Modelling Purchases as a Function of Advertising
and Promotion

Flemming Hansen
Lotte Yssing Hansen
and
Lars Grnholdt
Copenhagen Business School

Introduction

Since the 1960s (Grnholdt, 1990) there has been great interest in using different models to describe and explain the effects of advertisements on purchases. The interest is seen from both the advertisers' and the ad agencies' point of view. The ad agencies have an interest in giving their customers greater assurance of the strategies used, while the advertisers may want to see documentation which shows them that their 'investment' in the different media yields a revenue. Many researchers (see Little (1979) for an overview) have been involved with such models. Little (1979) divides the models into two classes: one that draws mainly upon intuition and one where the main focus lies in econometrics and/or statistics. However, it is crucial that the models either give the same result or at least give reason to assume that identical conclusions are drawn. In the worst case scenario it may be imagined that models give occasion for different conclusions, and this could very well be misused in the sense that the result wanted determines which method to use.