The Total Long-Term Sales Effects of Advertising: Lessons from Single Source

Kate Newstead, Jennifer Taylor, Rachel Kennedy and Byron Sharp
Ehrenberg-Bass Institute, University of South Australia

INTRODUCTION

If advertising drives sales—and more than 40 years of single source behavior measurement clearly shows that most advertising does (see Wood, this issue, p. 186)—it does so by nudging the propensity to buy the brand of the individuals who saw the commercial.

This nudge is the behavioral effect of advertising and should be the metric upon which it is judged. This change in buying propensity, however, can be difficult to detect, let alone measure correctly in aggregate (e.g., weekly sales figures). The effect of advertising can be subtle: after all, in a single TV spot, the cost-per-viewer is only a few cents, and other marketing activities can swamp the effect. The effect of advertising on aggregate sales depends not just on the power of the advertisement, but also the effectiveness of the media placement (how many consumers did it reach?). Finally, and very importantly, advertising's effect on sales figures is spread out over time; only a fraction of the individuals exposed to a commercial actually buy from the category in the following week.