Comparing the Current Effects and Carryover of National-, Regional-, and Local-Sponsor Advertising

Coordinating and controlling advertising strategy within contractual and administered vertical marketing systems (VMSs) can be a complex task given the number of channel members involved in the process. Quite often thousands of intermediaries are involved at different levels each with their own objectives and areas of responsibility. Conflict within a VMS can arise when dealers/distributors consider the advertising efforts of the sponsoring organization to be ineffective and vice versa. One of the major issues involves how to allocate the advertising budget throughout the VMS so as to generate the greatest return. To this end we report the results of a study comparing the current and lagged effects of national-sponsor advertising to that of local and regional sponsors within one of the more prominent contractual VMS in the United States—the automobile industry. Using a direct aggregation approach to model advertising carryover at both the industry and individual brand level provides useful information for making decisions regarding the allocation of advertising budgets.