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Measuring the effects of advertising on green industry sales: a generalized propensity score approach

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Abstract

This article estimates the effects of advertising expenditures on annual gross sales of green industry firms using a quasi-experimental framework. In order to account for potential selection bias, a generalized propensity score and a dose-response function are used to estimate advertising treatment effects. The method used allows us to investigate the relationship between the dose (advertising expenditures) and the response (firm sales). We use data from the National Green Industry Surveys of 2009 and 2014 to conduct the analysis. To further investigate potential heterogeneous advertising effects of the size of the firms, we separate the sample into small firms and large firms, according to their annual gross sales. The results indicate that the magnitude and shape of the response function depend on the size of the firm. For small firms, increasing advertising spending yields to higher sales within a range of advertising spending. Beyond this range, advertising spending increases do not impact sales any more. Thus, small firms’ management should carefully monitor advertising input. For large firms, on the other hand, the current evidence does not support a positive relationship between advertising spending and sales since the marginal treatment effect is insignificant almost over the entire range of adverting spending.

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Print advertising performance is influenced by consumers' attitudes toward advertising in general. Respondents with more favorable attitudes toward advertising recalled a higher number of advertisements the day after exposure and were more persuaded by them. The implications are discussed here.
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Over the past 25 years, evaluators of social programs have searched for nonexperimental methods that can substitute effectively for experimental ones. Recently, the spotlight has focused on one method, propensity score matching (PSM), as the suggested approach for evaluating employment and education programs. We present a case study of our experience using PSM, under seemingly ideal circumstances, for the evaluation of the State Partnership Initiative employment promotion program. Despite ideal conditions and the passing of statistical tests suggesting that the matching procedure had worked, we find that PSM produced incorrect impact estimates when compared with a randomized design. Based on this experience, we caution practitioners about the risks of implementing PSM-based designs.
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This study develops and empirically tests a framework for mobile social network service (SNS) advertising effectiveness. The study sets the advertising value, attitude towards advertising, and behavioural intentions as the key variables for the assessment of advertising effectiveness. Regarding antecedents of advertising effectiveness, the study identifies the salient attributes of mobile SNS advertising as social, mobile convenience, and active control; the main sub-values of mobile SNS advertising as informativeness, entertainment, and irritation.
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A randomized experiment with 1.6 million customers measures positive causal effects of online advertising for a major retailer. The advertising profitably increases purchases by 5%. 93% of the increase occurs in brick-and-mortar stores; 78% of the increase derives from consumers who never click the ads. Our large sample reaches the statistical frontier for measuring economically relevant effects. We improve econometric efficiency by supplementing our experimental variation with non-experimental variation caused by consumer browsing behavior. Our experiment provides a specification check for observational difference-in-differences and cross-sectional estimators; the latter exhibits a large negative bias three times the estimated experimental effect.
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Regional and national development policies play an important role to support local enterprises in Italy. The amount of financial aid may be a key feature for firms’ employment policies. We study the impact on employment of the amount of financial aid attributed to enterprises located in Piedmont, a region in northern Italy, analysing small-sized firms and medium- or large-sized firms separately. We apply generalized propensity score methods under the unconfoundedness assumption that adjusting for differences in a set of observed pre-treatment variables removes all biases in comparisons by different amounts of financial aid. We find that the estimated effects are increasing with amount of financial aid for both small-sized and medium- or large-sized firms, whereas the marginal effects of additional incentives are decreasing with amount of financial aid for small-sized firms, and have an inverse J-shape for medium- or large-sized firms.
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A robust body of research finds positive cross-sectional and longitudinal associations between teacher-child relationships and children's academic achievement in elementary school. Estimating the causal effect of teacher-child relationships on children's academic achievement, however, is challenged by selection bias at the individual and school level. To address these issues, we used two multilevel propensity score matching approaches to estimate the effect of high-quality teacher-child relationships in kindergarten on math and reading achievement during children's transition to first grade. Multi-informant data were collected on 324 low-income, Black and Hispanic students, and 112 kindergarten and first-grade teachers. Results revealed significant effects of high-quality teacher-child relationships in kindergarten on math achievement in first grade. No significant effects of teacher-child relationships were detected for reading achievement. Implications for intervention development and public policy are discussed.
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We semiparametrically estimate average causal effects of different lengths of exposure to academic and vocational instruction in the Job Corps (JC) under the assumption that selection into different lengths is based on a rich set of observed covariates and time-invariant factors. We find that the estimated effects on future earnings increase in the length of exposure and that the marginal effects of additional instruction decrease with length of exposure. We also document differences in the estimated effects across demographic groups, which are particularly large between males and females. Finally, our results suggest an important lock-in effect in JC training. No rights reserved. This work was authored as part of the Contributor's official duties as an Employee of the United States Government and is therefore a work of the United States Government. In accordance with 17 U.S.C. 105, no copyright protection is available for such works under U.S. law..
