Wearout effects of different advertising themes: a dynastic Bayesian model of the advertising-sales relationship

Models of advertising response implicitly assume that the entire advertising budget is spent on disseminating one message. In practice, managers use different themes of advertising (for example, price advertisements versus product advertisements) and within each theme they employ different versions of an advertisement. In this study, we evaluate the dynamic effects of different themes of advertising that have been employed in a campaign. We develop a model that jointly considers the effects of wearout as well as that of forgetting in the context of an advertising campaign that employs five different advertising themes. We quantify the differential wearout effects across the different themes of advertising and examine the interaction effects between the different themes using a Bayesian dynamic linear model (DLM). Such a response model can help managers decide on the optimal allocation of resources across the portfolio of ads as well as better manage their scheduling. We develop a model to show how our response model parameters can be used to improve the effectiveness of advertising budget allocation across different themes. We find that a reallocation of resources across different themes according to our model results in a significant improvement in demand. Reprinted by permission of the Institute for Operations Research and Management Science (INFORMS)