Pei-yu Chen
Associate Professor of MIS
Fox School of Business, Temple University
May 10, 2013
Speakman Hall 200, 10:00am – 1130am
Seminar Title: Does Multi-media Advertising Pay Off? Quantifying the Value of Multi-media Advertising on Brand Purchase
Abstract
Among the many decisions marketing managers must make is how to spread advertising dollars across the broad swath of available media: television, the Internet, social media, for example. With increased spending comes the need for accountability and for understanding the effectiveness of these marketing actions. Marketing practitioners, however, have been unable to efficiently measure the effectiveness of their multi- media advertising strategy in monetary terms using robust methodologies that can capture the complexity and diversity of multi-media efficacy, and thus fail to comprehensively evaluate multi-media investment with an eye toward more effective distribution of advertising dollars.
We address this industry need by quantifying the value of multi-media advertising for business. Our research interest is two-fold: Does social media affect brand purchase? If yes, how is the brand purchase generated in presence of multi-media advertising? Specifically, we draw upon the daily basis data of what households have bought, what they have watched on TV, their banner ad exposures, and what have been presented to them on their Facebook news feeds for a specific retailing product category over a 12-month observation window. We first examine whether multi-media advertising drive brand purchase, in terms of purchase counts, spending per purchase, and the total purchase value. Then we explore plausible explanations of how these brand purchases are created. We apply econometric modeling approaches, including fixed effect modeling, Fama-MacBeth cross-sectional regressions, and Seemingly Unrelated Regressions (SUR), to estimate these effects at disaggregate level, yet controlling for advertising endogeniety and heterogeneity.
We find that multi-media advertising effect exist and is important, while the relative effectiveness vary across media. Much of the impact of multi-media advertising can be attributed to the focal company’s market expansion, promotion on future purchase, and advertising externalities from competing brands. This study adds to our empirical knowledge of how different media channels work in concert – yet differing in their relative effectiveness – to drive marketing effectiveness. The findings point to how managers could gauge the potential value of seeding additional advertising channel and optimize the marketing mix to generate brand purchase.