When Should “Consumers-as-Producers” Have to Comply With Consumer Protection Laws?

Since the 1960s, consumer protection law has been built on the contrast between large “producers” and small “consumers.” Today, instead, an ordinary consumer owns what can accurately be called a “personal mainframe”—a home computer whose processing power matches an IBM mainframe from about 10 Years ago. Equipped with a personal mainframe—an Information-Age factory—ordinary “consumers” at home are increasingly also becoming “producers.” As unregulated consumers become regulated producers, a major legal question is whether and when the individual should have to comply with consumer protection laws. The discussion here selects four examples of US legal rules that might apply to consumers-as-producers, with recommendations spanning the range of possibilities: (1) consumer privacy legislation: creating a threshold, with no compliance required for databases of fewer than 5,000 names, is recommended; (2) advertising substantiation: concerning the requirement that advertisers have a “reasonable basis” for their claims, applying current law to small advertisers is recommended; (3) spam: current law does not create a threshold for those who send a few commercial emails, but such a threshold is worth considering; (4) political blogging: the author agrees with the US Federal Election Commission decision to create a major exemption from campaign finance laws for online political advocacy, even for large blogs or websites. The common theme among these recommendations is to describe the sort of harm that existing law seeks to reduce. The approach here next looks at how the use of personal mainframes affects creation of those harms. Where the sorts of harm are likely to be created by consumers-as-producers, the analysis tilts towards requiring compliance. Where the sorts of harms are unlikely to be caused by consumers-as-producers, then the case for an exception is stronger.

Modeling heterogeneous effective advertising stock using single-source data

This paper presents a nonlinear modeling of market response between advertising stock and direct utility with heterogeneous parameters using single-source data. We examine advertising threshold effects and measure the effective advertising stock at the individual consumer level. Two kinds of information, i.e., TV advertising exposure data and consumer’s purchase history data, are combined for the modeling. The former is used for constructing advertising stock over calendar time via heterogeneous carryover parameters and the latter is applied to the choice model. The Markov chain Monte Carlo (MCMC) method is applied to estimate these heterogeneous parameters. Compared to other possible nonlinear specifications, it is shown that the proposed threshold utility function model with discontinuity at the threshold performs better than other smooth market response models. The empirical results support the existence of an advertising threshold and suggest the pulsing or “on/off” policy for our datasets. In terms of the effective reach, implying the reach after suspending the ad exposure to investigate how it is damping out for a possible “on/off” advertising policy, the optimal “off” interval was measured to be quite short to support a high-frequency pulsing policy, because the carryover parameter as well as the difference of ad stock and threshold are not large enough for our datasets.      

Exposure order effects and advertising competition

This paper applies the theories of exposure order effects, developed in the psychology literature, to an industrial organization model to explore their role in advertising competition. There are two firms and infinitely many identical consumers. The firms produce a homogeneous product and distribute their brands through a common retailer. Consumers randomly arrive at the retailer and buy their most preferred brands. The order in which a consumer sees the advertising messages affects his brand preferences. Under the primacy effect the consumer prefers the brand he first saw advertised, under the recency—the last encountered brand. The equilibrium of the advertising game is characterized separately under the primacy and the recency effects. In the first setting all consumers are initially unaware of the product existence. The equilibrium advertising intensities, remarkably, do not depend on the type of exposure order effect. In the other two settings some consumers have already formed their brand preferences. The primacy and the recency effects give rise to different equilibrium outcomes.     

从概念的符号表达到沟通的价值创造——知识产品营销时代的广告变革

随着知识经济的发展,越来越多的知识产品进入我们的日常生活,并且实物产品也开始通过知识化来取得竞争优势。知识产品所具有的无形性、路径依赖性和共生性等特点,使营销路径发生变化的同时,也促使广告产业的核心价值链以及广告运作从概念的符号表达到沟通价值创造的转变。     

Targeted advertising as a signal

This study presents a signaling model of advertising for horizontally differentiated products. The central ingredients of the model are two important characteristics of advertising—targeting, and noisy information content. The theory yields interesting results about the informational role of targeted advertising, and its consequences. First, targeting can itself serve as a signal on product attributes. Second, the effectiveness of targeting depends not only on firms knowing consumer preferences, but on consumers knowing that firms know this. This creates a distinction between strategies of targeting and personalization. Third, the effectiveness of targeting in equilibrium may (far) exceed the information contained directly in the targeted message. Fourth, information content is not, however, superfluous. Specifically, when ads contain no information, a targeting equilibrium does not exist. Together, these results reveal how advertising conveys information both through the content of the message and the firm’s choice of advertising medium. Furthermore, the model is robust to the various critiques of prior work on ads-as-signals: namely, that ad content is irrelevant, ad exposure is unnecessary, and the choice of ads as signals is inherently arbitrary.

