What’s Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment

Firms spend billions of dollars each year advertising consumer products in order to influence demand. Much of these outlays are on the creative design of advertising content. Creative content often uses nuances of presentation and framing that have large effects on consumer decision making in laboratory studies. But there is little field evidence on the effect of advertising content as it compares in magnitude to the effect of price. We analyze a direct mail field experiment in South Africa implemented by a consumer lender that randomized creative content and loan price simultaneously. We find that content has significant effects on demand. There is also some evidence that the magnitude of content sensitivity is large relative to price sensitivity. However, it was difficult to predict which particular types of content would significantly impact demand. This fits with a central premise of psychology— context matters— and highlights the importance of testing the robustness of laboratory findings in the field. JEL codes: D01, M31, M37, C93, D12, D14, D21, D81, D91, O12 Other keywords: economics of advertising, economics & psychology, behavioral economics, cues, microfinance * Previous title: “What’s Psychology Worth? A Field Experiment in the Consumer Credit Market”. Primary affiliations: University of Chicago Graduate School of Business and the Jameel Poverty Action Lab; Yale University, Innovations for Poverty Action and the Jameel Poverty Action Lab; Harvard University, Innovations for Poverty Action and the Jameel Poverty Action Lab; Princeton University and Innovations for Poverty Action; Dartmouth College and Innovations for Poverty Action. Karen Lyons and Thomas Wang provided superb research assistance. Thanks to seminar participants at the AEA meetings, Berkeley, CBRSS, Chicago, the Columbia Graduate School of Business, Dartmouth, the Econometric Society meetings, the Federal Reserve Banks of New York and Philadelphia, Harvard, MIT, the Russell Sage Summer School, SITE, Stockholm University, the Toulouse Conference on Economics and Psychology, and Yale for helpful comments. We are especially grateful to David Card, Stefano DellaVigna, Larry Katz and Richard Thaler for their advice and comments. The authors thank the National Science Foundation, the Bill and Melinda Gates Foundation, and USAID/BASIS for funding. Much of this paper was completed while Zinman was at the Federal Reserve Bank of New York (FRBNY); he thanks the FRBNY for research support. Views expressed are those of the authors and do not necessarily represent those of the funders, the Federal Reserve System or the Federal Reserve Bank of New York. Special thanks to the Lender for generously providing us with the data from its experiment.