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Ad expenditures and perceived quality: a replication and extension

Author

Listed:
  • Koushyar Rajavi

    (Georgia Institute of Technology)

  • Donald R. Lehmann

    (Columbia University)

  • Kevin Lane Keller

    (Dartmouth College)

  • Alireza Golmohammadi

    (University of North Carolina at Charlotte)

Abstract

Several studies have explored the impact of advertising on perceived quality of brands. These include analytical ones Milgrom and Roberts (Journal of Political Economy, 94(4)796-821, 1986) and econometric studies (e.g., Tsai and Honka Marketing Science, 40(6)1030-1058, 2021). We replicate and extend the findings of Tsai and Honka (Marketing Science, 40(6)1030-1058, 2021) and Du et al. (Quantitative Marketing and Economics, 17(3)257-323, 2019), using a multi-firm, multi-year data set and focus on the impact of ad informativeness (measured as share of money spent on informative ads) on the link between ad expenditures and perceived brand quality. We find that the effect of ad expenditures on perceived quality is weaker for brands with more informative ads.

Suggested Citation

  • Koushyar Rajavi & Donald R. Lehmann & Kevin Lane Keller & Alireza Golmohammadi, 2023. "Ad expenditures and perceived quality: a replication and extension," Marketing Letters, Springer, vol. 34(1), pages 161-169, March.
    • Handle: RePEc:kap:mktlet:v:34:y:2023:i:1:d:10.1007_s11002-022-09646-3
    DOI: 10.1007/s11002-022-09646-3
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    References listed on IDEAS

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    1. Dina Mayzlin & Jiwoong Shin, 2011. "Uninformative Advertising as an Invitation to Search," Marketing Science, INFORMS, vol. 30(4), pages 666-685, July.
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    6. Debanjan Mitra & Peter N. Golder, 2006. "How Does Objective Quality Affect Perceived Quality? Short-Term Effects, Long-Term Effects, and Asymmetries," Marketing Science, INFORMS, vol. 25(3), pages 230-247, 05-06.
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