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Darren Filson
''Dissecting decline in the economy-wide advertising intensity 1997-2017''
( 2023, Vol. 43 No.3 )
The macro-level advertising-to-sales ratio of U.S.-based advertising firms is stable at approximately 3% prior to 2001 and then drops substantially (primarily during 2001-2005) to approximately 2% by 2013-2017. A decomposition shows that changes in advertising intensities in four vertical chains – food, drugs, computers, and tobacco – are critical contributors to the drop. I explore tentative explanations. It is unlikely that the diffusion of the Internet is wholly responsible; food, drugs, and tobacco are among the industries least impacted by ecommerce. Category-specific factors likely matter: commoditization, the rise of warehouse club/supercenters, the changing nature of new products, and public policies and self-regulation.
Keywords: advertising-to-sales, aggregate advertising, decomposition, macro advertising
JEL: M3 - Marketing and Advertising: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : May 30 2023 Manuscript Accepted : Sep 30 2023

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