The impact of advertising on a company’s stock price: Conditions for positive, neutral, negative, and reverse effects

Shuba Srinivasan and Dominique M.Hanssens

Marketers have made good progress in quantifying the impact of advertising campaigns on consumers, at least in the short run.
Srinivasan and Hanssens

Management Slant

  • Advertising has a generally positive impact on company value (stock price).
  • The positive effect comes mainly from strengthening the brand in investors’ minds.
  • There is synergy between advertising increasing consumer value and investor value, except in the case of price promotions.
  • Stock price movements can influence future advertising decisions that are not always in the company’s best interest.
  • Questions about the relationship between advertising and company value merit further research.

Introduction

Why Evaluate the Link Between Marketing and Company Value?

Tactical marketing engagements such as media advertisements typically have well-defined objectives by which to measure...

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