Luojia Young Scholar Forum 209

Topic: An Empirical Study of TV Commercial Zapping Behavior and Its Impact on Firms’ Advertising Cost-effectiveness

Time: 09：30-11：30, Nov.16

Site：EMS B337

Speaker: Dr. SHI Yang, HKUST

Abstract: In traditional broadcast networks, commercials are usually priced based on the expected audience size of associated TV programs. However, the actual audience size of commercials varies since viewers may zap during commercial breaks. This paper conducts a comprehensive study of TV viewers’ zapping behavior and examines the impact of the resulting audience loss on advertising cost-effectiveness.

Specifically, we model individual viewer’s binary viewing decisions in each minute of a commercial break and adopt a latent class approach to account for viewer heterogeneity.

Unlike previous research in which data are limited in one way or another, this research employs a unique, large-scale and rich data set (more than 2 million observations across viewer and minute) to include all important variables collectively identified by prior literature and their interactions. Thus, we can obtain better predictions. To the best of our knowledge, this is the first empirical study which includes individual viewer’s interactions with environmental factors as predictors of zapping, in particular viewers’ immediate and cumulative involvement levels in associated programs. We find that the zapping propensity is negatively correlated with both immediate and cumulative involvement levels. Moreover, the magnitudes of correlations with cumulative involvement level vary across program genres and viewers in zap-prone segments are more/less sensitive to immediate/cumulative involvement level than those who are less zap-prone.

Using actual price paid for each ad, we further examine advertising cost-effectiveness by studying firms’ best advertising purchase strategies in different scenarios. When advertisers are allowed to choose specific ad positions within a commercial break, one major healthcare product company in HK saves 8.8% amount of money to achieve the same number of ad exposures by accounting for the audience loss during commercial breaks in the advertising purchase strategy, compared with purchasing ad solely based on program audience sizes.