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Share of Voice: Findings from the US Automotive Industry

Author

Listed:
  • Rae Yule Kim

    (Montclair State University)

Abstract

This paper examines the impact of advertising spending on financial performances. It is often difficult to justify the ROI of advertising because the gain is often intangible. We utilize signaling theory to predict that competitive advertising spending should positively influence brand perceptions and nudge consumers to choose the brand over competitors that spend less on advertising. We implemented the system GMM on panel data to examine how competitive ad spending contributes to market share while controlling for persistence. The findings indicate that not the advertising spending but the competitive advertising spending share in the market significantly predict market dominance.

Suggested Citation

  • Rae Yule Kim, 2020. "Share of Voice: Findings from the US Automotive Industry," Economics Bulletin, AccessEcon, vol. 40(4), pages 3306-3312.
    • Handle: RePEc:ebl:ecbull:eb-20-00976
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I4-P288.pdf
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    References listed on IDEAS

    as
    1. Kirmani, Amna, 1990. "The Effect of Perceived Advertising Costs on Brand Perceptions," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 17(2), pages 160-171, September.
    2. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    3. Heid, Benedikt & Langer, Julian & Larch, Mario, 2012. "Income and democracy: Evidence from system GMM estimates," Economics Letters, Elsevier, vol. 116(2), pages 166-169.
    4. Semykina, Anastasia & Wooldridge, Jeffrey M., 2010. "Estimating panel data models in the presence of endogeneity and selection," Journal of Econometrics, Elsevier, vol. 157(2), pages 375-380, August.
    5. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    6. Deepa Chandrasekaran & Raji Srinivasan & Debika Sihi, 2018. "Effects of offline ad content on online brand search: insights from super bowl advertising," Journal of the Academy of Marketing Science, Springer, vol. 46(3), pages 403-430, May.
    7. Tuli, Kapil R. & Mukherjee, Anirban & Dekimpe, Marnik G., 2012. "On the Value Relevance of Retailer Advertising Spending and Same-store Sales Growth," Journal of Retailing, Elsevier, vol. 88(4), pages 447-461.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Budgeting; business economics; advertising spending; marketing ROI;
    All these keywords.

    JEL classification:

    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising

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