Using econometric analysis to evaluate retail advertising

Louise Cook, Holmes & Cook, explains how econometrics can help identify the specific effects of advertising in retail performance

Louise Cook

Fast moving consumer goods companies have a long history of using econometrics. They have had the necessary input data, having invested heavily in continuous research to monitor their own market position and competitors' activity and achievements. Moreover, in recent years, many companies have been forced to justify advertising expenditure, making econometric analysis, with its ability to separate advertising's effects from those of price, promotions and competitive activity, an invaluable tool. In addition to justifying budgets, they have attempted to understand more about how their advertising affects sales and so increase the efficiency with which they deploy their budgets.