Working Paper: NBER ID: w14506
Authors: Andrew Sweeting
Abstract: Commercial radio stations and advertisers have potentially conflicting interests about when commercial breaks should be played. This paper estimates an incomplete information timing game to examine stations' equilibrium timing incentives. It shows how identification can be aided by the existence of multiple equilibria when appropriate data are available. It finds that stations want to play their commercials at the same time, suggesting that mechanisms exist which align the incentives of stations with the interests of advertisers. It also shows that coordination incentives are much stronger during drivetime hours, when more listeners switch stations, and in smaller markets.
Keywords: commercial radio; advertising; multiple equilibria; timing incentives
JEL Codes: C35; C72; L13; L82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| stations prefer to coordinate their commercial breaks (M38) | greater clustering of commercial breaks during drivetime hours (L97) |
| greater clustering of commercial breaks during drivetime hours (L97) | incentives align with advertisers' preferences (M37) |
| listener switching behavior is heightened (C92) | stations synchronize their commercial breaks (L82) |
| smaller markets (D40) | higher likelihood of simultaneous commercial airing (C78) |
| multiple equilibria in the timing game (C73) | different strategic outcomes based on market conditions (L21) |
| station characteristics and market size (R53) | coordination of commercial breaks (L14) |