A Look at the Long-Run Effectiveness of Multimedia Advertising and its Implications for Budget Allocation Decisions
By Demetrios Vakratsas & Zhenfeng Ma
Multichannel
"This study demonstrates the positive contributions that magazine advertising makes over time."
Source: Journal of Advertising Research, June 2005, 45(2), pgs. 241-254.
Type of Promotional Material/Activity Tested: The long-term effectiveness of multimedia advertising for the two major competitors in the American sports utility vehicle industry in the 1990s. Effectiveness of media choice (magazine, network TV and spot TV) of competing brands of SUVs on monthly sales, factoring in persistence effects (impact of advertising over time.)
Methodology: Multivariate persistence modeling
Metrics:
Independent variables:
-
Amount spent on magazine, network TV, and spot TV for each brand.
Dependent Variable:
- Monthly sales figures for Ford Explorer and Jeep Grand Cherokee (1990-2000).
Top Line Results:
Average Percentage of Budget Spend per Medium
|
Ford Explorer |
Jeep Grand Cherokee |
|
| Magazine | 36% | 27% |
| Network TV | 45% | 30% |
| Spot TV | 12% | 31% |
- Impact on current (short-run) sales reveal that Explorer had a stronger effect on magazine and network TV media expenditures than Grand Cherokee. Grand Cherokee showed a stronger impact on short-run sales of spot TV than Explorer.
- Magazine advertising was more effective than network TV advertising for both brands in the long-term.
- Using a regression model to predict (simulate) the impact of changing media mix on future sales, the authors predicted that both Explorer and Grand Cherokee could have improved their respective sales performance by increasing budget allocation to magazines.
Take-Away: This research tested the link between the media mix of two brands of SUV’s over an 11-year period on sales. Dr. Vakratsas is a noted researcher on the effects of advertising. He and Dr. Ma have used a predictive modeling paradigm to demonstrate the positive contributions that magazine advertising makes on the long-run sales of vehicles. Using this methodology, the authors were not able to identify the root cause of the improvement but hypothesized it was due to media lifespan and content conveyed in magazine advertising.
Complexity rating of this source: 3 (Complex statistical analysis scale: 1= none, 2= moderate, 3 = difficult)
Source: A Look at the Long-run Effectiveness of Multimedia Advertising and Its Implications for Budget Allocation Decisions
