Automotive brands that are not currently advertising may be at increased risk of losing market share, according to a study published in the Journal of Advertising Research (JAR).
This was a key learning from analysis undertaken by Nicholas De Canha (from C2 Group, South Africa) and Michael Ewing and Ali Tamaddoni (both from Deakin University, Australia).
“Results suggest that the decay of market share was pronounced and more rapid when a brand was not advertising,” they wrote in their paper, entitled The impact of advertising on market share: Controlling for clutter, familiarity, and goodwill decay.
Drilling down into this subject, they explained that although “the decay was slowed by increasing familiarity of the vehicle and brand, when the brand was not advertising, market shares fell significantly”.
These results were drawn from a dataset that covered the top 12 auto brands in South Africa – together responsible for 80% of sales and 70% of above the line spending for new vehicles – over an eight-year period.
“To the best of the authors’ knowledge, this is the largest study of auto sales and advertising in the public domain,” De Canha, Ewing and Tamaddoni wrote.
More specifically, their work drew on 10,000 datapoints to assess “the complex relationship among advertising, sales, clutter and familiarity”.
A further insight: “Although a positive advertising response can be recorded early on, depending on the level of clutter and familiarity, the level of advertising needed to maintain a market share increases as the market share increases.”
Zeroing in on advertising clutter, or the “effect of a competitor’s expenditure”, for the auto brands featured in the study, they discovered another powerful knowledge point.
“Clutter was found to have one of the greatest effects on the efficacy of advertising. Indeed, the effect was so pronounced that at high levels of clutter, almost no level of advertising had an impact on the market share,” they wrote.
“These findings also support the previous work … and show that a clutter model that combines both the number of advertisers and the total volume of competitive expenditure is the most effective.”
This was a key learning from analysis undertaken by Nicholas De Canha (from C2 Group, South Africa) and Michael Ewing and Ali Tamaddoni (both from Deakin University, Australia).
“Results suggest that the decay of market share was pronounced and more rapid when a brand was not advertising,” they wrote in their paper, entitled The impact of advertising on market share: Controlling for clutter, familiarity, and goodwill decay.
Drilling down into this subject, they explained that although “the decay was slowed by increasing familiarity of the vehicle and brand, when the brand was not advertising, market shares fell significantly”.
These results were drawn from a dataset that covered the top 12 auto brands in South Africa – together responsible for 80% of sales and 70% of above the line spending for new vehicles – over an eight-year period.
“To the best of the authors’ knowledge, this is the largest study of auto sales and advertising in the public domain,” De Canha, Ewing and Tamaddoni wrote.
More specifically, their work drew on 10,000 datapoints to assess “the complex relationship among advertising, sales, clutter and familiarity”.
A further insight: “Although a positive advertising response can be recorded early on, depending on the level of clutter and familiarity, the level of advertising needed to maintain a market share increases as the market share increases.”
Zeroing in on advertising clutter, or the “effect of a competitor’s expenditure”, for the auto brands featured in the study, they discovered another powerful knowledge point.
“Clutter was found to have one of the greatest effects on the efficacy of advertising. Indeed, the effect was so pronounced that at high levels of clutter, almost no level of advertising had an impact on the market share,” they wrote.
“These findings also support the previous work … and show that a clutter model that combines both the number of advertisers and the total volume of competitive expenditure is the most effective.”
Sourced from Journal of Advertising Research; additional content by WARC staff
