Advertising ROI

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Citation

Thomas Stratmann (2009). How Prices Matter in Politics: The Returns to Campaign Advertising. Public Choice, 140 (3/4), 357-377

Highlights

“With respect to the quantitative importance of advertising, some of the estimates in this article suggest that $100,000 of extra TV advertising translates into an increase of 0.6 to a one percentage point increase when evaluated based on the median cost of advertising.”

“The estimates from actual TV advertising imply that an additional $50,000 of advertising increases incumbents’ vote shares by 0.4 percentage points and challengers’ vote shares by 0.7 percentage points.”

“These results suggest that advertising in campaigns is valuable for increasing vote shares. However, in most specifications the marginal product of spending is not statistically different between incumbents and challengers. Thus, campaign spending tends to be a zero sum game.”

Abstract

The apparent ineffectiveness of incumbent campaign spending in congressional elections is one of the enduring puzzles in the political economy literature. Previous work in this area has assumed that advertising prices are uniform across congressional districts, and therefore that campaign spending alone is a good proxy for campaign advertising. However, candidates in different districts face widely different advertising prices and this paper shows that differences in advertising costs are one source of the apparent ineffectiveness of campaign spending. Accounting for the price of advertising, this paper shows that campaign spending is productive for both incumbents and challengers.