What's Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment

This brief summarizes what's advertising content worth? Evidence from a consumer credit marketing field experiment in South Africa. The bank offered loans with repayment periods ranging from 4 to 18 months. Deadlines for response were randomly allocated from 2 weeks to 6 weeks. Firms spend billions of dollars developing advertising content, yet there is little field evidence on how much or how it affects demand. The author analyze a direct mail field experiment in South Africa implemented by a consumer lender that randomized advertising content, loan price, and loan offer deadlines simultaneously. The author fined that advertising content significantly affects demand. Although it was difficult to predict ex ante which specific advertising features will matter most in this context, the features that do matter have large effects. Showing fewer example loans, not suggesting a particular use for the loan, or including a photo of an attractive woman increases loan demand by about as much as a 25 percent reduction in the interest rate. The evidence also suggests that advertising content persuades by appealing 'peripherally' to intuition rather than reason. Although the advertising content effects point to an important role for persuasion and related psychology, our deadline results do not support the psychological prediction that shorter deadlines may help overcome time-management problems; instead, demand strongly increases with longer deadlines.

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