Benchmarking Advertising Efficiency
By Xueming Luo and Naveen Donthu
Multichannel
"In this study, printed mass media advertising shows greater impact than broadcast advertising."
Source: Journal of Advertising Research, November/December 2001, 4(6), pgs 7-18.
Type of Promotional Material/Activity Tested: Advertising expenses
Sample: Sixty-three of the top 100 national advertisers, as reported by Advertising Age (1997-98) based on measured media spending.
Methodology: Data Envelopment Analysis used to benchmark media spending inefficiency.
Metrics: Advertising expenses by media for 1997 and 1998.
Independent variables:
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Print, broadcast, and outdoors expenditures
Dependent variable:
- Sales revenue and operating income
Top Line Results:
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Only nine of the top 63 advertisers were efficient in their media spending -- employing the optimal mix of broadcast, print, and outdoor advertising in generating sales revenue.
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Firms that spent proportionately more on print media advertising had higher sales and operating incomes compared to firms that did not. That is, higher correlations were found between the amount spent on print advertising and sales and operating incomes (r = 0.61 and r = 0.28, respectively) vs. the amount spent on broadcast advertising and sales (r = 0.44) and operating incomes (r = 0.19).
Take Away: This research uses an econometric analysis to assess the correlations between the media choices and overall business results. Printed mass media advertising showed greater impact than broadcast advertising. There are a few limitations to this study -- the data are from the late 1990’s and does not include Internet advertising. In addition, other media forms such as direct mail were not included. But as to the question "do consumers' media choices impact the bottom line?" The answer is yes.
Complexity rating of original source: 2
(Complex statistical analysis scale: 1= none, 2= moderate, 3 = difficult)
Source: Benchmarking Advertising Efficiency (not freely available)
