New Insights on Financial Impact of Movie Product Placements

Stuart School of Business research presentation by Professor of Finance Haizhi Wang and Harold L. Stuart Endowed Chair in Business Siva K. Balasubramanian





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New Insights on Financial Impact of Movie Product Placements


Previous event studies involving movie product placements (Wiles and Danielova 2009; Karniouchina et al. 2011) show a pattern of positive abnormal returns. Nevertheless, Karniouchina et al. suggest a trend whereby the financial impact of placements may diminish over time.

We investigate this suggestion in depth. Specifically, we investigate the impact of movie product placements in the United States auto industry for two sample periods (1990-2004 and 2005-2017). Our event studies consider the short-run and mid-run impact horizons. In addition, we study the impact of (a) one firm’s product placement on its competitors, (b) movie sequels, (c) James Bond movies, and (d) a movie’s release in other formats such as VHS, DVD, BluRay subsequent to its theatrical release.

Additionally, we consider the appropriate choice of movie release dates from published sources, the importance of a time gap period in estimating events, and data-cleaning to avoid contamination effects in the event study. We find that from a research perspective, it is useful to restrict consideration to the U.S. general release date; contaminating effects of events unrelated to product placements may be reduced by data cleaning and by a 10-day gap period between events. That is, these steps result in a higher CAAR (Cumulative Average Abnormal Return) for movie product placements.

Our main findings indicate a trend whereby the CAAR decreases over time when we compare the results from 1990-2004 and 2005-2017. Results from our mid-run event study suggest that abnormal returns generally diminish as the time lag between consecutive events for a given firm is increased to 90 days. In other words, most of the abnormal returns are realized within 90 days.

With respect to competitor effects, results from our first sample (1990-2004) suggest that when a firm features its products in a movie, it has no impact on competitors. In contrast, our second sample (2005-2017) suggest a significant and negative abnormal return for competitors. Taken together, these results suggest that the competitive intensity in the product placement field has changed over time, and the field has matured to a point where actions taken by one firm actually hurts competing firms in recent time periods.

With respect to movie sequels, we find that the original movie in the sequel has a greater abnormal return than the first sequel which has a greater return compared to the second sequel. For our first sample period, James Bond movies realized a much higher abnormal return than our entire sample. However, abnormal returns for James Bond movies were greatly reduced for our second sample period, reflect the general pattern of results from the other analyses that the financial impact of product placements have generally diminished over time.

We find that the release of a movie in other formats (VHS, DVD, BluRay) subsequent to its theatrical release has no impact on abnormal returns for both sample periods. Finally, we report results from regression analyses that showcase the impact on CAAR of key financial and other variables.


All Illinois Tech faculty, students, and staff are invited to attend.

The Friday Research Presentations series showcases ongoing academic research projects conducted by Stuart School of Business faculty and students, as well as guest presentations by Illinois Tech colleagues, business professionals, and faculty from other leading business schools.

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