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Dissecting decline in the economy-wide advertising intensity 1997-2017

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  • Darren Filson

    (Claremont McKenna College)

Abstract

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.

Suggested Citation

  • Darren Filson, 2023. "Dissecting decline in the economy-wide advertising intensity 1997-2017," Economics Bulletin, AccessEcon, vol. 43(3), pages 1444-1452.
    • Handle: RePEc:ebl:ecbull:eb-23-00248
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2023/Volume43/EB-23-V43-I3-P123.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    advertising-to-sales; aggregate advertising; decomposition; macro advertising;
    All these keywords.

    JEL classification:

    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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