Michaela Draganska

Internet Versus Television Advertising: A Brand-Building Comparison

Many advertisers are reluctant to shift a large proportion of their advertising budgets to the Internet because they still view television advertising as the main vehicle for building a brand. Using a unique and rich data set comprising 20 campaigns across a variety of industries, this study demonstrates that Internet ads perform on par with television ads on the brand-building metrics that advertisers use and trust. The authors extend traditional brand–message recall measurements to facilitate comparisons between Internet formats and television by supplementing brand–message surveys conducted during the campaign with a set of precampaign surveys to control for preexisting brand knowledge. They find that accounting for differences in preexisting brand knowledge is paramount in obtaining valid comparisons across advertising formats because people who are exposed to Internet display ads have significantly lower levels of preexisting brand knowledge than television viewers. Without considering the differences in these “initial conditions,” television advertising seems to be more effective than advertising on the Internet, but when the preexisting differences among media formats are taken into account, the brand recall lift measures for Internet ads are statistically indistinguishable from comparable television lift measures.

A Likelihood Approach to Estimating Market Equilibrium Models

This paper develops a new likelihood-based method for the simultaneous estimation of structural demand-and-supply models for markets with differentiated products. We specify an individual-level discrete-choice model of demand and derive the supply side assuming manufacturers compete in prices. The proposed estimation method considers price endogeneity through simultaneous estimation of demand and supply, allows for consumer heterogeneity, and incorporates a pricing rule consistent with economic theory.The basic idea behind the proposed estimation procedure is to simulate prices and choice probabilities by solving for the market equilibrium. By repeating this many times, we obtain an empirical distribution of equilibrium prices and probabilities. The empirical distribution is then smoothed and used in a likelihood procedure to estimate the parameters of the model. The advantage of this method is that it avoids the need to perform a transformation of variables. If the tastes of consumers are independent across market periods, our approach yields maximum likelihood estimates; otherwise, it yields consistent but not fully efficient partial likelihood estimates.

Empirical models of manufacturer-retailer interaction: A review and agenda for future research

The nature of the interaction between manufacturers and retailers has received a great deal of empirical attention in the last 15 years. One major line of empirical research examines the balance of power between them and ranges from reduced form models quantifying aggregate profit and other related trends for manufacturers and retailers to structural models that test alternative forms of manufacturer-retailer pricing interaction. A second line of research addresses the sources of leverage for each party, e.g., trade promotions and their pass-through, customer information from loyalty programs, manufacturer advertising, productassortment in general, and private label assortment in particular. The purpose of this article is to synthesize what has been learnt about the nature of the interaction between manufacturers and retailers and the effectiveness of each party’s sources of leverage and to highlight gaps in our knowledge that future research should attempt to fill. (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrow (This abstract was borrowed from another version of this item.)

Determinants of Margins in the Distribution Channel: An Empirical Investigation

In this paper we describe how margins in the channel vary over time within a product category and identify the market, manufacturer, and retailer characteristics that explain this variation. To obtain the equilibrium margins, we explicitly model the behavior of the various agents in the marketplace. Because the behavior of the agents changes in response to changes in the economic environment, we observe shifts in the total channel margins and the way they are split between the channel members. We explain this variation by examining the impact of directly measurable factors on total margins in the distribution channel and the share of these margins that manufacturers and retailers obtain. We illustrate the proposed approach using data for the ground coffee category in Germany. Our empirical analysis demonstrates that while the market-level factors affect total margins in the channel, size and other characteristics of manufacturers and retailers have a larger impact on the way margins are split. Our findings have immediate implications for the product portfolios offered by manufacturers, the positioning of store brands, and the retail service level.

Manufacturer Advertising and Retail Prices: An Empirical Investigation

How do retail prices respond to manufacturer advertising? We use over two years of weekly data for 286 products across eleven product categories to show that retail prices change over and above what is expected after accounting for changes in wholesale prices. This suggests that retailers may behave in a strategic fashion and take advantage of the increased consumer pull when a brand is being advertised. The estimated advertising effects are of sizable magnitude and vary considerably across products and categories. We propose a number of product and category characteristics that may help explain the way retailers adjust prices in the presence of manufacturer advertising and explore their impact in our data.

Can't Buy Me Love: Investigating the Effect of Advertising on Brand Awareness and Perceived Quality Using Panel Data

We use a panel data set that combines annual brand-level advertising expenditures for over three hundred brands with measures of brand awareness and perceived quality from a large-scale consumer survey to study the effect of advertising. Advertising is modeled as a dynamic investment in a brands stocks of awareness and perceived quality and we ask how such an investment changes brand awareness and quality perceptions. Our panel data allow us to control for unobserved heterogeneity across brands and to identify the effect of advertising from the time-series variation within brands. They also allow us to account for the endogeneity of advertising through recently developed dynamic panel data estimation techniques. We find that advertising has consistently a significant positive effect on brand awareness but no significant effect on perceived quality.