Summary: This study looks at
correlations between advertising expenditures, brand awareness and perceived
quality.The authors arrive at some
pretty interesting conclusions.First,
and most importantly, advertising does not appear to have any statistically
significant effect on perceived quality.Brand awareness does show a positive, statistically significant
correlation with advertising expenditures up to $400M, from $400-$800M the
effect of advertising expenditures on brand awareness is not statistically
different from 0 and beyond $800M per year in advertising expenditures the
effect on brand awareness is actually negative.The rate of brand awareness carryover depreciation (the amount of brand
awareness that is lost by not advertising for a year) varies by product but is
in the range of 12% to 25% per year.And
finally, a one-standard-deviation increase in advertising spending increases
brand awareness by between .0340 standard deviations and .0408 standard
deviations.
Take Away:Advertising increases brand awareness but
not perceived quality.Consumers
forget about you when you don’t advertise but only at a rate of about 17% per year.
