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Advertising as a Reminder : Evidence from the Dutch State Lottery

Author

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  • He, Chen

    (Tilburg University, Center For Economic Research)

  • Klein, Tobias

    (Tilburg University, Center For Economic Research)

Abstract

We use high frequency data on TV and radio advertising together with data on online sales for lottery tickets to measure the short run effects of advertising. We find them to be strong and to last for up to about 4 hours. They are the bigger the less time there is until the draw. We develop the argument that this finding is consistent with the idea that advertisements remind consumers to buy a ticket and that consumers value this. Then, we point out that in terms of timing the interests of the firm and the consumers are aligned: consumers wish to be reminded in a way that makes them most likely to consider buying a lottery ticket. We present direct evidence that this does not only affect the timing of purchases, but leads to market expansion. Then, we develop a tractable dynamic structural model of consumer behavior, estimate the parameters of this model and simulate the effects of a number of counterfactual dynamic advertising strategies. We find that relative to the actual schedule it would be valued by the consumers and profitable for the firm to spread advertising less over time and move it to the last days before the draw.

Suggested Citation

  • He, Chen & Klein, Tobias, 2018. "Advertising as a Reminder : Evidence from the Dutch State Lottery," Discussion Paper 2018-019, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:0791692c-433c-4e8d-8374-ac46a1269ef7
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    References listed on IDEAS

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    Cited by:

    1. He, Chen, 2018. "Essays on the role and effects of advertising," Other publications TiSEM 47a3272a-54f1-4a90-9714-c, Tilburg University, School of Economics and Management.

    More about this item

    Keywords

    Dynamic demand; reminder advertising; adoption model;

    JEL classification:

    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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