The Dollar Value of Better Ad Content: Tracing the Relationships Between Ad Creatives, Ad Skipping, and Ad Elasticities

What is the relationship between ad skipping behavior, ad creative attributes, and ad purchase elasticities? Using linked data on store revenues, television advertising, ad skipping behavior, and hand-coded ad creative attributes for 60 brands across 4 years, we estimate 1) the effect of ad skipping rates on ad elasticity, 2) the effects of different ad creative attributes on ad elasticity, controlling for ad skipping rates, and 3) the effects of different ad creative attributes on ad skipping rates. To overcome confounding, we use an instrumental-variables strategy to identify ad skipping rate effects and recover large estimated effects of skipping rates on elasticities: we find significantly positive ad elasticities for ads with average (or lower) ad skipping rates, but near-zero elasticities for ads with ad skipping rates one standard deviation above the mean. We then show that call-to-action and sensory features both have significant direct effects on ad elasticities, but only sensory features produce secondary purchase effects channeled through impacts on ad skipping rates. We use these estimates to quantify the total dollar-value impact of lower ad skipping rates and different creative attributes in ads, and demonstrate that high skipping rates may explain ad ineffectiveness for up to 32% of brands.