The Ramifications of Nearly Going Dark: A Natural Experiment in the Case of U.S. Generic Orange Juice Advertising

Abstract

Evaluations of generic advertising programs by commodity check-off programs involve analyses of counterfactual scenarios in which advertising and promotion expenditures are set to zero over the program's history. In actual practice, the counterfactual is rarely realized. We present a case in which such a natural experiment occurred when generic advertising and promotion expenditures for U.S. orange juice were cut nearly to zero. Using structural econometric and autoregression models, we estimate losses in consumption and sales revenue and examine the time required for the market for orange juice to recover from the check-off's strategy of going nearly dark.The extant literature is replete with studies of the effectiveness of generic advertising and promotion programs conducted by the already large and growing number of commodity "check-off" programs in the United States (e.

When Brands Go Dark

“…This type of "as-it-lies" data collected from the normal operation of competitive brands presents something of a natural experiment, making it possible to document what happened to numerous brands that stopped advertising. Such an approach also has been used when category advertising is stopped (e.g., Capps, Bessler, and Williams, 2016).…”

On the robustness/replication of econometric analyses from nonlinear models using various commonplace software packages

“…The source of the PDL model comes from Capps, Bessler, and Williams (2016). The structural specification for the U.S. demand function for orange juice, excluding the ubiquitous error term, is expressed as follows:…”

“…The estimation of the PDL model was done in the original study using a nonlinear least squares algorithm from EVIEWS 8.0 (Capps, Bessler, and Williams, 2016). In this exercise, the econometric results were replicated precisely using EVIEWS 11.0.…”