A Micromodeling Approach to Investigate the Advertising-Sales Relationship

Robert C. Blattberg and Abel P. Jeuland
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Robert C. Blattberg: University of Chicago
Abel P. Jeuland: University of Chicago

Management Science, 1981, vol. 27, issue 9, 988-1005

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.

Keywords: marketing; marketing: advertising/promotion (search for similar items in EconPapers)
Date: 1981
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Citations: View citations in EconPapers (9)

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