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The industry popularity of Adstock transformations is due to its relatively simple nature and direct applicability to measuring Advertising Saturation. It helps Brand Managers determine if more or less investment is needed to make advertising more effective and yield a better ROI. One point that should be kept in mind is that the minimum threshold ROI acceptable is typically a break-even ROI, since in the short-term advertising pays for itself and there is a longer-term benefit over and above the short-term return in the form of Brand Equity improvement.

Measuring the Advertising Half-Life enables Brand Managers to also efficiently space advertising schedules to maximize the effect of each advertising exposure. Depending on whether the half-life of a copy is long or short exposures can be efficiently spaced to maximize sales response.

References

Almon, S. (1965) “The distributed lag between capital appropriations and expenditures”, Econometrica, 33, 178-196.

Broadbent, S. (1979) “One Way TV Advertisements Work”, Journal of the Market Research Society Vol. 23 no.3.

Dubé, J., Hitsch, G. J., Manchanda, P. (2004) “An Empirical Model of Advertising Dynamics”, Quantitative Marketing and Economics, 3 (2005) 2 Pg. 107-144

Fry, T.R.L., Broadbent, S. and Dixon, J.M. (2000), “Estimating Advertising Half-life and the Data Interval Bias”, Journal of Targeting, Measurement & Analysis in Marketing, 8, 314-334.

Leone, R.P. (1995) “Generalizing what is known about temporal aggregation and advertising carry-over”, Marketing Science, 14, G141-G150.

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