Can your advertising really buy earned impressions? The effect of brand advertising on word of mouth

Mitchell J. Lovett, Renana Peres, Linli Xu

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Paid media expenditures could potentially increase earned media exposures such as social media posts and other word-of-mouth (WOM). However, academic research on the effect of advertising on WOM is scarce and shows mixed results. We examine the relationship between monthly Internet and TV advertising expenditures and WOM for 538 U.S. national brands across 16 categories over 6.5 years. We find that the average implied advertising elasticity on total WOM is small: 0.019 for TV, and 0.014 for Internet. On the online WOM (measured volume of brand chatter on blogs, user-forums, and Twitter), we find average monthly effects of 0.008 for TV and 0.01 for Internet advertising. Even the categories that have the strongest implied elasticities are only as large as 0.05. Despite this small average effect, we do find that advertising in certain events may produce more desirable amounts of WOM. Specifically, using a synthetic control approach, we find that being a Super Bowl advertiser causes a moderate increase in total WOM that lasts 1 month. The effect on online WOM is larger, but lasts for only 3 days. We discuss the implications of these findings for managing advertising and WOM.

Original languageEnglish (US)
Pages (from-to)215-255
Number of pages41
JournalQuantitative Marketing and Economics
Volume17
Issue number3
DOIs
StatePublished - Sep 15 2019

Fingerprint

Word-of-mouth
Elasticity
World Wide Web
Expenditure
Advertising expenditures
National brands
Super Bowl
Blogs
Twitter
Academic research
Internet advertising
Social media
Media exposure

Keywords

  • Advertising
  • Brands
  • Dynamic panel methods
  • Earned media
  • Paid media
  • Synthetic control methods
  • Word of mouth

Cite this

Can your advertising really buy earned impressions? The effect of brand advertising on word of mouth. / Lovett, Mitchell J.; Peres, Renana; Xu, Linli.

In: Quantitative Marketing and Economics, Vol. 17, No. 3, 15.09.2019, p. 215-255.

Research output: Contribution to journalArticle

@article{29eb6433cab74f25a8e13dc321b7746b,
title = "Can your advertising really buy earned impressions? The effect of brand advertising on word of mouth",
abstract = "Paid media expenditures could potentially increase earned media exposures such as social media posts and other word-of-mouth (WOM). However, academic research on the effect of advertising on WOM is scarce and shows mixed results. We examine the relationship between monthly Internet and TV advertising expenditures and WOM for 538 U.S. national brands across 16 categories over 6.5 years. We find that the average implied advertising elasticity on total WOM is small: 0.019 for TV, and 0.014 for Internet. On the online WOM (measured volume of brand chatter on blogs, user-forums, and Twitter), we find average monthly effects of 0.008 for TV and 0.01 for Internet advertising. Even the categories that have the strongest implied elasticities are only as large as 0.05. Despite this small average effect, we do find that advertising in certain events may produce more desirable amounts of WOM. Specifically, using a synthetic control approach, we find that being a Super Bowl advertiser causes a moderate increase in total WOM that lasts 1 month. The effect on online WOM is larger, but lasts for only 3 days. We discuss the implications of these findings for managing advertising and WOM.",
keywords = "Advertising, Brands, Dynamic panel methods, Earned media, Paid media, Synthetic control methods, Word of mouth",
author = "Lovett, {Mitchell J.} and Renana Peres and Linli Xu",
year = "2019",
month = "9",
day = "15",
doi = "10.1007/s11129-019-09211-9",
language = "English (US)",
volume = "17",
pages = "215--255",
journal = "Quantitative Marketing and Economics",
issn = "1570-7156",
publisher = "Kluwer Academic Publishers",
number = "3",

}

TY - JOUR

T1 - Can your advertising really buy earned impressions? The effect of brand advertising on word of mouth

AU - Lovett, Mitchell J.

AU - Peres, Renana

AU - Xu, Linli

PY - 2019/9/15

Y1 - 2019/9/15

N2 - Paid media expenditures could potentially increase earned media exposures such as social media posts and other word-of-mouth (WOM). However, academic research on the effect of advertising on WOM is scarce and shows mixed results. We examine the relationship between monthly Internet and TV advertising expenditures and WOM for 538 U.S. national brands across 16 categories over 6.5 years. We find that the average implied advertising elasticity on total WOM is small: 0.019 for TV, and 0.014 for Internet. On the online WOM (measured volume of brand chatter on blogs, user-forums, and Twitter), we find average monthly effects of 0.008 for TV and 0.01 for Internet advertising. Even the categories that have the strongest implied elasticities are only as large as 0.05. Despite this small average effect, we do find that advertising in certain events may produce more desirable amounts of WOM. Specifically, using a synthetic control approach, we find that being a Super Bowl advertiser causes a moderate increase in total WOM that lasts 1 month. The effect on online WOM is larger, but lasts for only 3 days. We discuss the implications of these findings for managing advertising and WOM.

AB - Paid media expenditures could potentially increase earned media exposures such as social media posts and other word-of-mouth (WOM). However, academic research on the effect of advertising on WOM is scarce and shows mixed results. We examine the relationship between monthly Internet and TV advertising expenditures and WOM for 538 U.S. national brands across 16 categories over 6.5 years. We find that the average implied advertising elasticity on total WOM is small: 0.019 for TV, and 0.014 for Internet. On the online WOM (measured volume of brand chatter on blogs, user-forums, and Twitter), we find average monthly effects of 0.008 for TV and 0.01 for Internet advertising. Even the categories that have the strongest implied elasticities are only as large as 0.05. Despite this small average effect, we do find that advertising in certain events may produce more desirable amounts of WOM. Specifically, using a synthetic control approach, we find that being a Super Bowl advertiser causes a moderate increase in total WOM that lasts 1 month. The effect on online WOM is larger, but lasts for only 3 days. We discuss the implications of these findings for managing advertising and WOM.

KW - Advertising

KW - Brands

KW - Dynamic panel methods

KW - Earned media

KW - Paid media

KW - Synthetic control methods

KW - Word of mouth

UR - http://www.scopus.com/inward/record.url?scp=85069740443&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85069740443&partnerID=8YFLogxK

U2 - 10.1007/s11129-019-09211-9

DO - 10.1007/s11129-019-09211-9

M3 - Article

AN - SCOPUS:85069740443

VL - 17

SP - 215

EP - 255

JO - Quantitative Marketing and Economics

JF - Quantitative Marketing and Economics

SN - 1570-7156

IS - 3

ER -