QME

, Volume 7, Issue 2, pp 207–236 | Cite as

The effect of advertising on brand awareness and perceived quality: An empirical investigation using panel data

  • C. Robert Clark
  • Ulrich Doraszelski
  • Michaela Draganska
Article

Abstract

We use a panel data set that combines annual brand-level advertising expenditures for over three hundred brands with measures of brand awareness and perceived quality from a large-scale consumer survey to study the effect of advertising. Advertising is modeled as a dynamic investment in a brand’s stocks of awareness and perceived quality and we ask how such an investment changes brand awareness and quality perceptions. Our panel data allow us to control for unobserved heterogeneity across brands and to identify the effect of advertising from the time-series variation within brands. They also allow us to account for the endogeneity of advertising through recently developed dynamic panel data estimation techniques. We find that advertising has consistently a significant positive effect on brand awareness but no significant effect on perceived quality.

Keywords

Advertising Brand awareness Perceived quality Dynamic panel data methods 

JEL Classification

L15 C23 H37 

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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  • C. Robert Clark
    • 1
  • Ulrich Doraszelski
    • 2
  • Michaela Draganska
    • 3
  1. 1.Institute of Applied EconomicsHEC Montreal and CIRPEEMontrealCanada
  2. 2.Department of EconomicsHarvard UniversityCambridgeUSA
  3. 3.Graduate School of BusinessStanford UniversityStanfordUSA

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