Generalizations About Advertising Effectiveness in Markets
10 Pages Posted: 18 Jan 2010 Last revised: 27 Jan 2010
Date Written: January 14, 2010
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: Suggested Citation