Consumer Law

An Experiment on What Advertising Content is Worth

By Jeff Sovern

Marianne Bertrand of University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR), Dean S. Karlan of
Yale University - Economic Growth Center; Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab; Center for Global Development, Sendhil Mullainathan of Harvard University - Department of Economics; National Bureau of Economic Research (NBER), Eldar Shafir of Princeton University, and Jonathan Zinman of Dartmouth College have written What's Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment .  Here's the abstract:

Firms spend billions of dollars each year advertising consumer products in order to influence demand. Much of these outlays are on the creative design of advertising content. Creative content often uses nuances of presentation and framing that have large effects on consumer decision making in laboratory studies. But there is little field evidence on the effect of advertising content as it compares in magnitude to the effect of price. We analyze a direct mail field experiment in South Africa implemented by a consumer lender that randomized creative content and loan price simultaneously. We find that content has significant effects on demand. There is also some evidence that the magnitude of content sensitivity is large relative to price sensitivity. However, it was difficult to predict which particular types of content would significantly impact demand. This fits with a central premise of psychology - context matters - and highlights the importance of testing the robustness of laboratory findings in the field.

Full post as published by CL&P Blog on August 27, 2009 (boomark / email).