What is Advertising Content Worth? Evidence from the Motion Pictures Industry

Abstract

The large literature on the impact of advertising on consumers and firm behavior in marketing and economics has tried to distinguish between the informative and the persuasive roles of advertising. The extant literature typically uses advertising expenditure and implicitly assumes that advertising content is homogeneous. We analyze the contents of print ads in the motion picture industry to see whether the persuasive content or the informative content is more impactful on revenues. We estimate a simultaneous equation system via the GMM method and find that the persuasive content (role) of advertising is more significant than the informative content (role). Overall, we find that content elements matter in different ways. External validation components – persuasive contents, are much more important than other ad contents for predicting revenues and returns. Thus, we provide an interesting insight to this debate.