310 CHAPTER 9 ADVERTISING RESEARCHApart from changes in sales, more specifi c behavioural eff ects can be measured, such as
trial purchases and the degree of adoption of, or loyalty to, a brand.
Most of the aforementioned measures of communications results are eff ectiveness
measures, while marketers will also be interested in effi ciency measurement, i.e. the extent
to which the investment in an advertising campaign has had a commercial result. More
specifi cally, marketers might want to know how many sales for every pound (or euro, or
dollar) spent on communications has resulted. Over a longer period of time, data could be
collected on advertising budgets and sales per time unit (three months, a year, etc.), and the
relationship between the two may be estimated. Th is could result in the following:
S = 1.5 + 0.2 × A
where: S = sales in € million
A = advertising in € million
Th e conclusion would be that, over time, every euro invested in advertising has resulted in
€0.2 of extra sales. Additionally, the cost function of the company may be modelled, in order to
be able to calculate the profi tability of the advertising eff orts. However, advertising eff orts usually
have carry-over eff ects: the eff orts of today do not lead to extra sales during the same period only,
but also to extra commercial results in future periods. Th is eff ect may be modelled as follows:
S ( t ) = 1.5 + 0.2 × A ( t ) + 0.8 × S ( t − 1)
where: S ( t ) = sales in period t
A ( t ) = advertising investments in period t
S ( t − 1) = sales in period t − 1
Th e coeffi cient of S ( t − 1) represents the eff ect of advertising investments in the past on this
period’s sales. Th is eff ect is assumed to decrease over time. Th e long-term eff ect of advertising
can in this example be calculated as: 0.2/0.8 = 0.25. Th is implies that, in the long run, every
euro invested in advertising leads to an increase in sales of €0.25. Th e short-term eff ect of
advertising on sales in the same period is only €0.20.
Evidently, life is not so simple. Firstly, sales are infl uenced by more than communications
alone, so the model will have to be extended. Additionally, the competitors’ eff orts will have
to be taken into consideration too. Consequently, estimating the profi tability of advertising
investments is a complicated task.^18Suppose that for two competing brands the following results have been obtained after an advertising campaign:Brand A Brand B
Awareness rate 70% 20%
Trial rate 40% 20%
Adoption rate 10% 70%Obviously, the commercial end-result is the same for both brands: 2.8% of the target group have become loyal
to the brand. However, the three indicators show a more differentiated picture. Brand B was not very successful in
building awareness and trial. One might say that the advertising campaign was not very effective. On the other
hand, the marketing strategy seems to be on target: most people who have tried the product have become loyal
to it. Brand A has had a successful advertising campaign, but something seems to be wrong with the rest of the
marketing strategy. Maybe the product is of bad quality, the price too high or the distribution strategy inappropriate.
It could also be that the product is a luxury item, for which in the short run trial is more important than repeat
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