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Do Advertising Efficiency and Brand Value Matter?: Evidence from Super Bowl Advertising
... Kim, Freling & Grisaffe (2013) found that the market value of Super Bowl advertisers is positively related to Super Bowl ads featuring likeable characters, emotional appeals, and approach messaging. Kim, Freling and Eastman (2013) found that Super Bowl advertising efficiency is positively associated with Super Bowl advertiser stock valuation, suggesting that efficient conversion of advertising inputs to advertising outputs plays a key role in generating financial reward in a stock market. Kim (2013) demonstrated that a movie trailer released during the Super Bowl event increases opening week revenue. ...
... Based on this renewed interest, prior research verified the positive stock market reaction to advertisers sponsoring Super Bowl events (Kim & Morris 2003;Eastman, Iver & Wiggenhorn 2010;Kim, Freling & Grisaffe 2013). The financial performance of Super Bowl advertisers is enhanced by several factors including advertising appeal (Kim, Freling & Grisaffe 2013), advertising efficiency (Kim, Freling & Eastman 2013), and time placement (Eastman, Iver & Wiggenhorn 2010). ...
Companies, facing constant turbulences of its competitive environment, shall adapt its grow strategy by creating capacity for cooperation with different entities in innovation process. As types of innovation networks vary, question arise is it possible to manage its development to achieve company`s success by balance long-term growth and support short-term operations. The main goal of this paper is to seek a configuration of activities of innovation network managing that provide best results in implementing exploration, exploitation and ambidexterity strategy. To resolve this problems representative empirical research were conducted, covering 400 medium-size and large enterprises operating in Republic of Poland according to years 2015-2017.
Previous advertising efficiency studies have neglected the “black box” of the consumer purchase funnel. Thus, this study decomposes advertising efficiency into marketing and sales efficiency to unravel a complicated and multi-stage consumer purchase decision, and measures divisional advertising efficiency in the US consumer car purchase funnel using a slack-based measure network data envelopment analysis. Additionally, this study identifies consumer key brand perception attributes that affect divisional advertising efficiency by using a bootstrapped truncated regression to offer strategic advertising initiatives that are appropriate to car brand position and characteristics at each step of the customer buying funnel. The contributions of this study are twofold. First, this study is an unprecedented attempt at researching the divisional advertising efficiency for opening the hidden “black box” of the consumer car purchase journey. Second, this study suggests that advertising strategies, such as advertising themes and appeal type, should be differentiated in accordance with consumer key brand perception attributes at each step of the customer buying funnel, depending on car brand types such as luxury and mainstream.
Purpose
The main goal of this paper is to estimate advertising efficiency in the Spanish beer industry and to analyse the effects of several environmental variables and brand portfolio scope on advertising efficiency scores.
Design/methodology/approach
A two-stage double bootstrap procedure is employed. In the first stage, advertising efficiency is estimated using a bootstrapped Data Envelopment Analysis on a multiple input-output model of advertising. In the second stage, a bootstrapped truncated regression model is estimated in order to identify the determinants of advertising efficiency. Both stages are estimated simultaneously. The empirical application is carried out on a sample of Spanish brewers between 2007 and 2014.
Findings
Results show low advertising efficiency scores and highlight the effects that environment and brand portfolio scope have on these estimates.
Originality/value
For the first time, this paper analyses the effect of environmental variables and the brand portfolio scope on advertising efficiency in the beer industry.
has been recently suggested that sponsor identification may be kissed in favor of prominent brands. All things equal, consumers are more likely to attribute sponsorship to brands that they perceive to be more prominent in the marketplace, such as large-share brands. This article offers additional empirical evidence for this phenomenon and examines the underlying processes. The results of a controlled laboratory experiment replicate the phenomenon and show that this bias arises only when consumers are unable to retrieve the name of the sponsor directly from memory. In other words, direct retrieval is the default process of sponsor identification. The prominence bias is therefore more likely to occur in cluttered media environments where learning the event-sponsor associations is difficult. The findings further suggest that this bias emanates from a relatively controlled hypothesis-testing process that combines retrieval and constructive processes. During identification, the prominence of the brand is used as a confirmation cue that either validates or conflicts with people's vague recollections. The results also indicate that prominent brands identified or misidentified as sponsors do in fact benefit from enhanced brand image. (C) 2001 John Wiley & Sons, Inc.
Proper identification of event sponsors is a key concern in sponsorship communication. Although practitioners have assumed that event sponsors are identified primarily through pure recollection, the authors show that sponsor identification involves a substantial degree of construction. Results from three experiments indicate that sponsor identification is biased toward brands that are prominent in the marketplace and semantically related to the event. These biases appear to emanate from constructive processes whereby during identification, respondents use the prominence and relatedness of available brands as heuristics to verify their recollection of event-sponsor associations. The effects of relatedness on sponsor identification seem stronger and more robust than those of prominence, which appears to be invoked only for large events. Both effects are robust across methods of identification assessment though less pronounced when the accuracy threshold is high.
