Quantifying the ripple: word-of-mouth and advertising effectiveness

Barak Libai, Katherine N Lemon and John E Hogan

In this article the authors demonstrate how a customer lifetime value approach can provide a better assessment of advertising effectiveness that takes into account postpurchase behaviors such as word-of-mouth.

Quantifying the Ripple: Word-of-Mouth and Advertising Effectiveness

John E. Hogan Strategic Pricing Group

Katherine N. Lemon Carroll School of Management, Boston College

Barak Libai Faculty of Management, Tel-Aviv University

MEASURING ADVERTISING EFFECTIVENESS: HOW CAN WE IMPROVE?

Debate over how best to determine advertising effectiveness has continued unabated for decades as firms struggle to justify expenditures for one of the largest line items in the marketing budget. Participants in this debate often fall into two camps based on whether they focus on individual or aggregate level advertising response. Advocates for individual response models rightly argue that it is...

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