{"title":"Are Online and Offline Advertising Substitutes or Complements? Evidence from U.S. Food Industries","authors":"Xi He, R. Lopez, Yizao Liu","doi":"10.1515/jafio-2017-0031","DOIUrl":null,"url":null,"abstract":"Abstract 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.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0000,"publicationDate":"2018-03-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2017-0031","citationCount":"4","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Agricultural and Food Industrial Organization","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1515/jafio-2017-0031","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"Business, Management and Accounting","Score":null,"Total":0}
引用次数: 4
Abstract
Abstract 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.
期刊介绍：
The Journal of Agricultural & Food Industrial Organization (JAFIO) is a unique forum for empirical and theoretical research in industrial organization with a special focus on agricultural and food industries worldwide. As concentration, industrialization, and globalization continue to reshape horizontal and vertical relationships within the food supply chain, agricultural economists are revising both their views of traditional markets as well as their tools of analysis. At the core of this revision are strategic interactions between principals and agents, strategic interdependence between rival firms, and strategic trade policy between competing nations, all in a setting plagued by incomplete and/or imperfect information structures. Add to that biotechnology, electronic commerce, as well as the shift in focus from raw agricultural commodities to branded products, and the conclusion is that a "new" agricultural economics is needed for an increasingly complex "new" agriculture.
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