Advertisers are under pressure to demonstrate the financial effectiveness of their advertising. Event study methodology utilizing measurement and comparison of stock prices may be one way to address this concern. In this study, our results suggest that while advertising in the Super Bowl does not have a significant positive impact ona firm's stock price the day after the Super Bowl, when considering windows from two to four days before and after there is a significant positive stock price effect. Additionally, we found the current method advertisers use to judge the effectiveness of Super Bowl advertising (i.e. likeability with the USA Today poll and Advertising Age poll) had no significant relationship with financial effectiveness as measured by stock price. This suggests that the methods marketers use to judge Super Bowl advertising effectiveness may not be good measures of success in financial terms. Finally, our results suggest that if a firm does choose to advertise in the Super Bowl, they may want to pick the second quarter for their ad and that they need to maximize pre-Super Bowl publicity due to the impact on stock price before the Super Bowl.
Advertising accountability demands that advertising efficiency be measured, maximized, and benchmarked. In this paper.we demonstrate the application of Data Envelopment Analysis to benchmark advertising efficiency. Data Envelopment Analysis can be used to estimate the relative efficiency of advertising campaigns characterized by multiple inputs and multiple outputs.
A recurring, but unresolved, issue in salesforce research is the choice of salesperson performance evaluation methodology. Salesforce compensation is typically based on some form of evaluation, and hence the assessment method used is critical. The authors outline several evaluation methods currently in use and their pros and cons. Some methods are purely output or purely input based, and often employ only one indicator of performance. Still other methods use absolute ratios of outputs to inputs, or compare performance with the “average” performance rather than the “best.” The authors propose a data envelopment analysis (DEA) based approach that provides a measure of relative (to best) performance efficiency. An empirical example illustrates the proposed method of salesperson evaluation. The advantages of the proposed approach are discussed along with a description of situations in which its use may be more appropriate.
This paper illustrates the use of relative efficiency as an alternative conceptualization of salesperson performance. This approach yields a more individualized and complete picture of salesperson performance, since performance is adjusted by the inputs which were consumed to generate the performance. An analytical technique known as Data Envelopment Analysis is used to adjust sales performance by territory characteristics, derived from the Census of Retail Trade. Implications include ways to increase the impact of sales force-related expenditures, adjusting for territory inequities in the evaluation process and identifying best practices among a group of salespeople.
This study investigates the ways of improving banner advertising effectiveness by suggesting alternative advertising repetition strategies in varying on-line environments. Specifically, we investigate the effectiveness of repeating varied executions versus repeating single executions of a banner ad on brand recall and intention to click in different competitive and content-relevant on-line environments. The results of our experiment show that (1) banner advertising repetition leads to greater brand name memory and intention to click in on-line environments; (2) in a noncompetitive Internet environment, an ad variation strategy leads to higher brand name recall and intention to click than an ad repetition strategy; (3) in a competitive Internet environment, a single ad repetition strategy leads to higher brand name recall than a varied ad repetition strategy; (4) brand name recall is higher when the ad is presented in a content-relevant Web site; (5) a single ad repetition strategy generates marginally greater recall in a content-relevant Web site; and (6) a varied ad repetition strategy generates marginally greater recall in a content nonrelevant Web site. The effects of repeating varied versus same executions of an ad on intention to click in content-relevant Web sites did not generate any significant findings.
Prior research has found that the announcement of marketing alliances tends to produce no effect on firm value creation In a high-tech context. This article reexamines this issue and Investigates whether the characteristics of a firm's network of alliances affect the firm value created from the announcement of a new marketing alliance. The authors investigate whether network centrality, network density, network efficiency, network reputation, and marketing alliance capability influence firm value creation. They examine this question using an event study of 230 announcements for marketing alliances in the software Industry. The results Indicate that, in general, marketing alliance announcements create value (i.e., abnormal stock returns) for the firm in the announcement period event window. Furthermore, network efficiency and network density have the strongest positive Impact when they are moderate; network reputation and network centrality have no effect. These results point to the greater role of relational network characteristics than size-/status-based benefits. Finally, marketing alliance capability, which reflects a firm's ability to manage a network of previous marketing alliances, has a positive impact on value creation.
