Getting into Your Head(Ache): The Information Content of Advertising in the Over-the-Counter Analgesics Industry

Anderson, Simon and Ciliberto, Federico and Liaukonyte, Jura (2010): Getting into Your Head(Ache): The Information Content of Advertising in the Over-the-Counter Analgesics Industry.

Abstract

We study how much information firms include in their advertisements and what determines their choices. We use data from advertisement videos from the US OTC analgesics industry between 2001 and 2005 to measure information content in ads. For each video we code the number of cues it contains. The correlation between any two cues is rarely large, suggesting that each cue provides different information.

We find: i) brands with inherently better characteristics (e.g. faster relief) transmit more information; ii) comparative advertisements contain significantly more information than self-promotion ads; iii) market share is negatively associated with the amount of information content; iv) a higher market share of the generic version of a brand is also associated with less information by the brand. Not controlling for endogeneity of market share and the decision to use comparative advertising would lead to significant estimation bias. Result (iii) is consistent with recent theoretical work that larger firms disclose less information, while result (iv) indicates the likely presence of information spillovers from brands to their generic counterparts.

• Item Type: MPRA Paper
• Language: English
• Keywords: Information Content, Advertising, Comparative Advertising, Content Analysis
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M3 - Marketing and Advertising > M37 - Advertising; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L15 - Information and Product Quality ; Standardization and Compatibility

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