If the Question is Ad Effect, the Answer is 'Not Elasticities'

Advertising sales elasticity is often used to compare advertising effects (across years, campaigns, media, regions and brands).

If the Question Is Ad Effects, the Answer Is 'Not Elasticities'

Simon BroadbentBrandCon Ltd.

After market-mix modeling, it has become the custom to report advertising sales elasticity. This has been used to compare advertising effects: across years, campaigns, media, regions, and brands. This is incorrect.

Elasticity has also been called the proportion of sales 'due to advertising.' This is misleading.

For comparisons, the advertising coefficient in a linear regression is recommended. This is simply related to elasticity, which is the coefficient in a logarithmic regression.

When market-mix modeling estimates the sales reactions to various factors, it does so through...

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