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Question:Does advertising really increase sales?

Answer:General findings from advertising studies include the following:

Decreases in the level of advertising do not lead to an immediate decrease in sales. An increase in the level of advertising by itself does not lead to an increase in sales.

On average, half of all ongoing ad campaigns are ineffective.

Changes in the creative, medium, target segment or product itself sometimes lead to change in sales, even though increases in the level of advertising alone do not.

When advertising is effective, it is effective either early on or never.

When advertising does affect sales, its impact is not large and is much smaller than that of price. In fact, research shows that the elasticity of sales to advertising is .1, while the elasticity of sales to price is Ė2.5.

For more on advertising, read this tutorial.

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