Modeling advertising impact at campaign level: Empirical generalizations relative to long-term advertising profit contribution and its antecedents
- 699 Downloads
Research on advertising effectiveness is focused on sales and provides few empirical generalizations on profitability and its antecedents. To fill this gap, we develop an econometric model to capture the impact of advertising at campaign level, using retail panel data coupled with TV audience tracking data. Our study involves 31 brands from six packaged goods categories observed weekly and nationally over 4 years and representing 264 TV campaigns. Although we confirm empirical generalizations on the capacity of advertising to increase sales, we establish a different picture for profitability. Only 11 % of campaigns make a positive contribution to profit. Advertising is more profitable for challengers and medium brands, whereas leaders and small brands (recent or established) have a lower profitability. Advertising intensity in the category and campaign carry-over emerge as the strongest (respectively) negative and positive drivers of profitability. The antecedents of carry-over are also analyzed and discussed.
KeywordsAdvertising campaign Campaign profitability antecedents Advertising carry-over Advertising Adstock Advertising econometric model
The authors thank IRI France for supplying the data, and the LabEx Entreprendre for financial support. They also thank Professor J.P. Couderc and the anonymous ML reviewers for their helpful comments.
- Batra, R., Lehmann, D. R., Burke, J., & Pae, J. (1995). When does advertising have an impact? A study of tracking data. Journal of Advertising Research, 35(5), 19–32.Google Scholar
- Broadbent, S., & Fry, T. (1995). Adstock modelling for the long term. Journal of the Market Research Society, 37(4), 385–403.Google Scholar
- Farris, P. W., Bendle, N. T., Pfeifer, P. E., & Reibstein, D. J. (2010). Marketing metrics: the definitive guide to measuring marketing performance (2nd ed.). Pearson Education: Wharton School Publishing.Google Scholar
- Jones, J. P. (1995). Single-source research begins to fulfill its promise. Journal of Advertising Research, 35(3), 9–16.Google Scholar
- Leeflang, P. S. H., Wittink, D.R., Wedel, M., Naert P. A. (2000) Building Models for Marketing Decisions. ISMQ Kluwer AcademicGoogle Scholar
- Lodish, L. M., & Riskey, D. R. (1997). Making ads profitable: in-market research now guides advertising decisions at Frito-Lay. Marketing Research, 9(4), 38–42.Google Scholar
- Van Horne J.C. (1995) Financial Management and Policy, Prentice Hall, 10th EditionGoogle Scholar