Study Of Celebrity Advertising Based On Signaling Theory In Information Economics

Advertising is a prominent feature of economic life. Advertising economics is a well-rounded curriculum in overseas. However, there are few of scholars studying on this field and few of valuable study. Celebrity advertising is an important form of advertising, and it has taken up high percents in commercial ads, while the economists have not paid enough attention to it.Why we need a spokesperson in advertising? Which role does a celebrity spokesperson play in a celebrity advertising? How do companies select their celebrities, and how do companies address the investment return on celebrity endorsement? In this paper, according to signaling model in information economics, we analyze the utility of celebrity endorsement in an ad and build a celerity endorsement utility function based on that. This function can be used to choose a proper spokesperson. From this function we also get variable named celebrity endorsement efficiency. Putting the variable into the Milgrom and Roberts Price-Advertising Signaling Quality Model, we get a new model. According to the new model, we find that the celebrity endorsement utility can signal quality and can be proved by a case study of Anta Company.This paper is composed of seven parts. Chapter one introduces the research motivation, background and value of celebrity advertising and advertising economics. Chapter two reviews the related literature and brings forward the existing problems and innovation attempts. Chapter three introduces signaling theory and advertising signaling quality model in information economics, based on which we build the new celebrity advertising signaling model. Chapter four analyzes celebrity endorsement utility in celebrity advertising and builds the celebrity endorsement utility function. Firms can use this function to choose the most proper celebrity endorser in an advertisement. Chapter five builds a new signaling model transformed from Milgrom and Roberts Price-Advertising Signaling Quality Model. By loosing the former hypothesis that advertising cost is efficiency, we introduce a new variable (celebrity endorsement efficiency). Chapter six proves the model by a case study of Anta Company. Chapter seven is the conclusions of this paper.