Generalizations About Advertising Effectiveness in Markets

10 Pages Posted: 18 Jan 2010 Last revised: 27 Jan 2010

See all articles by Gerard J. Tellis

Gerard J. Tellis

University of Southern California - Marshall School of Business, Department of Marketing

Date Written: January 14, 2010

Abstract

Research on over 400 estimates of advertising elasticity leads to the following important generalization. If advertising changes by 1%, sales or market share will change by about .1%. (That is, advertising elasticity is 0.1.). The advertising elasticity is higher in Europe relative to the US, for durables relative to non-durables, in early relative to late stages of the product life cycle, and in print over TV. The advertising elasticity is lower in models that incorporate disaggregate data, advertising carryover, quality, and promotion relative to those that do not. The advertising elasticity is lower in multiplicative models relative to other model forms, such as the additive model. The advertising elasticity is invariant over the measure of the dependent variable or the method of estimation.

Keywords: Advertising, Effectivness, Elasticity, Generalizations

Suggested Citation

Tellis, Gerard J., Generalizations About Advertising Effectiveness in Markets (January 14, 2010). Available at SSRN: https://ssrn.com/abstract=1536859 or http://dx.doi.org/10.2139/ssrn.1536859

Gerard J. Tellis (Contact Author)

University of Southern California - Marshall School of Business, Department of Marketing ( email )

Hoffman Hall 701
Los Angeles, CA 90089-0443
United States
213-740-5031 (Phone)
213-740-7828 (Fax)

HOME PAGE: http://gtellis.net

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