As a result of the diminishing effectiveness of broadcast advertising, firms are increasingly turning to product placements in films and television to promote their products. A growing stream of product placement research has conducted surveys of consumer and practitioner views on the practice and experiments to gauge product placement's impact on brand awareness, attitudes, and purchase intent. However, there is no evidence of whether firms' investments in film product placements are worthwhile. The event study of 126 product placements in successful films during 2002 reveals a mean cumulative abnormal return of .89% during the film's opening, indicating that product placement in a successful film is associated with positive movements in firm stock prices. Cross-sectional analysis of the returns offers new insight into how product, film, and execution factors influence the placement's worth. The authors find that placement abnormal returns are enhanced by tie-in advertising and brand equity but are inhibited by audience absorption, critical acclaim, and violent film content. Placement modality, character associations, and blatancy also significantly affect the placement's value.
Practitioners and scholars have questioned marketing communication’s credibility because it has not been linked to firm shareholder value. Using secondary longitudinal data, the authors show that the impact of marketing communication productivity (MCP) on shareholder value is positive and nonlinear. In particular, the influence of MCP on the forward-looking performances of Tobin’s q and stock return is curvilinear with an inverted U shape. The authors also investigate the moderating role of research-and-development investment and competitive intensity. The findings have implications for marketing managers regarding how to model and benchmark MCP and the dangers of blindly improving the productivity of advertising and sales promotion expenditures.
The authors develop a conceptual framework of the marketing-finance interface and discuss its implications for the theory and practice of marketing. The framework proposes that marketing is concerned with the task of developing and managing market-based assets, or assets that arise from the commingling of the firm with entities in its external environment. Examples of market-based assets include customer relationships, channel relationships, and partner relationships. Market-based assets, in turn, increase shareholder value by accelerating and enhancing cash flows, lowering the volatility and vulnerability of cash flows, and increasing the residual value of cash flows. ABSTRACT FROM AUTHOR Copyright of Journal of Marketing is the property of American Marketing Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts)
Marketing executives are being urged to speak in the language of finance to gain internal support for marketing initiatives. Responding to this call, the authors examine the impact of a firm's advertising and its research and development (R&D) on the systematic risk of its stock, a key metric for publicly listed firms. They hypothesize that a firm's advertising and R&D expenditures create intangible assets that insulate it from stock market changes, lowering its systematic risk. They test the hypotheses using a panel data on 644 publicly listed firms between 1979 and 2001, consisting of five-year moving windows. They scale the firm's advertising and R&D expenditures by its sales. After controlling for factors that accounting and finance researchers have shown to be associated with systematic risk, the authors find that advertising/sales and R&D/sales lower a firm's systematic risk. The article's findings extend prior research that has focused primarily on the effect of marketing initiatives on performance metrics without consideration of systematic risk. For practice, the ability of advertising and R&D to reduce systematic risk highlights the multifaceted implications of advertising and research programs. The article's findings may surprise senior management, some of whom are skeptical of the financial accountability of advertising programs.
Proper identification of event sponsors is a key concern in sponsorship communication. Although practitioners have assumed that event sponsors are identified primarily through pure recollection, the authors show that sponsor identification involves a substantial degree of construction. Results from three experiments indicate that sponsor identification is biased toward brands that are prominent in the marketplace and semantically related to the event. These biases appear to emanate from constructive processes whereby during identification, respondents use the prominence and relatedness of available brands as heuristics to verify their recollection of event-sponsor associations. The effects of relatedness on sponsor identification seem stronger and more robust than those of prominence, which appears to be invoked only for large events. Both effects are robust across methods of identification assessment though less pronounced when the accuracy threshold is high.
has been recently suggested that sponsor identification may be kissed in favor of prominent brands. All things equal, consumers are more likely to attribute sponsorship to brands that they perceive to be more prominent in the marketplace, such as large-share brands. This article offers additional empirical evidence for this phenomenon and examines the underlying processes. The results of a controlled laboratory experiment replicate the phenomenon and show that this bias arises only when consumers are unable to retrieve the name of the sponsor directly from memory. In other words, direct retrieval is the default process of sponsor identification. The prominence bias is therefore more likely to occur in cluttered media environments where learning the event-sponsor associations is difficult. The findings further suggest that this bias emanates from a relatively controlled hypothesis-testing process that combines retrieval and constructive processes. During identification, the prominence of the brand is used as a confirmation cue that either validates or conflicts with people's vague recollections. The results also indicate that prominent brands identified or misidentified as sponsors do in fact benefit from enhanced brand image. (C) 2001 John Wiley & Sons, Inc.
