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Lookup NU author(s): Dr Stephen McDonald,
Professor Colin Wren
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The use of information intermediaries has been shown to undermine the effect of brand in online markets. In this paper the direct effect of search on the relationship between brand advertising and pricing strategies is analyzed. Price data are taken from the leading UK motor insurance comparison site, with the advantage that prices can be related to the search characteristics of consumers and to the advertising expenditure of firms. The paper finds that more-advertised firms have lower price rankings at the comparison site, indicating that advertising is informative in this market. The main result is that search weakens the relationship between advertising and pricing. An implication is that increased usage of price comparison sites will make informative brand advertising less important.
Author(s): McDonald S, Wren C
Publication type: Article
Publication status: Published
Journal: International Journal of the Economics of Business
Print publication date: 19/01/2012
ISSN (print): 1357-1516
ISSN (electronic): 1466-1829
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