Advertising profitability: size matters

In this follow-up paper to ‘The Curse of Lord Leverhulme’ by E. Ephron and G Pollak (Admap July/August 2003), Paul Dyson argues that the main factor driving advertising profitability, even in fmcg markets, is market size.

advertising profitability

Size matters

Paul DysonD2D Limited

Erwin Ephron and Gerry Pollak's recent article in Admap (1) raised some interesting points about profitable advertising. The authors tackled the issue that most advertising does not make a profit, at least in the short term. They argued that this finding may well be biased by the fact that the majority of advertising campaigns evaluated through econometric modelling are for fast moving consumer goods (fmcg).

Their point was that fmcg products will be less profitable in general, for a number of reasons (my interpretation in brackets).

  • They tend...

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