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Internet Adoption and Advertising Expenditures on Traditional Media: An Empirical Analysis Using a Panel of Countries

Authors


  • I thank the review team, Norris Bruce, Stan Liebowitz, Brian Ratchford, Catherine Tucker, and participants at the ZEW Conference on the Economics of Information and Communication Technologies (2011) for comments. Joaquin Zentner provided research assistance and Amanda Besch editorial assistance. Financial support from the Center for the Analysis of Property Rights and Innovation is gratefully acknowledged. All errors are my own.

Abstract

The Internet can affect advertising expenditures through various channels. This paper quantifies the relationships between Internet adoption and changes in advertising expenditures on traditional offline media types. I use a panel of 11 years of data at the country level that contains information on advertising expenditures by medium and Internet penetration for more than 80 countries. I find that increases in Internet penetration are negatively correlated with changes in advertising expenditures on newspapers, magazines, and television, but I do not find conclusive results for the correlation between Internet adoption and changes in advertising expenditures on radio.

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