Optimal Seasonal Allocation of Generic Dairy Advertising Expenditures

Annual seasonal advertising expenditure allocations were estimated for the national generic advertising programs for fluid milk and cheese with the use of price and advertising elasticities of demand that varied over time. Significant variation in optimal allocations existed both across products and over time, emphasizing the importance of obtaining accurate seasonal forecasts that incorporate changes in market conditions to plan future spending allocations. In the absence of such information, allocating annual budgets equally across quarters still produced positive producer welfare gains on average relative to historical spending that were not statistically different from those realized under the optimal spending strategy.