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Push-me pull-you: comparative advertising in the OTC analgesics industry

Anderson, Simon and Ciliberto, Federico and Liaukonyte, Jura and Renault, Regis (2012): Push-me pull-you: comparative advertising in the OTC analgesics industry.

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Abstract

We derive equilibrium incentives to use comparative advertising that pushes up own brand perception and pulls down the brand image of targeted rivals. Data on content and spending for all TV advertisements in OTC analgesics 2001-2005 enable us to construct matrices of dollar rival targeting and estimate the structural model. Using brands' optimal choices, these attack matrices identify diversion ratios, from which we derive comparative advertising damage measures. We find that outgoing comparative advertising attacks are half as powerful as self-promotion in raising own perceived quality and cause more damage to the targeted rival than benefit to the advertiser. Comparative advertising causes most damage through the pull-down effect and has substantial benefits to other rivals.

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