As integrated marketing communications increasingly emerge as the focus of corporate communication efforts, companies have grown to realise that consumers are not their only target audience. Rather, there are many stakeholder groups that also need to be targeted with the company messages. This research examines some of the important stakeholders — investors — and their perception of a company's advertising as reflected in the stock price performance at certain peak advertising periods. Using standard event-study methods with the sample focusing on selected companies and their Super Bowl ads, this study found a significantly different stock price performance (compared to that of the prior periods) for the companies that advertised.Journal of Targeting, Measurement and Analysis for Marketing (2003) 12, 53-65; doi:10.1057/palgrave.jt.5740098
Over the last decade, US Super Bol advertising has evolved into a unique phenomenon. US advertisers love the Super Bowl because it has reached an average television audience of over 120 million US viewers for the last 10 years. This manuscript examines the popularity of Super Bowl advertising during the 1990s. Every Super Bowl advertisement aired in the USA during the 10-year period 1990-1999 was video taped and viewed. In addition, USA Today's published Super Bowl advertisement likeability results were incorporated into the analysis. A total of 454 national advertisements were examined with regard to advertisement likeability. The impact of humour, advertisement length, animals, celebrities and product category type on advertisement likeability was assessed with the help of a comprehensive Super Bowl advertisement likeability model. It was hypothesized that each of these variables would be positively related to Super Bowl advertisement likeability. The results of a multiple regression analysis indicated that all these factors except the presence of celebrities had a strong significant impact on advertisement likeability scores.Based on these findings,this paper provides advertising strategy recommendations for future Super Bowl advertisers and marketing academics.
Celebrity endorsement has become a prevalent form of advertising in the United States. Despite extensive litera- ture on the effects of celebrity endorsements on consumers' brand attitudes and purchase intentions, little is known about the economic value of these endorsements. Research on this topic has typically focused on theories ex- plaining how celebrity endorsements influence consumers' attitudes and intentions. The authors assess the impact of celebrity endorsement contracts on the expected profitability of a firm by using event study methodology. Their approach assumes that the announcement of a celebrity endorsement contract, usually widely publicized in the business press, is used as information by market analysts to evaluate the potential profitability of endorsement ex- penditures, thereby affecting the firm's expected return. Announcements of 110 celebrity endorsement contracts were analyzed. Results indicate that, on average, the impact of these announcements on stock returns is positive and suggest that celebrity endorsement contracts are generally viewed as a worthwhile investment in advertising.
For too long, marketers have not been held accountable for showing how marketing expenditures add to share-holder value. As time has gone by, this lack of accountability has undermined marketers' credibility, threatened the standing of the marketing function within the firm, and even threatened marketing's existence as a distinct capa-bility within the firm. This article proposes a broad framework for assessing marketing productivity, cataloging what is already known, and suggesting areas for further research. The authors conclude that it is possible to show how marketing expenditures add to shareholder value. The effective dissemination of new methods of assessing mar-keting productivity to the business community will be a major step toward raising marketing's vitality in the firm and, more important, toward raising the performance of the firm itself. The authors also suggest many areas in which further research is essential to making methods of evaluating marketing productivity increasingly valid, reli-able, and practical.
Traditional econometric models suggest that advertising has a clear and significant positive effect on sales in the current period. However, recent studies using scanner data indicate that the estimated effects of TV advertising on households' brand choices are weak and rarely significant. Do those findings mean that TV advertising does not really have an impact on current brand choices and sales? Or are the discrepant findings due to differences among the measures, models and aggregation levels used by different researchers? The authors address these issues. Their analysis indicates that aggregating data over time and households may create a false impression of advertising having a statistically significant effect on sales.
The marketing profession is being challenged to assess and communicate the value created by its actions on shareholder value. These demands create a need to translate marketing resource allocations and their performance consequences into financial and firm value effects. The objective of this paper is to integrate the existing knowledge on the impact of marketing on firm value. We first frame the important research questions on marketing and firm value and review the important investor response metrics and relevant analytical models, as they relate to marketing. We next summarize the empirical findings to date on how marketing creates shareholder value, including the impact of brand equity, customer equity, customer satisfaction, R&D, product quality and specific marketing-mix actions. In addition we review emerging findings on biases in investor response to marketing actions. We conclude by formulating an agenda for future research challenges in this emerging area.
Building strong brands has become a marketing priority for many organisations. The presumption is that building a strong brand yields a number of marketing advantages. In this paper, a comprehensive summary of empirical findings is provided from some of the major marketing journals that reveal how brand strength, operationalised in various ways, can create differential responses by consumers to various marketing activities - a well-accepted view of brand equity. Additionally, some underlying theoretical mechanisms on which these findings are based are identified and organised. Lastly, some current gaps in the literature are identified, and an agenda put forth for future research on the marketing advantages of strong brands.
