Understanding the Timing and Magnitude of Advertising Spending Patterns

66 Pages Posted: 20 Sep 2009

See all articles by Maarten J. Gijsenberg

Maarten J. Gijsenberg

University of Groningen - Department of Marketing & Marketing Research

Harald J. van Heerde

University of Waikato. Management School

M. G. Dekimpe

Catholic University of Leuven (KUL) - Department of Applied Economics; Erasmus Research Institute of Management (ERIM)

Jan‐Benedict EM Steenkamp

University of North Carolina (UNC) at Chapel Hill - Marketing Area

Vincent R. Nijs

Northwestern University - Department of Marketing

Multiple version iconThere are 2 versions of this paper

Date Written: June 11, 2009

Abstract

Notwithstanding the fact that advertising is one of the most used marketing tools, little is known about what is driving (i) the timing and (ii) the magnitude of advertising actions. Building on formative theory, the authors develop a parsimonious model that captures this dual investment process. They explain advertising spending patterns as observed in the market, and investigate the impact of company, competitive, and category-related factors on these decisions, thereby introducing the novel concept of Ad-sensor. Analyses are based on a unique combination of (i) weekly advertising data on 748 CPG brands in 129 product categories in the UK, (ii) household panel purchase data, and (iii) data on new product introductions. The analyzed brands include both large and small brands, both frequent and infrequent advertisers, thus providing a more complete and correct overview of the market. The results show that advertising spending patterns can be explained as real-life applications of the normative literature, in which advertising and advertising goodwill management are embedded in dynamic (s,S) inventory systems.

Adstock and Ad-sensor show a positive effect on both timing and magnitude decision. Competitive reasoning is found to have little to no effect on advertising decisions, whereas category-related factors do show an impact. The extent to which campaigning strategies are more or less the outcome of advertising goodwill management systems, however, varies across brands as a function of their relative size and advertising frequency.

Keywords: Advertising, timing, competition, Tobit-II, Bayesian inference

Suggested Citation

Gijsenberg, Maarten J. and van Heerde, Harald J. and Dekimpe, Marnik and Steenkamp, Jan-Benedict E. M. and Nijs, Vincent R., Understanding the Timing and Magnitude of Advertising Spending Patterns (June 11, 2009). Available at SSRN: https://ssrn.com/abstract=1472914 or http://dx.doi.org/10.2139/ssrn.1472914

Maarten J. Gijsenberg (Contact Author)

University of Groningen - Department of Marketing & Marketing Research ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 50 363 8249 (Phone)
+31 50 363 7970 (Fax)

Harald J. Van Heerde

University of Waikato. Management School ( email )

Hamilton
New Zealand

Marnik Dekimpe

Catholic University of Leuven (KUL) - Department of Applied Economics ( email )

Leuven, B-3000
Belgium
+32 16 326 957 (Phone)
+32 16 326 732 (Fax)

HOME PAGE: http://www.econ.kuleuven.ac.be/tew/academic/market/members/MarnikDekimpe.htm

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 1715/9576 (Phone)
+31 10 408 9011 (Fax)

HOME PAGE: http://web.eur.nl/fbk/dep/dep3/about/members/people/mdekimpe

Jan-Benedict E. M. Steenkamp

University of North Carolina (UNC) at Chapel Hill - Marketing Area ( email )

CB 3490
Chapel Hill, NC 27599
United States
919-962-9579 (Phone)

HOME PAGE: http://www.kenan-flagler.unc.edu/Faculty/search/detail.cfm?person_id=860

Vincent R. Nijs

Northwestern University - Department of Marketing ( email )

Kellogg School of Management
2001 Sheridan Rd.
Evanston, IL 60208
United States

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