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

Anderson, Simon and Ciliberto, Federico and Liaukonyte, Jura (2012): Information content of advertising: empirical evidence from the OTC analgesic industry.

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Abstract

We empirically study the information-persuasion trade-off in advertising using data on the information content of advertisements, which we measure with the number of information cues in ads. 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 higher market shares and brands competing against strong generic substitutes have less information content.

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