Research linking marketing to financial performance has predominantly focused on how marketing assets and actions add value. We argue that it is equally important to understand how marketing decisions can destroy firm value. Prior research has indicated that negative events vary greatly in their indirect costs to the firm. Based on established theory and in-depth interviews with practitioners, we identify a set of factors that can explain the heterogeneity in the magnitude of indirect costs associated with negative marketing-related events. Specifically, we address how shareholder value is impacted by the regulatory exposure of deceptive marketing, which carries no direct cost to the firm. Using an event study, our analysis shows that incidents of exposed deceptive marketing are associated with significant negative abnormal returns amounting to a drop of 1%, which translates into an $86M wealth loss for the median-sized firm in our sample. In explaining the variation in magnitude of the impact between events, we find that event characteristics are generally more significant than firm and brand characteristics. When deception is highly egregious or directed at vulnerable populations, firm value is more negatively impacted than when the potential to mislead and harm is not readily verifiable. Furthermore, when the cited product has substantial brand market share, the levels of egregiousness and target audience explain substantially more of the variation in event impact than when brand market share is low. The results are robust to alternative stock portfolio-based measures of abnormal returns, model specification, heteroskedasticity, and examination of risk. Our framework and analysis have implications for Wall Street executives, Main Street managers, academic researchers, and public policy.
This paper presents a technique for estimating a firm's brand equity that is based on the financial market value of the firm. Brand equity is defined as the incremental cash flows which accrue to branded products over unbranded products. The estimation technique extracts the value of brand equity from the value of the firm's other assets.
This technique is useful for two purposes. First, the macro approach assigns an objective value to a company's brands and relates this value to the determinants of brand equity. Second, the micro approach isolates changes in brand equity at the individual brand level by measuring the response of brand equity to major marketing decisions.
Empirically, we estimate brand equity using the macro approach for a sample of industries and companies. Then we use the micro approach to trace the brand equity of Coca-Cola and Pepsi over three major events in the soft drink industry from 1982 to 1986.
The authors examine the effects of brand strategy (i.e., brand extensions vs. individual brands) on new product market share and advertising efficiency, and the degree to which these effects are moderated by characteristics of the brand, the product to which it is extended, and the market in which that product competes. The findings indicate that brand extensions capture greater market share and realize greater advertising efficiency than individual brands. The strength of the parent brand is related positively to the market share of brand extensions but has no effect on advertising efficiency. Neither the market share nor the advertising efficiency of extensions is affected by the number of products affiliated with the parent brand. The relative effect of brand extensions on market share is not moderated by the degree of similarity between the extension and other products affiliated with the brand. Advertising efficiency effects, however, are elevated when similarity is high, but only when it is based on intrinsic attributes. Market share and advertising efficiency effects are elevated when the extension is composed primarily of experience attributes and competes in markets where consumers have limited knowledge of the product class. Competitive intensity does not moderate advertising efficiency effects; however, market share effects are elevated when the extension competes in markets comprising few competitors. Finally, both market share and efficiency effects diminish as the extension becomes established in the market.
The authors develop a conceptual framework of the marketing–finance interface and discuss its implications for the theory and practice of marketing. The framework proposes that marketing is concerned with the task of developing and managing market-based assets, or assets that arise from the commingling of the firm with entities in its external environment. Examples of market-based assets include customer relationships, channel relationships, and partner relationships. Market-based assets, in turn, increase shareholder value by accelerating and enhancing cash flows, lowering the volatility and vulnerability of cash flows, and increasing the residual value of cash flows.
The main purpose of this article is to empirically examine the Galbraithian hypothesis that advertising adjusts aggregate demand to the changing industrial development and consequently stimulates sales. The causal relations between sales and advertising are tested in the context of a vector autoregressive system using the US aggregate data over the post-Second World War period. Our empirical results fail to support the Galbraithian thesis, and suggest instead the presence of a potent reverse causality running from aggregate sales to advertising. We use the signalling theory to interpret our results.
This study investigated the relationship between Super Bowl advertising and advertisers' market valuation, identifying several factors that influence the financial rewards of this media-placement strategy. Specifically, the authors examined the impact of each commercial's featured characters and appeals and the product benefits promoted on abnormal stock returns for sponsoring companies that appear in Super Bowl advertising. Event study results showed that Super Bowl advertising is positively related to abnormal stock returns for advertisers. Cross-sectional regression analyses also indicated that market value of Super Bowl advertisers is positively related to likeable characters, emotional appeals, and approach messaging. The combined use of likeable characters with either emotional appeals or approach messages also is positively associated with firm valuation.
