New and Enduring Empirical Generalizations on Advertising Elasticity: A Meta-Analysis of 872 Estimates

48 Pages Posted: 20 Jun 2011 Last revised: 6 Nov 2014

See all articles by Raj Sethuraman

Raj Sethuraman

Southern Methodist University (SMU) - Marketing Department

Gerard J. Tellis

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

Richard Briesch

Southern Methodist University (SMU) - Marketing Department

Date Written: August 1, 2009

Abstract

This study conducts a meta-analysis of 872 short-term brand-level advertising elasticities estimated in 57 studies published between 1960 and 2008. Short-term advertising elasticity is the percent change in a brand’s current period sales for one percent change in the brand’s current period advertising. The study finds 16 new and 7 enduring empirical generalizations on advertising elasticity. The most important ones are the following: The average advertising elasticity is .12, which is significantly lower than the prior meta-analytic mean of .22 (Assmus, Farley and Lehmann 1984). The average advertising elasticity has been relatively stable over the last four decades (1964-2004). Only about half (53%) of the advertising elasticities are significantly greater than zero. Advertising elasticities are higher a) for durable goods than nondurable goods, b) in the early stage of the life cycle than in the mature stage, c) for yearly data than for daily or quarterly data, d) for TV advertising than print advertising, and e) when advertising is measured in relative than in absolute terms. The authors discuss the implications of these findings.

Keywords: Advertising, Meta-Analysis, Empirical Generalization, Promotion, Marketing Mix

Suggested Citation

Sethuraman, Raj and Tellis, Gerard J. and Briesch, Richard, New and Enduring Empirical Generalizations on Advertising Elasticity: A Meta-Analysis of 872 Estimates (August 1, 2009). Marshall School of Business Working Paper No. MKT 3-11. Available at SSRN: https://ssrn.com/abstract=1866002 or http://dx.doi.org/10.2139/ssrn.1866002

Raj Sethuraman (Contact Author)

Southern Methodist University (SMU) - Marketing Department ( email )

United States

Gerard J. Tellis

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

Richard Briesch

Southern Methodist University (SMU) - Marketing Department ( email )

United States

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