The effect of advertising on brand awareness and perceived quality: An empirical investigation using panel data

We use a panel data set that combines annual brand-level advertising expenditures for over three hundred brands with measures of brand awareness and perceived quality from a large-scale consumer survey to study the effect of advertising. Advertising is modeled as a dynamic investment in a brand’s stocks of awareness and perceived quality and we ask how such an investment changes brand awareness and quality perceptions. Our panel data allow us to control for unobserved heterogeneity across brands and to identify the effect of advertising from the time-series variation within brands. They also allow us to account for the endogeneity of advertising through recently developed dynamic panel data estimation techniques. We find that advertising has consistently a significant positive effect on brand awareness but no significant effect on perceived quality.

广告专业理论与实践互动教学法研究

我国的广告教育是在广告市场的催生下高速发展起来的。目前,广告学专业理论体系尚不完善,专业教学方法和手段尚在探索中。采取互动的教学手段,把广告学专业理论与实践教学有效地结合起来,是培养专门化广告人才的积极途径。互动教学法作为一种现代教学方法,能够充分调动教师与学生两个方面的积极性,充分利用一切有利于教学活动的社会资源,使学生变被动学习为主动学习。本文分析了互动教学法的内涵、本质,及其积极意义,提出在广告学专业实施互动教学法的五种形式,为培养高素质的广告人才,推动我国广告行业的发展,提供了宝贵的参考意见。     

Advertising, Its Determinants, and Market Structure

This study derives a formal model of firm advertising behavior and applies it to the industry level to figure out the relationship between advertising and market structure. The firm advertising model shows that both consumer preference andfirm-specific advertising competence jointly determineprofit-maximizing advertising intensity. At the industry level, advertising intensity is represented multiplicatively by consumer preference and a measure of market structure, which reflects the joint distribution of the levels of advertising competence and market shares among firms. The new market structure measure suggests that those single-dimensional measures of market structure such as seller concentration and the Herfindahl index are inadequate in explaining interindustry differences in advertising intensity, and that the long-debated advertising-concentration relationship differs depending primarily on the appropriability of advertising. An empirical analysis of 426 five-digit Korean manufacturing industries shows that an inverted U-shaped relationship between the Herfindahl index and industry advertising intensity is observed for consumer goods industries but a lazy J-shaped relationship for producer goods industries.     

Advertising Bans, Monopoly, and Alcohol Demand: Testing for Substitution Effects using State Panel Data

Using a panel of 45 states for the period 1982–1997,this study analyzes the importance of severalrestrictive alcohol regulations, including advertising bans for billboards, bans of price advertising, state monopoly control of retail stores, and changes in the minimum legal drinking age. In contrast to previous research, the study allows for substitution among beverages as a response to a regulation that targets a specific beverage. A restrictive law that applies only to one beverage (or one form of advertising) can result in substitution toward other beverages (or non-banned media). Allowing for substitution means that the net effect on total alcohol consumption is uncertain, and must be determined empirically. The empirical results demonstrate that monopoly control of spirits reduces consumption of that beverage, and increases consumption of wine. The effect on beer is positive, but is not statistically significant. The net effect on total alcohol is significantly negative. Higher minimum legal drinking age laws have negative effects on beverage and total alcohol consumption. Bans of advertising do not reduce total alcohol consumption, which partly reflects substitution effects. The study thus demonstrates the possible unintended consequences of restrictive alcohol regulations.     

Do ads that tell a story always perform better? The role of character identification and character type in storytelling ads

The growing use of storytelling as an advertising strategy for brands online poses the question of their relative effectiveness compared to more factual types of ads. In this context, this article focuses on the role of character identification and character type in the effects of narrative transportation that occur from storytelling ads. Using four experimental studies in two different contexts, two brand types, and two character types (human versus animal), the findings present a cautionary tale for the use of storytelling. By generating higher levels of narrative transportation, storytelling video ads can reduce character identification, which results in an overall decrease in positive attitude toward the brand, when using animal characters. These main findings are nuanced in the presence of joyful emotions. Implication for research and practice are discussed.