The authors examine the effects of brand strategy (i.e., brand extensions vs. individual brands) on new product market share and advertising efficiency, and the degree to which these effects are moderated by characteristics of the brand, the product to which it is extended, and the market in which that product competes. The findings indicate that brand extensions capture greater market share and realize greater advertising efficiency than individual brands. The strength of the parent brand is related positively to the market share of brand extensions but has no effect on advertising efficiency. Neither the market share nor the advertising efficiency of extensions is affected by the number of products affiliated with the parent brand. The relative effect of brand extensions on market share is not moderated by the degree of similarity between the extension and other products affiliated with the brand. Advertising efficiency effects, however, are elevated when similarity is high, but only when it is based on intrinsic attributes. Market share and advertising efficiency effects are elevated when the extension is composed primarily of experience attributes and competes in markets where consumers have limited knowledge of the product class. Competitive intensity does not moderate advertising efficiency effects; however, market share effects are elevated when the extension competes in markets comprising few competitors. Finally, both market share and efficiency effects diminish as the extension becomes established in the market.
Brand equity components, brand attitude and brand name familiarity, influence not only the positive benefits but also the adverse consequences that follow brand leveraging. Making use of event study methods, the authors assess whether and how the stock market return-a measure of the change in expected future cash flows-associated with a brand extension announcement depends on these brand equity components. The empirical analysis indicates that stock market participants' responses to brand extension announcements, consistent with the trade-offs inherent in brand leveraging, depend interactively and nonmonotonically on brand attitude and familiarity.
We provide empirical evidence that a firm's overall visibility with investors, as measured by its product market advertising,
has important consequences for the stock market. Specifically we show that firms with greater advertising expenditures, ceteris
paribus, have a larger number of both individual and institutional investors, and better liquidity of their common stock.
Our findings are robust to a variety of methodological approaches and to various measures of liquidity. These results suggest
that the investors' degree of familiarity with a firm may affect its cost of capital and consequently its value.
This article examines the development of commercial sponsorship as a legitimate marketing communications option available to management. Initial attention focuses on the causes of sponsorship emergence, the current developments in this growing industry and the prospects therein. Sponsorship's role on behalf of management is then discussed in terms of potential objectives and target audiences. Sponsorship management issues in terms of selection, implementation and results evaluation are subsequently examined.
Financial-relations advertising is a major type of corporate advertising, yet little research has addressed its effectiveness. The authors use a time-series approach to study the effect of financial-relations advertising on stock trading volume and stock price. They find increases in trading volume at the initial appearance of a financial-relations advertisement, but not during subsequent appearances of the ad. Further, these increases occur mainly for small capitalization firms. No support is found for the view that this type of advertising positively affects stock prices, at least in the short run. Although financial-relations advertising may change the expectations of individual investors, such advertising does not appear to change the market's view of a stock.
Faced with increasingly competitive markets and higher media costs, advertising managers keep looking for research findings that can tell them exactly how often to run an ad campaign. Two schools of thought have emerged on this issue: minimalists who assert that one exposure is enough and repetitionists who believe that repetitive advertising is necessay. Which view is correct?. This paper argues that neither view is correct. Effective frequency depends on three factors rather than on a single exposure level. These three factors are brand familiarity, message complexity, and message novelty. The opposing views in the literature can be explained by differences in research context on these three factors.
Marketing has a tradition in conducting scientific research with cutting-edge techniques developed in management science, such as data envelopment analysis (DEA) (Charnes et al. 1985). Two decades ago, Kamakura, Ratchford, and Agrawal (1988) applied DEA to examine market efficiency and consumer welfare loss. In this review of three new books, my purpose is (1) to provide a background of DEA for marketing scholars and executives and (2) to motivate them with exciting DEA advances for marketing theory and practice.
Super Bowl advertisers count on media coverage and word-of-mouth discussion to provide ROI beyond the game's viewership and to justify the most expensive 30-second commercial time of the year. Many companies have historically thought the best strategy was to keep their Super Bowl advertisements secret, hoping that the element of surprise will generate this postgame buzz. In 2007, several advertisers actively promoted their involvement with the game and even revealed their advertisements on the web before the game. The data show that an aggressive promotion strategy is the most effective way to generate postgame consumer discussion and demonstrate how the volume of pregame traditional media coverage drives postgame activity.
Past research has shown a correlation between measures of brand equity and stock price. However, these results are not sufficient to conclude that branding creates shareholder value. Using time-honored models from the discipline of finance, this paper specifies, and subsequently tests, the necessary and sufficient conditions to determine whether brand strength leads to the creation of shareholder value. The results presented extend previous research by showing that strong brands not only deliver greater returns to stockholders versus a relevant market benchmark, they do so with less risk. A reframing of brand research within the framework of risk management is recommended, toward a goal of greater organizational interdependence and accountability for the marketing function as a whole.
