. 24/7 Space News .
Advertising plays key role in satellite TV success, study shows
by Staff Writers
Notre Dame IN (SPX) Jan 11, 2022

File image of a large satellite TV being built for Echostar.

The pay television market in the United States was dominated by a handful of cable operators until the early 1990s with the entry of satellite TV, which has grown consistently ever since.

A new study from the University of Notre Dame documents the role of advertising to help explain satellite operators' continued success.

"Commercial Success through Commercials? Advertising and Pay TV Operators" was recently published in the Journal of Marketing Research from Joonhyuk Yang, assistant professor of marketing in Notre Dame's Mendoza College of Business, along with Jung Youn Lee from Northwestern University and Pradeep Chintagunta from the University of Chicago.

Using data on U.S. households' subscription choices and operators' advertising decisions, the authors document supply and demand conditions conducive to the growth of the satellite operators. The study highlights the interaction between advertising cost efficiencies and the scale of entry in explaining the competition between market incumbents (cable) and entrants (satellite).

The entry of the satellite operators into the television service market has been studied extensively by scholars and regulators. Prior studies focused on topics ranging from its impact on consumer welfare to its impact on pricing and product quality of cable services and consumers switching between cable and satellite services. These discussions focus on market outcomes of the entry and competition, but not on the process of entry itself.

"We highlight the potential role of advertising in explaining the successful entry and survival of the satellite operators through demand generation and competition with cable incumbents," Yang said. "We find that consumers in this market were sensitive to advertising, and especially so to that of the satellite operators. We provide evidence that a form of asymmetric cost efficiencies in television advertising benefited the entrants more than the incumbents.

"Specifically, the costs of local advertising tend to be higher than those of national advertising, which likely allowed the satellite operators to better leverage their national presence with cheaper national advertising."

The cost differences between national and local television advertising have long been recognized as an entry barrier. However, the topic has typically been explored in contexts where market incumbents operate on a large scale and entry occurs on a smaller scale.

Few studies have empirically explored the role of the cost advantage of national advertising in a setting where new firms enter on a national scale and compete with local incumbents.

"This is a study on marketing history that utilizes the U.S. television service market in which satellite operators, facilitated by new technology, entered the market on a national scale, whereas cable operators were limited to operate at the local level," Yang said.

According to Yang, identifying advertising effects is challenging because there are other things moving together with advertising. For instance, the baseline demand for products and services changes over time. To tease apart ad effect from other factors, one needs an experiment that randomly assigns varying levels of advertising across regions or consumers. Oftentimes, however, experiments are infeasible or too expensive.

"Our study instead uses a quasi-experimental method, a border strategy, which is not quite an experiment but it attempts to resemble the properties of an experiment," Yang said. "There are a subset of regions served by the same set of pay-TV operators but on media market borders. This makes different parts within a region receive different levels of advertising because firms make advertising decisions for each media market. On the other hand, other characteristics of consumers within the region, regardless of which media market they belong to, are assumed to be comparable. We identify ad effect by comparing consumers across the media market borders."

In general, the TV service market offered a unique setting for studying advertising effect, according to Yang.

"To the best of our knowledge, the effect in service industries has received relatively little attention, compared with a wide range of consumer-packaged-good markets. In that sense, our study adds to the literature of advertising by providing evidence on an important role advertising may have played in the context of a service market."

Research Report: "Commercial Success through Commercials? Advertising and Pay TV Operators"

Related Links
University of Notre Dame
The latest information about the Commercial Satellite Industry

Thanks for being there;
We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain.

With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords.

Our news coverage takes time and effort to publish 365 days a year.

If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Monthly Supporter
$5+ Billed Monthly

paypal only
SpaceDaily Contributor
$5 Billed Once

credit card or paypal

Satellogic to build high-throughput manufacturing plant in Netherlands
Charlotte NC (SPX) Dec 30, 2021
Satellogic, a leader in sub-meter resolution satellite imagery collection, announced that it will be constructing a high-throughput satellite manufacturing facility in the Netherlands. This 57,000 square foot new location is expected to accelerate the company's assembly of satellites and accommodate its state-of-the-art manufacturing, integration, and testing equipment. In addition to having logistics capabilities and storage facilities designed for sensitive optic-mechanical and electronic parts, ... read more

Comment using your Disqus, Facebook, Google or Twitter login.

Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle

NASA's newest astronaut class begins training in Houston

Japan space tourist eyes Mariana Trench trip after ISS

CES show highlights: Robo-dogs, self-sailing boat, brain tech

CES tech fair opens under pandemic shadow

Virgin Orbit air drops rocket carrying 7 satellites

SpaceX launches 105 satellites from Florida

Ride into space on Vega-C secured for FLEX and Altius

Astroscale U.S. and Orbit Fab sign first on-orbit satellite fuel sale agreement

Sols 3355-2256: Closer to the Prow

Widespread megaripple activity on Martian North Pole

Sol 3354: Tantalizingly Out of Reach

NASA's InSight enters safe mode during regional Mars dust storm

Shouzhou XIII crew finishes cargo spacecraft, space station docking test

China to complete building of space station in 2022

CASC plans more than 40 space launches for China in 2022

China's astronauts mark New Year with livestream from space

Advertising plays key role in satellite TV success, study shows

Planet to launch 44 SuperDove satellites on SpaceX's Falcon 9

Euroconsult predicts highest government space budgets in decades despite Covid

Loft Orbital extends production agreement with LeoStella

Chile court freezes multi-million dollar lithium deal

Using High Temperature Composites For Sustainable Space Travel

Take-Two to buy 'Farmville' creator Zynga for $12.7 bn

Metaverse gets touch of reality at CES

Cheops reveals a rugby ball-shaped exoplanet

From dust to planet: how gas giants form

Eccentric exoplanet discovered

Elusive atmospheric molecule produced in a lab for the 1st time by UH

Oxygen ions in Jupiter's innermost radiation belts

Ocean Physics Explain Cyclones on Jupiter

Looking Back, Looking Forward To New Horizons

Testing radar to peer into Jupiter's moons

The content herein, unless otherwise known to be public domain, are Copyright 1995-2024 - Space Media Network. All websites are published in Australia and are solely subject to Australian law and governed by Fair Use principals for news reporting and research purposes. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA news reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. All articles labeled "by Staff Writers" include reports supplied to Space Media Network by industry news wires, PR agencies, corporate press officers and the like. Such articles are individually curated and edited by Space Media Network staff on the basis of the report's information value to our industry and professional readership. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. General Data Protection Regulation (GDPR) Statement Our advertisers use various cookies and the like to deliver the best ad banner available at one time. All network advertising suppliers have GDPR policies (Legitimate Interest) that conform with EU regulations for data collection. By using our websites you consent to cookie based advertising. If you do not agree with this then you must stop using the websites from May 25, 2018. Privacy Statement. Additional information can be found here at About Us.