TV Advertising Effectiveness and Profitability: Generalizable Results From 288 Brands

Bradley T. Shapiro*, Günter J. Hitsch, Anna E. Tuchman

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

We estimate the distribution of television advertising elasticities and the distribution of the advertising return on investment (ROI) for a large number of products in many categories. Our results reveal substantially smaller advertising elasticities compared to the results documented in the literature, as well as a sizable percentage of statistically insignificant or negative estimates. The results are robust to functional form assumptions and are not driven by insufficient statistical power or measurement error. The ROI analysis shows negative ROIs at the margin for more than 80% of brands, implying over-investment in advertising by most firms. Further, the overall ROI of the observed advertising schedule is only positive for one third of all brands.

Original languageEnglish (US)
Pages (from-to)1855-1879
Number of pages25
JournalEconometrica
Volume89
Issue number4
DOIs
StatePublished - Jul 2021

Keywords

  • Advertising
  • agency issues
  • consumer packaged goods
  • empirical generalizations
  • media markets
  • return on investment

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'TV Advertising Effectiveness and Profitability: Generalizable Results From 288 Brands'. Together they form a unique fingerprint.

Cite this