TY - JOUR
T1 - Are Online and Offline Advertising Substitutes or Complements? Evidence from U.S. Food Industries
AU - He, Xi
AU - Lopez, Rigoberto
AU - Liu, Yizao
N1 - Publisher Copyright:
© 2018 Walter de Gruyter GmbH, Berlin/Boston 2018.
PY - 2018/3/26
Y1 - 2018/3/26
N2 - This article investigates the substitution between online advertising (ONLA) and offline advertising (OFFLA) as well as the impact of adopting ONLA on the total cost of advertising. We estimate an advertising translog cost function at the product-brand level, using monthly observations between 2005 and 2011 for each of three industries: beer, ready-to-eat cereals, and carbonated soft drinks. Although in all three industries we find that traditional media (TV and print) advertisements are close substitutes, we also find that ONLA is a complement to, rather than a substitute for, both TV and print media advertising. This may be explained by ONLA's targeting younger market segments and acting as a reinforcement of TV and print media advertising exposure. Further results show that the adoption of ONLA has lowered the cost of advertising for achieving a sales target and that its complementarity effect is weakening over time.
AB - This article investigates the substitution between online advertising (ONLA) and offline advertising (OFFLA) as well as the impact of adopting ONLA on the total cost of advertising. We estimate an advertising translog cost function at the product-brand level, using monthly observations between 2005 and 2011 for each of three industries: beer, ready-to-eat cereals, and carbonated soft drinks. Although in all three industries we find that traditional media (TV and print) advertisements are close substitutes, we also find that ONLA is a complement to, rather than a substitute for, both TV and print media advertising. This may be explained by ONLA's targeting younger market segments and acting as a reinforcement of TV and print media advertising exposure. Further results show that the adoption of ONLA has lowered the cost of advertising for achieving a sales target and that its complementarity effect is weakening over time.
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U2 - 10.1515/jafio-2017-0031
DO - 10.1515/jafio-2017-0031
M3 - Article
AN - SCOPUS:85039036624
SN - 1542-0485
VL - 15
JO - Journal of Agricultural and Food Industrial Organization
JF - Journal of Agricultural and Food Industrial Organization
IS - 2
M1 - 20170031
ER -