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Q:8
o geI a beIIer undersIanding
oI how conIenI aIIecIs
Ihe decision Io buy a producI
or parIicipaIe in a programme,
researchers developed a Leld
sIudy
1
wiIh a SouIh AIrican cash
loan lender IhaI varied boIh price
|inIeresI raIe) and adverIising
conIenI in Ihe same seIIing.
1he lender IhaI parIicipaIed in Ihis
sIudy is a well-esIablished player
in Ihe SouIh AIrican `cash loan'
markeI, which oIIen promoIes
iIs producI via prinI adverIising.
Cash lenders like Ihis are common
in boIh Ihe US and SouIh AIrica,
oIIering small, high-inIeresI,
shorI-Ierm, uncollaIeralized loans
Io Ihe working poor who mighI
oIherwise noI have access Io crediI.
1o IesI responses Io adverIising
conIenI, Ihe lender worked wiIh
us Io develop a menu oI opIions
IhaI could be varied randomly
in order Io measure Ihe impacI
oI speciLc ad conIenI on Ihe
decision Io seek ouI a loan. We
senI direcI mail soliciIaIions Io
approximaIely , Iormer
clienIs, oIIering Ihem new loans
aI randomly varied inIeresI raIes
wiIh applicaIion deadlines IhaI
also varied randomly. In addiIion
Io varying price and deadlines,
Ihe mailers also varied Ihe look
oI Ihe ads and Ihe language used.
For example, some used a phoIo
oI a smiling person or reIerred
Io Ihe inIeresI raIe as `special' or
`low', some said IhaI Ihe sIaII spoke
Ihe local language, and oIhers
included a comparison wiIh a
compeIiIor's inIeresI raIe.
We Iound IhaI Ihe conIenI oI Ihe
ads had a signiLcanI eIIecI on
demand. In parIicular, cerIain
conIenI had a direcI impacI on
loan Iake-up and, Io a lesser exIenI,
on repaymenI. WhaI mighI come
as a surprise was IhaI Ihe conIenI
someIimes had as big an eIIecI on
demand as a change in price. For
insIance, limiIing Ihe examples
oI loans IhaI Ihe lender oIIered Io
one |as opposed Io a choice among
Iour) increased Iake-up jusI as
much as a per cenI reducIion
in price. Including a phoIo oI a
smiling woman on Ihe leIIer
increased Iake-up jusI as much as a
per cenI reducIion in price.
While Ihe sIudy produced some
inIeresIing resulIs, we were less
successIul in predicIing FYBDUMZ
whaI Iypes oI conIenI would aIIecI
demand. Several IeaIures IhaI we
anIicipaIed would be imporIanI
Io consumers - like menIioning
IhaI lender sIaII speak Ihe local
language and comparing Ihe
lender's raIes wiIh Ihose oI a
compeIiIor - did noI seem Io aIIecI
Iheir decisions. And one change
IhaI we did noI Ihink would have
a sIrong impacI on demand -
removing suggesIed uses Ior Ihe
loan, a common IeaIure oI similar
adverIising - Iurned ouI Io have a
sIrong posiIive eIIecI.
So while Ihe resulIs demonsIraIe
Ihe imporIanI conIribuIion IhaI
ad conIenI can make Io decision
ouIcomes, in some cases quiIe
large relaIive Io price, Ihe IacI
IhaI iI is so diILculI Io predicI
exacIly whaI will work, and when,
supporIs an imporIanI principle:
conIexI maIIers. II also reinIorces
Ihe need Ior companies as well as
communiIy-minded enIiIies |such
as social markeIers) Io do more
Leld IesIing oI lab resulIs, so IhaI
more can be learned abouI exacIly
whaI works in diIIerenI conIexIs.
5MALL XPRtMk15 0U51t0ktkC
tC A55UMP1t0k5
0ees ad centent aIIect
censumer demand?
0ean Kar|an, ManIred Kuhn and Ienathan Zinman
xpesure te advertising is pervasive in mest ceuntries,
with cempanies and ether advertisers paying
signihcant sums in the hepe eI inhuencing censumer
decisiens. tn Iact, there is |itt|e research that
quantihes the eIIect eI the 'creative centent' eI ads.
ker de we knew much abeut hew impertant ad centent
is re|ative te the preduct's price. 1he resu|ts eI recent
research in this area have imp|icatiens Ier these in the
micre|ending industry and a|se Ier ether pregrammes
that seek te inhuence purchasing decisiens er
pregramme participatien threugh advertising and
pub|ic messaging. At the same time, the study epened
new questiens abeut p|anning advertising strategies
Ier Iuture research.
5
0ean Kar|an
is Professor of
Economics, Yale
university. Email
0ean.Karlan@yale.
edu
ManIred Kuhn is
Chief Executive
0fcer, 0pportunity
Finance, South Africa.
Email manfredk@
opportunitynance.
co.za
Ienathan Zinman is
Associate Professor
of Economics at
0artmouth Colleee.
Email izinman@
dartmouth.edu
Marianne BerIrand, Dean
Karlan, Sendhil MullainaIhan,
Fldar ShaLr and jonaIhan
Zinman, `WhaI's AdverIising
ConIenI WorIh' Fvidence Irom
a consumer crediI markeIing
Leld experimenI', IorIhcoming,
2VBSUFSMZ+PVSOBMPG&DPOPNJDT.
hIIp:||karlan.yale.edu|p|
AdConIenIWorIh_marFinal.
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