Determinants of Advertising Effectiveness: The Development of an International Advertising Elasticity Database and a Meta-Analysis
BuR Business Research Journal, Vol. 4, No. 2, pp. 193-239, December 2011
47 Pages Posted: 3 Jan 2012
Date Written: December 19, 2011
Increasing demand for marketing accountability requires an efficient allocation of marketing expenditures. Managers who know the elasticity of their marketing instruments can allocate their budgets optimally. Meta-analyses offer a basis for deriving benchmark elasticities for advertising. Although they provide a variety of valuable insights, a major shortcoming of prior meta-analyses is that they report only generalized results as the disaggregated raw data are not made available. This problem is highly relevant because coding of empirical studies, at least to a certain extent, involves subjective judgment. For this reason, meta-studies would be more valuable if researchers and practitioners had access to disaggregated data allowing them to conduct further analyses of individual, e.g., product-level-specific, interests. We are the first to address this gap by providing an advertising elasticity database (AED) and empirical generalizations about advertising elasticities and their determinants. Our findings indicate that the average current-period advertising elasticity is 0.09, which is substantially smaller than the value 0f 0.12 that was recently reported by Sethuraman, Tellis, and Briesch (2011). Furthermore, our meta-analysis reveals a wide range of significant determinants of advertising elasticity. For example, we find that advertising elasticities are higher for hedonic and experience goods than for other goods; for new than for established goods; when advertising is measured in gross rating points (GRP) instead of absolute terms; and when the lagged dependent or lagged advertising variable is omitted.
Keywords: advertising effectiveness, advertising elasticity, advertising elasticity database, meta-analysis, empirical marketing generalizations
JEL Classification: C10, D12, M37
Suggested Citation: Suggested Citation