There is an impressive body of empirical evidence which indicates that successive price changes in individual common stocks are very nearly independent. Recent papers by Mandelbrot and Samuelson show rigorously that independence of successive price changes is consistent with an efficient market, i.e., a market that adjusts rapidly to new information. It is important to note, however, that in the empirical work to date the usual procedure has been to infer market efficiency from the observed independence of successive price changes. There has been very little actual testing of the speed of adjustment of prices to specific kinds of new information. The prime concern of this paper is to examine the process by which common stock prices adjust to the information (if any) that is implicit in a stock split. In doing so we propose a new event study methodology for measuring the effects of actions and events on security prices.
The Super Bowl symbolizes the increasing acceptance and prevalence of advertising in society. The essay analyzes the discourse around Super Bowl advertising. After first examining the reasons why national advertisers are attracted to the Super Bowl, the essay then examines pre‐event discourse about Super Bowl advertising, discourse that elevates advertising during the event, and post‐event discourse about Super Bowl advertising. Ultimately, the paper argues that because Super Bowl advertising has been granted such social attention and legitimacy, it encourages the celebration of advertising as a beloved form of mediated entertainment.
Two studies were conducted to obtain insights on how consumers form attitudes toward brand extensions, (i. e., use of an established brand name to enter a new product category). In one study, reactions to 20 brand extension concepts involving six well-known brand names were examined. Attitude toward the extension was higher when (1) there was both a perception of "fit" between the two product classes along one of three dimensions and a perception of high quality for the original brand or (2) the extension was not regarded as too easy to make. A second study examined the effectiveness of different positioning strategies for extensions. The experimental findings show that potentially negative associations can be neutralized more effectively by elaborating on the attributes of the brand extension than by reminding consumers of the positive associations with the original brand.
When a buyer firm and a supplier firm plan to transact, what factors drive their choice of mechanism to govern the relationship? Focusing on contract-governed versus joint venture-governed relationships, the authors present a theoretical framework that specifies the conditions that make one or the other form of relationship structure more appropriate. This study was designed to address potential limitations regarding measurement, financial consequences, and context in the extant literature. The authors employ measures derived from Standard & Poor's Compustat financial database and an overall measure of firm reputation to examine empirically differences in firm characteristics across the two types of relationships. To examine the financial consequences of relationship structure, the authors use event-study techniques that tie stock price reactions to the governance mechanism choice. The results suggest that buyers and suppliers are more likely to form a joint venture (versus simple contract) when (1) the supplier's degree of asset specificity is high, (2) monitoring the supplier's behavior is difficult, and (3) the supplier has a poorer reputation. The authors find that vertical joint ventures (between buyers and suppliers) are economically similar to contracts, to the extent that abnormal wealth gains go solely to the supplier firms. Horizontal joint ventures (partners are at the same level of the value chain), however, provide bilateral, synergistic wealth gains. The results suggest that buyers and suppliers can use joint ventures to reduce certain governance problems rather than to gain synergies.
Whether shareholders are more important than customers is an old debate. By law, Boards are accountable to shareholders not to customers or other stakeholders. This is a view supported by Milton Friedman who argued that the purpose of companies is to maximise shareholder returns (Friedman 1970). Peter Drucker on the other hand has argued that the purpose of the firm is to create and maintain satisfied customers (Drucker 1955) and the late Sumantra Ghoshal has recently argued strongly that shareholders do not have priority over other stakeholders (Ghoshal 2005). Traditional Marketing has attempted to reconcile this apparent dilemma by being profit responsible. However, reported profits are not always the best measure of shareholder value because they depend on a range of accounting assumptions and are arbitrarily recorded based on a calendar year end. Moreover the underlying accounting assumptions reflect the needs of lenders more accurately than those of the shareholder. To cope with this Economic Value Added (EVA) has been developed as a better measure of shareholder value because it reflects shareholder needs rather than those of lenders (Stewart 2003b). Yet the main drivers of EVA are directly affected by Marketing rather than by finance and accounting decisions. This paper argues it is the role of Strategic Marketing to reconcile the two sides of the argument by balancing customer value with shareholder value - for without customer value there can be no long-term shareholder value; and if the provision of value to customers is not disciplined by the constraints imposed by shareholder value, just as Marketing can destroy shareholder value by focusing too much on customer value, Finance can destroy customer value by focusing too much on short-term horizons - most particularly the financial year end. Strategic Marketing also needs to reconcile efficiency with effectiveness. This paper attempts to provide a broader definition to the concept of Strategic Marketing by integrating finance, marketing theory and practice, as well as brand building and advertising practice to provide academics and practitioners with a holistic approach to reconciling the demands of shareholder and customer value. In so doing the paper reinforces the idea that it makes no difference in principle whether we are concerned with the marketing of goods and services or operating in a B2B or B2C context, by recognising that although the contexts may vary and therefore execution will reflect these variances, the principles remain the same.
