical evidence supports this claim, especially with regard to advertising content. The authors investigate whether and to what extent brands’ advertising content consistency—the similarity in the firm’s own advertising content over time—and commonality—the similarity between the firm’s and competitors’ advertising content—affect brands’ sales. Insights emerge from the analysis of the impact on sales of the content of 247 television ads aired by 33 brands in six consumer packaged goods categories over a four-year period. Results indicate that more than advertising spending, both consistency and commonality in advertising content affect sales, especially with respect to long-term cumulative sales. However, brands differ considerably regarding the direction of the effects. While small brands tend to benefit from increased consistency and commonality in advertising content, large brands tend to suffer from increased consistency. Thus, whether consistency and commonality in advertising content will help or hurt depends on the size of the brand.     

Managing Word-of-Mouth: A Nonprofit Case Study

Word-of-mouth (WOM) is an important influence on the opinions of donors and their donation behaviors. Against a background of more professional donor relationship management, we investigate about how, if at all, nonprofits (NP) manage WOM. We report an in-depth case study of a single NP. We find that there is widespread appreciation that WOM influences NP performance indirectly through its impact on donor acquisition, donor loyalty, and organizational reputation. Whilst the organization employs networking and WOM practices, it stresses the reduction of negative WOM (NWOM) rather than the promotion of positive WOM (PWOM). Crisis management dominates the NP's WOM-related thinking. We find that PWOM emanates from many organizational influences including donor satisfaction, the welfare service itself, networking practices, external suppliers, alliances, its officers and communication practices including both advertising and public relations. We apply a new model, the eight pillars of WOM, to our analysis of WOM management in the case organization.     

The formation of habit and word-of-mouth intention of over-the-top platforms

The current study examines how video content on over-the-top (OTT) platforms and the enjoyment from watching them form habits and word-of-mouth (WOM) intentions. We propose a research model that integrates elements from the Self-Determination Theory (SDT) and the concept of “habit loop” from the Interest-Driven Creator (IDC) theory. The model was analyzed using PLS-SEM on 302 responses from OTT users. The study elucidates how video content availability helps in habit formation indirectly through perceived enjoyment. The results also demonstrated that the WOM of OTT platforms is explained by perceived enjoyment, affective commitment, and the habit of using the OTT platforms. The study highlights that habit is a significant predictor of affective commitment and WOM intention of hedonic apps. This is the first study to illustrate how video content availability affects users’ enjoyment, habitual use, and WOM intentions. Habit as a significant predictor of affective commitment and WOM intention of hedonic apps, like OTT platforms, is unprecedented.     

The commercial contribution of clinical studies for pharmaceutical drugs

Pharmaceutical drugs are rigorously evaluated through clinical studies. The commercial consequences of such clinical studies, both to the promotion for and sales of drugs, are largely under-researched. The present study answers the following research questions: 1) How does the evolution of clinical study outcomes affect product sales? 2) How does the evolution of clinical study outcomes affect a firm's promotion expenditures to physicians and consumers? 3) Is the assessment of the responsiveness of sales to promotion expenditures biased when the analyst omits the role of clinical studies? We summarize a comprehensive body of clinical studies in three metrics: valence, dispersion, and volume. We extend the literature with the following findings. A higher valence and volume of clinical studies (i.e., more positive and larger number of studies) increase sales. A higher valence of clinical studies increases spending on both direct-to-consumer advertising and direct-to-physician promotion. A higher dispersion among clinical studies decreases spending on direct-to-consumer advertising. A higher volume of clinical studies has no effect on direct-to-physician promotion, but decreases direct-to-consumer advertising. Furthermore, the results show that omitting these metrics from a market response model leads to an overestimation of the responsiveness of sales to promotion expenditures.