A New Theorem for Optimizing the Advertising Budget

This article offers a new solution to the advertising budgeting problem, developed through empirical optimization.

A New Theorem for Optimizing the Advertising Budget

Malcolm Wright Ehrenberg-Bass Institute, University of South Australia


Empirical generalizations (EGs) have obvious practical applications, but they also can help to advance theory and develop managerial principles by following the “Empirical Theoretical” (ET) route (Bass, 1995).

There is a popular view that the social sciences face great difficulties developing models and laws simply because human society presents too many variables. Thus, social science models inherently have more measurement error, greater stochastic variability, and are more challenging to specify than physical sciences models.

Yet EGs help clarify the many variables in...

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