Firms' strategic leverage of unplanned exposure and planned advertising: An analysis in the context of celebrity endorsements

Abstract

Using data on advertising and sales of an innovative piece of golf equipment and the performance of its celebrity endorsers, the authors build a discrete-choice model that incorporates consumer awareness and preferences. They empirically investigate how celebrity endorsements affect consumer choices during new product introductions, the roles of planned advertising and unplanned media exposure, and how firms can strategically leverage the unplanned component. Model estimates reveal that wins in professional golf tournaments (which proxy for unplanned television exposure during weekly golf tournaments) affect awareness and that paid planned advertising impacts awareness and preferences. Focusing on Titleist equipment, counterfactual analysis demonstrates that the unplanned media exposure and planned advertising account for 22% and 24% of sales, respectively. The results also suggest that firms would benefit from coordinating the two. The planned portion should serve as a substitute for unplanned media exposure in the early stage and a complement as products age.