Column 8 · Marketing Programs · Era 6, Engagement and Networks (2010s)
Advertising Elasticity
Implementation, content · Major · Cluster III, Organization and Programs
Description
Their meta-analysis of brand advertising elasticities found a mean short-term elasticity of about 0.1 and identified how elasticities vary across product categories, markets, and time.
Managerial Implications
Across decades of studies, advertising elasticity is small, around 0.1 in the short term and roughly double that in the long term, and has been declining. Advertising works better for new products, in Europe versus the United States, and for durable goods. Managers should expect modest average returns, concentrate advertising where elasticity is known to be higher, and test rather than assume, because the typical campaign does not pay back on short-term sales.