Information content of advertising: Empirical evidence from the OTC analgesic industry

Abstract

We develop an empirical study of the information–persuasion trade-off in advertising using data on the information content of ads, which we measure with the number of information cues in ads within an entire industry. The data are from video files of all advertisements in the OTC analgesics industry from 2001 to 2005. We propose a simple theoretical framework to motivate an ordered probit model of information content. We find that stronger vertical differentiation is positively associated with the delivery of more product information in a brand's advertisements: brands with higher levels of quality include more information cues. Next, comparative advertisements contain significantly more product information than self-promotional advertisements. Finally, brands with larger market shares and brands competing against generic substitutes with large market shares use ads that have less information content.