Advertising as a Reminder

Evidence from the Dutch State Lottery

Chen He, Tobias Klein

Research output: Working paperDiscussion paperOther research output

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Abstract

We use high frequency data on TV and radio advertising together with data on online sales for lottery tickets to measure the short run effects of advertising. We find them to be strong and to last for up to about 4 hours. They are the bigger the less time there is until the draw. We develop the argument that this finding is consistent with the idea that advertisements remind consumers to buy a ticket and that consumers value this. Then, we point out that in terms of timing the interests of the firm and the consumers are aligned: consumers wish to be reminded in a way that makes them most likely to consider buying a lottery ticket. We present direct evidence that this does not only affect the timing of purchases, but leads to market expansion. Then, we develop a tractable dynamic structural model of consumer behavior, estimate the parameters of this model and simulate the effects of a number of counterfactual dynamic advertising strategies. We find that relative to the actual schedule it would be valued by the consumers and profitable for the firm to spread advertising less over time and move it to the last days before the draw.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages47
Volume2018-019
Publication statusPublished - 28 May 2018

Publication series

NameCentER Discussion Paper
Volume2018-019

Fingerprint

State lotteries
Lottery
High-frequency data
Dynamic structural model
Online sales
Consumer value
Market expansion
Short-run
Advertising strategy
Consumer behaviour
Purchase
Schedule

Keywords

  • Dynamic demand
  • reminder advertising
  • adoption model

Cite this

He, C., & Klein, T. (2018). Advertising as a Reminder: Evidence from the Dutch State Lottery. (CentER Discussion Paper; Vol. 2018-019). Tilburg: CentER, Center for Economic Research.
He, Chen ; Klein, Tobias. / Advertising as a Reminder : Evidence from the Dutch State Lottery. Tilburg : CentER, Center for Economic Research, 2018. (CentER Discussion Paper).
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He, C & Klein, T 2018 'Advertising as a Reminder: Evidence from the Dutch State Lottery' CentER Discussion Paper, vol. 2018-019, CentER, Center for Economic Research, Tilburg.

Advertising as a Reminder : Evidence from the Dutch State Lottery. / He, Chen; Klein, Tobias.

Tilburg : CentER, Center for Economic Research, 2018. (CentER Discussion Paper; Vol. 2018-019).

Research output: Working paperDiscussion paperOther research output

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KW - adoption model

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He C, Klein T. Advertising as a Reminder: Evidence from the Dutch State Lottery. Tilburg: CentER, Center for Economic Research. 2018 May 28. (CentER Discussion Paper).