In recent years, manufacturers have become increasingly disposed toward the use of sales promotions, often at the cost of advertising. Yet the long-term implications of these changes for brand profitability remain unclear. In this paper, we seek to offer insights into this important issue. We consider the questions of i) whether it is more desirable to advertise or promote, ii) whether it is better to use frequent, shallow promotions or infrequent, deep promotions, and iii) how changes in regular prices affect sales relative to increases in price promotions. Additional insights regarding brand equity, the relative magnitude of short- and long-term effects, and the decomposition of advertising and promotion elasticities across choice and quantity decisions are obtained. To address these points, we develop a heteroscedastic,

A randomized experiment performed in cooperation between Yahoo! and a major retailer allows us to measure the effects of online advertising on sales. We exploit a match of over one million customers between the databases of Yahoo! and the retailer, assigning them to treatment and control groups for an online advertising campaign for this retailer and then measuring each individual’s weekly sales at this retailer, both online and in stores. By combining a controlled experiment with panel data on purchases, we find statistically and economically significant impacts of the advertising on sales. The treatment effect persists for weeks after the end of an advertising campaign, and we estimate the total effect on revenues to be more than eleven times the retailer’s expenditure on advertising during the study. Additional results explore differences in the number of advertising impressions delivered to each individual, age and gender demographics, online and offline sales, and the effects of advertising on those who click the ads versus those who merely view them. Our results provide the best measurements to date of the effectiveness of image advertising on sales, and we shed light on important questions about online advertising in particular.

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This article provides observations on the state of the art in marketing research during 1987-1997. As such, it updates the earlier state-of-the-art review by Malhotra (1988),

By drawing on an empiricist tradition, and on the literature discussing the philosophical problems of marketing knowledge, we seek to develop practical guidelines for developing empirical generalisations. In particular we suggest three criteria for the development of marketing knowledge: ensuring falsifiability and theoretical competition; overcoming uncertainty through replication; and using extension to develop generalisations and identify boundary conditions. By way of demonstration, these criteria are applied to assessments of the Dirichlet model, the Servqual instrument, and market share modelling. We conclude with renewed plea that more of the academic research effort in marketing be devoted to replicating and extending existing results, and determining the conditions under which existing theories do, and do not, hold. Correspondence should be addressed to Malcolm Wright at:

This paper aims to understand the impact of temporal spacing between ad exposures on a consumer's decision of whether to purchase the advertised product. I create an individuallevel dataset with exogenous variation in the spacing and intensity of ads by running online eld experiments. In these experiments, exposure to ads is randomized across individuals and over time. The data show that at a purchase occasion, the likelihood of a product's purchase increases if its past ads are spread apart rather than bunched together, even if spreading apart of ads involves shifting some ads away from the purchase occasion. Because the traditional models of advertising do not allow for this e ect, I build a new memory-based model of learning through ad exposure. Using a nested test, I reject a goodwill stock model based on the Nerlove and Arrow [1962] approach, in favor of the more general memory-based model. Counterfactual simulations using parameter estimates show that not accounting for the spacing e ect of ads might lead to signi cantly lower pro ts for the advertisers.

The authors are listed in reverse alphabetical order. They gratefully acknowledge the support of IRI/Europanel, who provided the data on which this study is based. They thank the participants at the MSI Conference on Competitive Reaction for constructive comments on an earlier draft of this work. Financial support by the Flemish Science Foundation (F.W.O) under grant G.0145.97 and the Research Council of the Catholic University of Leuven under grant OT.96.4 is greatly How do competitors react to each other’s price-promotion and advertising actions? How do these reactions influence the net sales impact we observe? We answer these questions by performing a large-scale empirical study of the short-run and long-run reactions to promotion and advertising shocks in over 400 consumer product categories, over a four-year time span. Competitive reaction can be passive, accommodating or retaliatory. We first develop a series of expectations on the type and intensity of reaction behavior, and on the moderators of this behavior. These expectations are assessed in two ways. First, vector-autoregressive models quantify the short-run and long-run effect of a promotion or advertising action on competitive sales and on competitive reactions. By cataloging the numerical results, we are able to formulate

dmick@virginia.edu. The authors acknowledge financial support from Santa Clara University, in the form of Leavey and University grants, and the University of Virginia, in the form of McIntire grants. They also thank Brittney Rhoney, Dayna Koeninger, and Martha Page for assistance in data collection and coding, and Jim Burroughs and Barbara J. Phillips for ideas and advice on the manuscript. 2 Overloaded and disinterested consumers have become skillful at screening out ads. In response, advertisers employ and combine various strategies, with two major ones being (a) rhetorical figures (e.g., rhyme, puns) and (b) message repetition. Though each has received substantial research attention and is crucial to advertising theory, they have not been examined simultaneously. We conducted a multi-magazine experiment that imposed a heavy processing load and incidental exposure to ads. Target ads had headlines varying in rhetorical structure (figurative or not, and scheme or trope) and were repeated one, two, four, or six times. We found that alterations to rhetorical structure had a systematically greater impact on memory,

on prior versions of this manuscript. A Theory of Combative Advertising In mature markets with competing firms, a common role for advertising is to shift consumer preferences towards the advertiser in a tug-of-war, with no effect on category demand. In this paper, we analyze the effect of such “combative ” advertising on market power. We show that, depending on the nature of consumer response, combative advertising can reduce price competition to benefit competingfirms. However, it can also lead to a pro-competitive outcome where individual firms advertise to increase own profitability, but collectively become worse off. This is because combative advertising can intensify price competition such that an "advertising war " leads to a "price war. " Similar to price competition, advertising competition can result in a prisoner’s dilemma where all competing firmsmakelessprofit even when the effect of each firm’s advertising is to enhance consumer preferences in its favor. Givensuchpro-competitiveeffects, we further show that cost of combative advertising could be a blessing in disguise — higher unit cost of advertising resulting in lower equilibrium levels of advertising, leading to higher prices and profits. We conduct a laboratory experiment to

Based on over 260 estimates, the mean elasticity of sales or market share to advertising is 0.1 percent. Another 450 field experiments suggest that changes in media, product, target segments, advertising scheduling, and advertising content are more likely to yield changes in sales than do changes in advertising weight. Numerous other studies suggest that advertising wear-in does not exist or occurs quite rapidly while advertising wear-out occurs more slowly. Details of and differences in these results by condition are discussed in this article. OVERVIEW “Advertising effectiveness in markets ” refers to market response to a firm’s (or a brand’s) advertising. I define “market response ” as the firm’s (or brand’s) choices, sales, or market share in real market contexts. Researchers have also examined the effects of advertising on consumer awareness, attitudes, beliefs, and intentions. These effects typically