By Bradford Lightcap
This paper examines the viability of sustained advertising spending in an increasingly digital age. Beginning with print media and through the advent of television, the ad market has seen vast evolution in information consumption. The result has been a creative adaptability by advertisers to keep pace with said change. However, growth in ad spending has not significantly outpaced GDP growth, as documented in the Relative Constancy Hypothesis. RCH asserts that both ad spending and consumer expenditure as a percent of GDP remain steady over time. This paper focuses on whether the advertising claim holds up through the rise of the Internet. How this powerful medium may alter traditional advertising trends remains unclear. The answer could have implications for both advertisers and parties that rely on them
Advisor: Connel Fullenkamp | JEL Codes: L82, M3, M37, O39 | Tagged:
By Jayoung Jeon
Critics and their reviews provide crucial information for consumers in many “experience goods” markets, and the movie market is one such market. Through their impact on the consumer’s film selection, critics’ reviews influence the first weekend box office performance (the influence effect). We hypothesize that the influence effect of critics’ reviews is different for foreign and domestic movies. Using the U.S. film industry as our empirical setting, we examine the effects of reviews on opening weekend revenues in the U.S. film industry. We find that, when the critics’ assessment of domestic movies is positive, people are discouraged from watching the movie. On the other hand, for foreign movies, the impact of positive reviews is found to be positive. We interpret this result as arising from the different target audiences for foreign and domestic movies. Further analysis of our data supports this hypothesis. We also find that people are more influenced to watch movies when they see multiple reviews than only a few of them. This positive impact of the number of critics’ reviews is greater for domestic than foreign movies, and greater for domestic art movies than domestic non-art movies.
Advisor: James Roberts | JEL Codes: L82, M37 | Tagged: