HEALTH ECONOMICS Health Econ. 17: 551–556 (2008) Published online 20 August 2007 in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/hec.1273 HEALTH ECONOMICS LETTERS EFFECTS OF YOUTH, PRICE, AND AUDIENCE SIZE ON ALCOHOL ADVERTISING IN MAGAZINES JON P. NELSON a, * and DOUGLAS J. YOUNG b a Department of Economics, Pennsylvania State University, University Park, PA, USA b Montana State University, Bozeman, MT, USA SUMMARY In this paper, we study the effects of youth readership, price of advertisements, and audience size on alcohol advertising in 35 major magazines. The regressions also account for readership demographics (adult reader age, income, gender, race), magazine characteristics (newsstand sales, number of annual issues), and type of beverage (beer, wine, spirits). Using count data models, the results indicate significant effects for price, audience size, and adult demographics, but fail to support claims that alcohol advertisers target adolescent readers. Copyright # 2007 John Wiley & Sons, Ltd. Received 12 February 2006; Revised 5 September 2006; Accepted 26 June 2007 KEY WORDS: alcohol; advertising; magazines; count data; youth INTRODUCTION Considerable controversy exists regarding possible targeting of youth by alcohol advertisers, including advertisements placed in magazines (FTC, 1999, 2003; NRC, 2003). Compared with broadcast media, advertising in magazines might be more prone to demographic targeting due to content differences, portability, and ability to connect with the reader’s lifestyle and preferences. 1 Several recent reports attempt to analyze this issue by using descriptive methods that label magazines as ‘youth oriented’ if adolescent readership is more than its share of the overall population (CAMY, 2002, 2005). These reports fail to account for other aspects of advertising placement decisions, such as the price of an advertisement, audience size, and adult demographics. Using count data regressions, this paper models alcohol advertisers’ placement decisions as a derived demand for advertising space. We estimate negative binomial and Poisson regressions for cumulative advertisements for each beverage (beer, wine, spirits) placed in 35 major magazines during 1997–2001. Our results indicate statistically significant effects for price, audience size, and adult demographics, but fail to support the claim that alcohol advertisers target adolescent readers. Implications of these results for public policy are discussed. *Correspondence to: Department of Economics, Pennsylvania State University, 608 Kern Building, University Park, PA 16803, USA. E-mail: jpn@psu.edu 1 ‘Targeting’ is a term used in marketing to refer to direct attempts by producers and advertisers to reach a particular market segment in order to satisfy profit objectives. According to Garfield et al. (2003, p. 2428), without explicit evidence of intent, indirect targeting occurs whenever a group or market segment is reached in a measurable or material manner. We adopt their test, which also is consistent with the US Supreme Court interpretations of First Amendment protections provided to commercial speech under the Central Hudson doctrine (447 U.S. 557). Copyright # 2007 John Wiley & Sons, Ltd.