, 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


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.


Advertising Brand awareness Perceived quality Dynamic panel data methods 

JEL Classification

L15 C23 H37 



The authors would like to thank Jason Allen, Christina Gathmann, Wes Hartmann, Ig Horstmann, Jordi Jaumandreu, Phillip Leslie, Puneet Manchanda, Julie Mortimer, Harikesh Nair, Peter Rossi, and two anonymous referees for helpful comments and Harris Interactive for providing the Equitrend data used in this study. Clark would like to thank the CIRPEE and FQRSC for research support for this project and Doraszelski gratefully acknowledges the hospitality of the Hoover Institution during the academic year 2006/07.


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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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