The Anatomy of the Advertising Budget Decision: How Analytics and Heuristics Drive Sales Performance

Kolsarici, Ceren; Vakratsas, Demetrios; Naik, P. A.

doi:10.1177/0022243720907578

Cited by 22 publications

(24 citation statements)

References 46 publications

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“…However, the role of heuristics has remained largely unexplored. Heuristics have a central role in managerial decision‐making and are widely used for important decisions (Bingham & Eisenhardt, 2011; Gigerenzer & Gaissmaier, 2011; Kolsarici et al, 2020; West, Christodoulides, & Bonhomme, 2018). This study provides some of the first empirical evidence to explain how managers use heuristics when choosing which innovation projects to invest in.…”

Section: Resultsmentioning

confidence: 99%

“…Although people attempt to make rational decisions, the decision‐making process adopted often necessitates a compromise. An example would be the situation of a firm setting an advertising budget that attempts to balance a variety of objectives (Kolsarici, Vakratsas, & Naik, 2020; West, Ford, & Farris, 2014) or deciding upon where to site a manufacturing plant in Asia (Bingham & Eisenhardt, 2011). However, while the latter authors take a process approach to explain the use of such applied heuristics, we instead employ conceptually underpinned heuristic types.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

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Choosing among alternative new product development projects: The role of heuristics

West

Acar

Caruana

2020

Psychology and Marketing

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The initial screening decision that marketing managers make is critical. It requires the selection of what innovation project to invest in, which is fundamental to marketing success. However, our knowledge of how managers make these decisions and how this impacts performance is limited. By drawing upon cognitive psychology and the managerial decision-making literature, we address two critical questions. The first question focuses on identifying specific decision-making types (e.g., specific heuristics, intuition) used when making an innovation screening decision. Based on this analysis and prior research, we develop specific decision-maker profiles about how an individual manager decides. The second research question is about connecting these profiles with performance. Specifically, it addresses what the consequences of different decision-maker profiles are on the perceived accuracy and speed of decision-making? Data were collected from 122 senior managers in these industries. We find that when heuristics are used alone, or concurrently with intuition, managers make decisions that are as accurate as when they rely on analytical decision-making. However, the process is significantly faster. The findings provide an important step toward a more comprehensive understanding of decisionmaking at the front-end of innovation.

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Section: Resultsmentioning

confidence: 99%

Section: Theoretical Backgroundmentioning

confidence: 99%

Choosing among alternative new product development projects: The role of heuristics

West

Acar

Caruana

2020

Psychology and Marketing

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“…Ashley, Granger, and Schmanlesee (1980) report that changes in consumption leads to changes in advertising spending. This finding is corroborated by the fact that marketing managers tend to set advertising budgets according to the expected sales, which translates into aggregate consumption in an economy (Kolsarici, Naik, and Vakratsas 2020). If the economy is more consumption based, then firms are more likely to spend on advertising to gain a greater share of consumer spending.…”

Section: Moderating Role Of Country Culturementioning

confidence: 94%

Financial Development and Country-Level Advertising Spending: The Moderating Role of Economic Development and National Culture

Bahadir¹,

Bahadir²

2020

Journal of International Marketing

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Firms invest in brand capital through advertising. Financial constraints hinder firms’ ability to fund their investment projects. Empirical studies in the finance literature suggest that firms’ access to external financial resources, labeled “financial development,” affects their investment behavior. The authors take the view of advertising spending as investment in brands and study the effect of financial development on advertising spending at the country level using a panel of 59 developing and developed countries during 1990–2016. The results suggest that financial development has a positive and significant effect on advertising spending, and this effect is stronger in countries with a low level of economic development. Furthermore, the authors investigate the role of national culture dimensions including uncertainty avoidance, long-term orientation, collectivism, masculinity, and power distance in the relationship between financial development and advertising. Overall, the results provide evidence that the impact of financial development on advertising spending depends on the national culture dimensions.

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“…Comprehensiveness and parsimony are desirable properties of frameworks, especially in terms of their applicability to practice (Jaworski 2011). Practicing managers prefer simplicity, consistent with the idea of limited rationality, which applies to advertising decisions (Kolsarici, Vakratsas, and Naik 2020). However, this should not come at the expense of comprehensiveness, as all important aspects of ACS decisions must be considered.…”

Section: Acs: Integrative Framework and Expectationsmentioning

confidence: 96%

The Impact of Advertising Creative Strategy on Advertising Elasticity

Dall’Olio¹,

Vakratsas²

2022

Journal of Marketing

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This study provides a comprehensive assessment of the impact of Advertising Creative Strategy (ACS) on advertising elasticity, founded on an integrative framework which distinguishes between the Function (content) and the Form (execution) of an advertising creative. Function is evaluated using a three-dimensional representation of content (Experience, Affect, Cognition), whereas the representation of Form accounts for both executional elements and the use of creative templates. The distinction between Function and Form allows for the investigation of potential synergies between content and execution, previously unaccounted for in the literature. The ACS framework also facilitates the calculation of composite metrics that capture holistic aspects of the creative strategy, such as Focus, or the extent of the emphasis on a specific content dimension, and Variation i.e., changes in content and execution over time. The empirical application focuses on a Dynamic Linear Model analysis of 2251 television advertising creatives from 91 brands in 16 consumer packaged goods categories. The findings suggest that in terms of Function, experiential content has the biggest effect on elasticity, followed by cognitive and affective content. Function and Form produce synergies that can be leveraged by advertisers to increase returns. Finally, Focus, Variation and the use of templates increase advertising elasticity.

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The Anatomy of the Advertising Budget Decision: How Analytics and Heuristics Drive Sales Performance

Cited by 22 publications

References 46 publications

Choosing among alternative new product development projects: The role of heuristics

Choosing among alternative new product development projects: The role of heuristics

Financial Development and Country-Level Advertising Spending: The Moderating Role of Economic Development and National Culture

The Impact of Advertising Creative Strategy on Advertising Elasticity

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