A Study of Retailer Advertising

Advertising represents an important marketing activity that brands and retailers use to achieve their strategic goals. Despite its importance, the retailing literature contains few studies that shed light on patterns of their advertising. Consequently, little is known about how retailers spend on advertising, how this spend is changing over time and what factors this spend depends on. We draw on observational data series from multiple sources, and utilise time series modelling approaches to study patterns in retailer advertising over the past two decades. Preliminary results show retailers spend very little on advertising (around 0.2%), and have furthermore reduced their spend over time. A closer look at the data suggests the decline in advertising by retailers is accounted for mostly by a shift away from some, but not all traditional advertising formats, and from local towards national advertising. We also find evidence of considerable heterogeneity in retailers’ advertising spend per capita, and compare this with available evidence on advertising effectiveness. This heterogeneity motivates our analysis to understand underlying consumer, market/competition, company, and contextual to explain the variations in retailer advertising activity.