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A Micromodeling Approach To Investigate The Advertising-Sales Relationship

In: Perspectives On Promotion And Database Marketing The Collected Works of Robert C Blattberg

Author

Listed:
  • ROBERT C. BLATTBERG

    (University of Chicago, USA)

  • ABEL P. JEULAND

    (University of Chicago, USA)

Abstract

The purpose of this paper is to derive a model of advertising effects on the firm's sales. A micromodel is postulated and aggregated across individuals and over time to produce a macromodel of the aggregate sales-advertising relationship for a single product. The micromodel postulated is very simple. It incorporates two factors: reach of the ads and rate of decay of their effectiveness over time.This approach to modeling advertising effects is shown to be fruitful in several respects: (1) the coefficients of the aggregate equation are easily interpretable—in terms of the reach and decay parameters; (2) the model derived is nonlinear yet estimable; (3) a special case of the model is very similar to lag models that have been in use; (4) the model can be used whatever the unit of time is; (5) the carryover effect of advertising (as commonly defined) is not constant, but depends upon the previous spending levels; and (6) the model helps illustrate that the duration of advertising may be greatly overstated if aggregate lagged dependent variable models are simplistically interpreted.

Suggested Citation

  • Robert C. Blattberg & Abel P. Jeuland, 2010. "A Micromodeling Approach To Investigate The Advertising-Sales Relationship," World Scientific Book Chapters, in: Greg M Allenby (ed.), Perspectives On Promotion And Database Marketing The Collected Works of Robert C Blattberg, chapter 17, pages 265-282, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814287067_0017
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    More about this item

    Keywords

    Quantitative Marketing; Tracker Model; Customer Level Data; Marketing-Mix Modeling;
    All these keywords.

    JEL classification:

    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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