EXPRESS: Measuring Heterogeneity in TV Advertising Elasticities: Evidence from 135 Retail and Restaurant Brands

We estimate the heterogeneity of TV advertising effectiveness across store characteristics and advertising levels using a large-scale panel of 135 US retail and restaurant brands, and then use these estimates to assess strategies for improving TV advertising performance. We find significant heterogeneity in TV advertising elasticity across characteristics for over 93% of brands, but show that firms’ observed allocations generally fail to fully exploit this estimated heterogeneity and instead covary much more closely with simple heuristics. For example, we find that firms tend to advertise in areas where they already have high revenue, rather than in the areas estimated to have the highest incremental revenue from advertising. In particular, brands tend to overinvest in dense, high-income markets and underinvest in markets with high concentrations of college-educated residents. We project that brands could improve ad lift by a median 2.35 percentage points (relative to <0.5% median baseline ad lift) and earn tens of millions in additional revenue under identical-budget reallocations that better leverage this heterogeneity, and that 14-16 percentage points of brands with negative return-on-investment (ROI) from TV advertising could achieve positive ROI through such reallocations.

• 저널Journal of Marketing Research
• 토픽Consumer Market Behavior and Pricing · Marketing
• DOI10.1177/00222437261435578
• 저자Samsun Knight, Tsung-Yiou Hsieh, Yakov Bart