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How TV Ads Influence Online Shopping How TV Ads Influence Online Shopping Jura Liaukonyte,1 Thales Teixeira,2 Kenneth C. Wilbur3 April 7, 2014 Media multitasking distracts consumers’ attention from television advertising, but it also enables immediate and measurable response to advertisements. This paper explores how the content of television advertising influences online shopping. We construct a massive dataset spanning $4 billion in advertising expenditures by 20 brands, online shopping behavior at those brands’ websites, and content measures for 1,269 distinct television commercials. We use a quasi- experimental research design to estimate how advertising content influences changes in online shopping data within two-minute pre/post windows of time. We also measure the effects within two-hour windows of time using a difference-in-differences approach. The findings show that direct-response tactics increase both web traffic and purchase probability. Information-based arguments and emotional content actually reduce traffic but increase sales among those who visit the brand’s website. Imagery content reduces direct traffic but does not affect purchase probability. These results imply that brands seeking to attract multitaskers’ attention and dollars must select their advertising copy carefully according to their objectives. Keywords: Advertising content, difference-in-differences, internet, media multitasking, online purchases, simultaneous equations model, quasi-experimental design, television. 1 Dake Family Assistant Professor, Cornell University, Dyson School of Applied Economics and Management, https://faculty.cit.cornell.edu/jl2545. 2 Assistant Professor of Business Administration, Harvard Business School, http://www.hbs.edu/ faculty/Pages/profile.aspx?facId=522373. 3 Assistant Professor, University of California, San Diego, Rady School of Management, http://kennethcwilbur.com. The authors thank comScore, the Cornell University Dyson School Faculty Research Program, Dake Family Endowment, and the Division of Research and Faculty Development of the Harvard Business School for providing the funds to acquire and build the dataset in this research. Teixeira thanks Elizabeth Watkins for research assistantship. Wilbur thanks Duke University for employing him during part of the time this research was conducted. We are grateful to Donald Lichtenstein, Chris Oveis, Catherine Tucker, the editor, area editor, two anonymous referees and numerous seminar audiences for their helpful suggestions. Authors contributed equally. 1. Introduction As computers have grown smaller and more convenient, simultaneous television and internet consumption (“media multitasking”) has increased rapidly (Lin, Venkataraman and Jap 2013). Numerous studies have reported large increases in media multitasking; among them, Nielsen (2010) claimed that 34% of all internet usage time occurred simultaneously with television consumption. Meanwhile, television usage has not fallen, with Americans still watching about five hours per day. In fact, time spent with television and time spent with internet are positively correlated at the household level (Nielsen 2011). One might therefore suspect that television can effectively engage online shoppers. But do multitaskers engage with television ads or does simultaneous media consumption steal consumer attention away from commercials? Numerous studies suggest that engagement is possible. Among them, Nielsen (2012) found that 27% of US viewers had looked up product information for a TV advertisement, and 22% had looked up advertised coupons or deals advertised on TV. Ofcom (2013) reported that 16% of UK consumers had searched for product information or posted to a social network about a television advertisement. The current paper studies how the content of television advertising influences online shopping. It aims to contribute to the literature on cross-media effects by answering the following questions: can TV advertising trigger online shopping? If so, how does it work and what type of content is most effective? Recent research (Zigmond and Stipp 2010, Lewis and Reiley 2013, Joo et al. 2014) has used online search data to show that search engine queries to Google and Yahoo respond almost instantaneously to television commercials. However, to our knowledge, no past research has looked at the effects of television advertising on direct website traffic or online purchase data. 1 This paper not only establishes that online shopping responds to television advertising, it also investigates how those effects depend on advertising content. To uncover these issues, we merged two large databases of television advertising and internet usage, and then created a third database of advertising content. The ad data represent $4.1 billion spent by 20 brands in 5 product categories to air 1,269 distinct advertisements 365,017 times in 2010. The contents of these advertisements were coded to assess the extent to which each one incorporated direct response tactics, arguments, emotional content and imagery. Finally, the advertising data were supplemented with comprehensive, passively measured brand- level website traffic and sales data from a daily sample of 100,000 consumers. Advertising response studies are notoriously plagued by endogeneity. To address this, we employ a quasi-experimental research design in conjunction with narrow two-minute event windows (Chaney et al. 1991). For each ad insertion, online shopping variables are measured within a narrow window of time prior to the advertisement. This “pre” period serves as a baseline against which the ad’s effect is measured. The same variables are measured again in a “post” window of the same length immediately following the ad’s insertion. Systematic differences between the pre- and post-windows are attributed to the ad insertion. The identification strategy is similar to the regression discontinuity approach of Hartmann, Nair and Narayan (2011). We also measure advertising effects on online shopping in broader two-hour windows of time. In order to partial out unobserved category-time interactions, we use online shopping on nonadvertising competitors’ websites as control variables in a difference-in-differences regression framework. 2 We find clear evidence that television advertising influences online shopping. Direct response content increases direct website visitation (e.g., directly using a URL) with a smaller corresponding decrease in search engine referrals (e.g., indirectly via a search engine). It also raises conversion probability. Arguments and emotional content reduce direct traffic while simultaneously increasing purchase probabilities; the net result of these two offsetting effects is positive for most brands. Imagery content reduces direct traffic and does not significantly change purchase probabilities. In sum, the results suggest that advertisers must select advertising content carefully according to their objectives. The paper proceeds by reviewing literature on TV advertising and proposing a simple conceptual framework. It then describes the data, model specification and the results. A general discussion of the implications for television advertisers concludes. 2. Background Literature and Conceptual Framework Our work is directly related to research on multimedia advertising effectiveness. Several recent studies found evidence of synergistic effects between television advertising and internet advertising on offline sales (Kolsarici and Vakratsas 2011, Naik and Peters 2009, Naik and Raman 2003, Ohnishi and Manchanda 2012). Dagger and Danaher (2013) built a single-source, customer-level database of ten advertising media and retail sales for a large retailer. They found that single-medium advertising elasticities were highest for catalogs, followed by direct mail, television, email and search, suggesting that direct-response channels are more effective at increasing short-term sales than other advertising channels. 3 The sum of the evidence suggests that significant cross-media effects exist. However, researchers are just starting to understand how the content of advertising in one medium might influence consumers’ behavior in another. In an early effort, Godes and Mayzlin (2004) showed that online discussions of new television programs had explanatory power in a dynamic model of those program’s ratings. More recently, Gong et al. (2013) designed a field experiment to measure the causal impact of tweets and retweets on ratings of a television program. They found that the content of promotional messages on the internet influenced the number of people estimated to view the promoted television program. 2.1 TV Advertising and Online Behavior Television ads are valuable for generating awareness, knowledge and interest in new products. A direct consequence is that effective television ads may lead viewers to seek out more information about these products and brands (Rubinson 2009). To date, the most studied online behavior among TV viewers has revolved around searching for advertised brands and products using search engines (e.g., Joo et al. 2014). Lewis and Reiley (2013) found that advertisements during the Super Bowl tend to trigger online searches for the advertised brands immediately, within one minute, with smaller effects noticeable up to an hour after the ad’s broadcast time. However, their analysis did not include direct traffic to the brand’s website or online purchases, making it impossible to separate interest in the ad’s entertainment value from interest in the advertised product. They suggested
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