Marvelous Advertising Returns? A Meta-Analysis on Advertising Elasticities in the Entertainment Industry
(A2021-94202)

AUTHORS

Andrea Schoendeling, University of Cologne; Alexander Edeling, University of Cologne; Alexa Burmester, University of Hamburg; Andre Marchand, Leipzig University; Michel Clement, University of Hamburg, Germany

ABSTRACT

The impact of advertising on supply and demand is one of the most discussed issues among practitioners and researchers in the entertainment industry. Due to the industry’s unique characteristics, the transferability of findings from an existing meta-analysis on advertising elasticities across industries by Sethuraman, Tellis, and Briesch (2011) is limited. This meta-analysis is based on 262 elasticities drawn from 52 entertainment studies and provides the following new empirical generalizations: (1) The average advertising elasticity in the enter-tainment industry is .35, which is almost three times higher than the average for other industries. (2) Elasticities are lower for games than movies, for supply than demand, during recessions, and in Europe than in the USA, for example. Contrary to other industries, elasticities do not show a negative time trend in the entertainment industry. Accounting for endogeneity leads to significantly lower elasticities.