What is a 'Small' Advertising Elasticity?
Simon Broadbent Leo Burnett
Professor Tellis has recently published (1) an estimate of average price elasticity, which is the expected percentage change in volume sales when price rises one per cent. The number is 1.76. He compares this with an estimate of average advertising elasticity, which is the expected percentage change in volume sales when the amount spent on advertising rises one per cent. The number is 0.22.
Of course 0.22 is a smaller number than 1.76; he calls the difference 'dramatic' and suggests that, because 0.22 is small, marketers do not 'have...