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Information content of advertising: Empirical evidence from the OTC analgesic industry

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  • Anderson, Simon P.
  • Ciliberto, Federico
  • Liaukonyte, Jura

Abstract

We develop an empirical study of the information–persuasion trade-off in advertising using data on the information content of ads, which we measure with the number of information cues in ads within an entire industry. The data are from video files of all advertisements in the OTC analgesics industry from 2001 to 2005. We propose a simple theoretical framework to motivate an ordered probit model of information content. We find that stronger vertical differentiation is positively associated with the delivery of more product information in a brand's advertisements: brands with higher levels of quality include more information cues. Next, comparative advertisements contain significantly more product information than self-promotional advertisements. Finally, brands with larger market shares and brands competing against generic substitutes with large market shares use ads that have less information content.

Suggested Citation

  • Anderson, Simon P. & Ciliberto, Federico & Liaukonyte, Jura, 2013. "Information content of advertising: Empirical evidence from the OTC analgesic industry," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 355-367.
    • Handle: RePEc:eee:indorg:v:31:y:2013:i:5:p:355-367
    DOI: 10.1016/j.ijindorg.2013.06.002
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    Cited by:

    1. Simon P. Anderson & Federico Ciliberto & Jura Liaukonyte & Régis Renault, 2016. "Push-me pull-you: comparative advertising in the OTC analgesics industry," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 1029-1056, November.
    2. Janssen, Aljoscha & Granlund, David, 2023. "The importance of the first generic substitution: Evidence from Sweden," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 1-25.
    3. Janssen, Aljoscha & Granlund, David, 2022. "The Importance of the First Generic Substitution: Evidence from Sweden," Working Paper Series 1428, Research Institute of Industrial Economics.
    4. Marcin Nowakowski & Barbara Nowakowska, 2016. "Message Strategy and Information Content of Advertising in Women’s Magazines in Poland (Strategia przekazu oraz tresc informacyjna reklam w czasopismach kobiecych w Polsce )," Research Reports, University of Warsaw, Faculty of Management, vol. 1(20), pages 123-135.
    5. Dubois, Pierre & Majewska, Gosia, 2022. "Mergers and Advertising in the Pharmaceutical Industry," CEPR Discussion Papers 17658, C.E.P.R. Discussion Papers.
    6. Ce Shang & Frank J. Chaloupka, 2017. "The Trend of Voluntary Warnings in Electronic Nicotine Delivery System Magazine Advertisements," IJERPH, MDPI, vol. 14(1), pages 1-12, January.
    7. Alipranti, Maria & Mitrokostas, Evangelos & Petrakis, Emmanuel, 2016. "Non-comparative and comparative advertising in oligopolistic markets," DICE Discussion Papers 231, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    8. Kenneth C. Wilbur, 2016. "Advertising Content and Television Advertising Avoidance," Journal of Media Economics, Taylor & Francis Journals, vol. 29(2), pages 51-72, April.
    9. Demetrios Vakratsas & Aneel Keswani & David Stolin, 2021. "Advertising persuasion in dual markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 239-245, January.
    10. Matthew McGranaghan & Jura Liaukonyte & Kenneth C. Wilbur, 2022. "How Viewer Tuning, Presence, and Attention Respond to Ad Content and Predict Brand Search Lift," Marketing Science, INFORMS, vol. 41(5), pages 873-895, September.
    11. Andrew T. Ching & Robert Clark & Ignatius Horstmann & Hyunwoo Lim, 2016. "The Effects of Publicity on Demand: The Case of Anti-Cholesterol Drugs," Marketing Science, INFORMS, vol. 35(1), pages 158-181, January.
    12. Jura Liaukonyte & Thales Teixeira & Kenneth C. Wilbur, 2015. "Television Advertising and Online Shopping," Marketing Science, INFORMS, vol. 34(3), pages 311-330, May.
    13. Liu, Xingyi, 2022. "Competitive pricing and advertising with spillover," Journal of Mathematical Economics, Elsevier, vol. 101(C).
    14. Barton, Jared & Castillo, Marco & Petrie, Ragan, 2016. "Negative campaigning, fundraising, and voter turnout: A field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 121(C), pages 99-113.

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    More about this item

    Keywords

    Information content; Advertising; Information–persuasion tradeoff; Content analysis;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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