Concave or S-Shaped Sales Response to Advertising: Does It Really Matter? A Mathematical Model Modifies Conventional Wisdom about Ad Budgeting

In many advertising situations, the optimal decision - how much to spend and where to allocate the advertising budget - is not sensitive to the exact functional form used in modeling the process under study.

Concave or S-Shaped Sales Response to Advertising: Does It Really Matter? A Mathematical Model Modifies Conventional Wisdom about Ad Budgeting

Paul D. Berger

Bentley University

Bruce D. Weinberg

University of Massachusetts, Amherst

Management slant

  • It may be unnecessary to allocate effort and resources to determining whether the form of a sales response to advertising function is concave or S-shaped.
  • Advertising expenditures that maximize profit must be on a concave portion of a sales-response curve.
  • The above points apply to many problem settings in which optimal advertising decisions are to be made.

INTRODUCTION

There has been much debate in the marketing...

Not a subscriber?

Schedule your live demo with our team today

WARC helps you to plan, create and deliver more effective marketing

  • Prove your case and back-up your idea

  • Get expert guidance on strategic challenges

  • Tackle current and emerging marketing themes

We’re long-term subscribers to WARC and it’s a tool we use extensively. We use it to source case studies and best practice for the purposes of internal training, as well as for putting persuasive cases to clients. In compiling a recent case for long-term, sustained investment in brand, we were able to support key marketing principles with numerous case studies sourced from WARC. It helped bring what could have been a relatively dry deck to life with recognisable brand successes from across a broad number of categories. It’s incredibly efficient to have such a wealth of insight in one place.

Insights Team
Bray Leino

You’re in good company

We work with 80% of Forbes' most valuable brands* and 80% of the world's top top-of-the-class agencies.

* Top 10 brands