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The return to advertising expenditure

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Abstract

Every year companies spend billions of dollars on advertising in an effort to induce consumers to purchase their goods. Yet, unlike almost any other investment that a company makes, management's advertising allocation decision is made with little, if any, substantive information on the return received from that investment. This research presents a methodology for determining the monetary gains from advertising and provides an estimate of the return to advertising investment for a sample of firms. Substantial gains exist for firms from advertising. This effect is seen to vary by type of industry and is strongly related to other positive strategic decisions of the firm.

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Author information

Authors and Affiliations

  1. Owen Graduate School of Management, Vanderbilt University, 37203, Nashville, TN

    Bruce Cooil

  2. John E. Anderson Graduate School of Management, University of California, Los Angeles, 90024, Los Angeles, CA

    Timothy M. Devinney

Authors
  1. Bruce Cooil
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  2. Timothy M. Devinney
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Additional information

The authors would like to thank Deborah Heisley, two anonymous referees, and the participants at the 1991 Marketing Science Conference for their comments and suggestions. We thank Sylvia Graham, Camilo Riano, Patrick Grant, Patricia James, and Cordy Cates for assistance in gathering the information for this paper.

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Cooil, B., Devinney, T.M. The return to advertising expenditure. Marketing Letters 3, 137–145 (1992). https://doi.org/10.1007/BF00993993

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  • DOI: https://doi.org/10.1007/BF00993993

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