On the Marketing of Experience Goods: the Case of Movies

Nelson (1970, 1974), in a series of seminal papers, discussed the unique marketing challenges experience goods face. Whereas advertising for search goods can be directly informative, advertising for experience goods can only be indirectly informative, via signals such as advertising spending. In this paper we examine the marketing strategy of movies to identify which of these mechanisms might be going on. The data suggest that movies follow two distinct types of advertising strategies, depending on their assets at birth, and later in the life-cycle. However, despite these differences, a single idea unifies all movie marketing: advertise your strong search attributes. Advertising spending strategy and distribution strategy simply follow from this basic decision on advertising content.