Better Practices In Advertising Can Change A Cost Of Doing Business To Wise Investments In The Business

Margaret H. Blair and Allan R. Kuse
The ARS Group

Many view advertising as a cost of doing busi­ness rather than wise investments in the business—a view that has created the roller-coaster rides of cutting advertising 'spending' to meet quarterly profit objectives. This has most likely resulted from marketers not knowing, not being able to account for, not being able to improve, and/or not being able to achieve the return from investments in advertising consistent with their business objectives.

In an analysis of market mix modeling for 45 brands, Ephron and Pollak (2003) concluded that, on average, every advertising dollar spent returns just $54 for consumer package goods and $.87 for non-consumer package goods.