Estimating current and carryover effects of advertising on sales in a competitive setting (on example of German premium automobile brands)

<p>The importance of advertising efficiency evaluation in practice is undoubted, and it leads to the high interest of researchers in its investigation. Several channels create the total impact of advertising on sales and thorough accounting for all possible influences is essential for the development of optimal advertising strategy. In automobile market the problem receives particular importance due to the specifics of the industry. The differences in efficiency are hypothesized between advertising types (brand-image and model specific advertising) and among market segments. Therefore the study aims at the evaluation of current and carryover effects of advertising in the competitive setting. In order to achieve the aim the following objectives were set:</p><p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Review of the existing approaches to the estimation of long-run effect of advertising and of advertising rivalry</p><p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Estimation of current and carryover effect of advertising on the sales of premium automobile brands on different levels of data aggregation (on brand level and on level of various segments)</p><p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comparison of the magnitude and duration of advertising effects depending on the level of data aggregation</p><p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Analysis of differences in influence of brand image and model specific advertising</p><p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Definition of advertising rivalry type for segments on each level of data aggregation</p><p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Formulation of practical recommendations based on the estimated effects</p><p>Regression analysis based on the direct aggregation approach was used in order to evaluate the effects of advertising based on data for German premium automobile market. The study shows differences in efficiency of advertising types, distinct features of advertising rivalry among market segments and predicts the factors that may influence the duration and magnitude of the advertising effects.</p><p>The main contributions of the study include development of new methodology for the estimation of carryover effect measures, demonstration of differences in effects between segments and tests of several hypotheses that may be valuable in practice. These features as well as the limitations of the research show potential directions for further research in the field of the advertising efficiency in automobile market.&nbsp;</p>