OPTIMAL MEDIA ALLOCATION DECISIONS FOR GENERIC ADVERTISERS

Henry Kinnucan and Maria Thomas

Journal of Agricultural Economics, 1997, vol. 48, issue 1‐3, 425-441

Abstract: Media allocation rules are derived for generic advertisers under a variety of market structures, marketing technologies and policy settings. The rules indicate that once the budget is set, allocation decisions can proceed strictly on the basis of media‐specific advertising elasticities. The investment decision, however, is more complex. In addition to the media‐specific advertising elasticities, generic advertisers need to take into account the price sensitivity of consumers, supply response, markup behaviour, advertising ‘tax’ incidence, policy setting, and competitive conditions. A general finding is that protection blunts the incentive to advertise collectively, while imperfect competition enhances the incentive.

Date: 1997
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