Event studies and market analyses provide ample evidence that companies' advertising tactics affect their share prices. However, we have little understanding of the specific mechanism(s) through which advertising might influence investors or how investors may differ from one another in the degree of advertising's effect on their choices. This study synthesizes findings from advertising studies with those from the field of behavioral finance. A model for future research is offered in which investing expertise, access to company information, and motivation affect perceptions of a company's advertising efforts, which in turn drive perceptions of management quality, management optimism, and company value.
Companies that advertise during the Super Bowl can reach 40 million U.S. households with a 30-second commercial spot, but the cost can exceed $2 million. This research examines Nielsen television ratings and expenses for related commercial spots and suggests that the Super Bowl is not always the best site for introducing new companies or products to the marketplace. ANOVA test results indicate that younger companies may better affect purchase decisions by advertising more frequently during less expensive programming slots.
Although content analysis has been widely used to study advertising across a number of different communication situations, rarely is the content of advertisements connected to the effect they have on consumers. Super Bowl commercials in particular have not attracted a great deal of attention from researchers, and not much is known about their content or the impact these commercials have on consumers. Our study explores the content of commercials shown during the 1996-2002 Super Bowls and uses USA Today Ad Meter scores as a dependent variable. The findings suggest that in Super Bowl commercials higher levels of affect are associated with advertising goods rather than services, using emotional appeals, avoiding straight announcements as a message format, including animals, and not making quality claims. Our results also indicate that the most favorably rated advertisements in the sample differ from the lowest rated advertisements along a number of dimensions. 1
Is the involvement of stars critical to the success of motion pictures? Film studios, which regularly pay multimilliondollar fees to stars, seem to be driven by that belief. This article sheds light on the returns on this investment using an event study that considers the impact of more than 1200 casting announcements on trading behavior in a simulated and real stock market setting. The author finds evidence that the involvement of stars affects movies' expected theatrical revenues and provides insight into the magnitude of this effect. For example, the estimates suggest that, on average, stars are worth approximately $3 million in theatrical revenues. In a cross-sectional analysis grounded in the literature on group dynamics, the author also examines the determinants of the magnitude of stars' impact on expected revenues. Among other things, the author shows that the stronger a cast already is, the greater is the impact of a newly recruited star with a track record of box office successes or with a strong artistic reputation. Finally, in an extension to the study, the author does not find that the involvement of stars in movies increases the valuation of film companies that release the movies, thus providing insufficient grounds to conclude that stars add more value than they capture. The author discusses implications for managers in the motion picture industry.
The authors assess which brand asset metrics provide incremental information content to accounting performance measures in explaining stock return. The analysis focuses on the five pillars (i.e., central brand attributes) that form the basis for the newly updated Young & Rubicam Brand Asset Valuator model: differentiation, relevance, esteem, knowledge, and energy. Analysis shows that perceived brand relevance and energy provide incremental information to accounting measures in explaining stock returns. However, esteem and knowledge do not; that is, their effects are reflected in current-term accounting measures and in brand relevance and energy. The financial markets do not view brand differentiation as having incremental information content, but they hould. Changes in differentiation are indicative of future-term accounting performance, which in turn affects stock return. These conclusions are invariant to the use of alternative accounting performance measures, risk adjustments, and the inclusion of additional brand attributes into the analysis.
This paper investigates claims that firm-specific effects in advertising-sales models can be attributed to a positive correlation between advertising and product quality. Using a standard Koyck transformation on an unbalanced panel dataset of UK firms, the implied long-lasting effects of advertising disappear when firm-specific effects are taken into account. This conclusion is robust to various econometric approaches. However, when the firm-specific effects are retrieved, they are found to correlate strongly with mean advertising. There is no discernible link between the firm-specific effects and whether a firm perceives quality to be an important form of competition in its market. The results give no support to the idea that advertising affects sales through associated product quality. They are consistent with the persistence of advertising within firms over time.
This paper presents a data envelopment analytic model for assessing the relative efficieny of sales units that simultaneously incorporates multiple sales outcomes, controllable and uncontrollable resources, and environmental factors. The model enables comparisons among a reference set of sales units engaged in selling the same product/service by deriving a single summary measure of relative sales efficiency. In addition, it provides insights into modifications that are necessary in order to enhance relative efficiency of an individual sales unit. Conditions when the sales unit has additional control over resources are explored and the effects on relative efficiency are examined. An illustration of the model in the context of sales units from a sample of insurance companies demonstrates the critical features of the model.