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We propose two semiparametric estimators of the dose-response function based on spline techniques. Under uncounfoundedness, the generalized propensity score can be used to estimate dose-response functions (DRF) and marginal treatment effect functions. In many observational studies treatment may not be binary or categorical. In such cases, one may be interested in estimating the dose-response function in a setting with a continuous treatment. We evaluate the performance of the proposed estimators using Monte Carlo simulation methods. The simulation results suggested that the estimated DRF is robust to the specific semiparametric estimator used, while the parametric estimates of the DRF were sensitive to model mis-specification. We apply our approach to the problem of evaluating the effect on innovation sales of Research and Development (R&D) financial aids received by Luxembourgish firms in 2004 and 2005.
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An analysis of the net returns to dairy farmers from generic fluid milk advertising is made in terms of the ability of advertising to increase the blend price of milk in excess of the cost of advertising. The evaluation of the economic effectiveness of generic fluid milk advertising programs extends beyond the measurement of the direct sales response to advertising. Specifically, the class I-class II price differential and the class I utilization rate are found to be extremely important factors influencing the effectiveness of generic milk advertising programs, while the impact of the price elasticity of supply is relatively minor.
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A narrative review is presented, within the organizing framework of a meta-analysis, of econometric models reported in the business literature that estimate the effect of advertising and promotional spending on the market value of the firm. Results from published market valuation models are aggregated, and various model specifications are appraised. In brief the meta-analysis finds support for a positive relationship between levels of advertising and promotional spending and the market value of the firm. That is, marketing activities (represented here by observed advertising and promotions spending) are generally expected to deliver future cashflows and produce increases in shareholder wealth. The review seeks to enhance understanding among the community of marketing scholars of the properties of market valuation models published in the literature and serves as a springboard for ongoing investigation of a crucial question for marketing theory and practice.
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We estimate the short-, medium-, and long-term effects of different types of government-sponsored training in West Germany using particularly rich data that allows us to control for selectivity by matching methods and to measure interesting outcome variables over eight years after a programme's start. We use distance-weighted radius matching together with a bias removal procedure based on weighted regressions in order to increase the precision and robustness of standard matching estimators. We find negative employment effects in the short term for all programme types, effects whose magnitude and persistence is directly related to programme duration. In the longer term, training seems to increase employment rates by 10–20 percentage points. For most programmes the longer-term positive effects seem to be sustainable over the eight-year observation period.
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To estimate the effect of breastfeeding duration on childhood obesity. The Child Development Supplement (CDS) of the Panel Study of Income Dynamics (PSID). The PSID provides extensive data on the income and well-being of a representative sample of U.S. families from 1968 to the present. The CDS collects information on the children in PSID families ranging from cognitive, behavioral, and health status to their family and neighborhood environment. The first two waves of the CDS were conducted in 1997 and 2002, respectively. The data provide information on 3,271 children and their mothers. We use the generalized propensity score to adjust for confounding based on continuous treatment, and the general additive model to analyze the adjusted association between treatment and the outcome conditional on the propensity score. The main outcome is the body mass index (BMI) directly assessed during the in-person interview in 2002. Covariates include family, maternal, and child characteristics, many of which were measured in the year the child was born. After using propensity scores to adjust for confounding, the relationship between breastfeeding duration and childhood BMI is trivially small across a range of model specifications, and none of them is statistically significant except the unadjusted model. The causal link between duration of breastfeeding and childhood obesity has not been established. Any recommendation of promoting breastfeeding to reduce childhood obesity is premature.
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  The paper assesses the heterogeneity of treatment effects arising from variation in the duration of training. We use German administrative data that have the extraordinary feature that the amount of treatment varies continuously from 10 days to 395 days (i.e. 13 months). This feature allows us to estimate a continuous dose–response function that relates each value of the dose, i.e. days of training, to the individual post-treatment probability of employment (the response). The dose–response function is estimated after adjusting for covariate imbalance by using the generalized propensity score, which is a recently developed method for covariate adjustment under continuous treatment regimes. Our data have the advantage that we can consider both the actual and the planned durations of training as treatment variables: if only actual durations are observed, treatment effect estimates may be biased because of endogenous exits. Our results indicate an increasing dose–response function for treatments of up to 120 days, which then flattens out, i.e. longer training programmes do not seem to add an additional treatment effect.