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How Does Advertising Impact Revenue?

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In the last segment, you saw that market mix modelling helps you model the relationship between the various marketing spends and their impact on the sales and revenues. Now, you will see the different ways in which advertising can impact the sales or revenue of a firm.

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In the video above, you saw the seven major effects of advertisement on sales or revenues. You learnt that

  1. The current effect of an advertisement is the effect on sales or any other outcome parameters at the same time as it is aired or exposed.
  2. The carry-over effect of advertisement is the effect on sales or other outcome parameters that follows even after the day of the advert exposure.
  3. The shape effect of advertisement is the effect on sales with increase in the intensity of the advertising.
  4. The competitive effect of advertisement is the effect on sales or any other outcome parameters when your competitors also advertise similar products or services.

  5. The dynamic effect of advertisement is the effect on sales or any other outcome parameters that changes with time.

  6. The content effect of advertisement is the effect on sales or any other outcome parameters due to a change in the advertising content.

  7. The media effect of advertisement is the effect on sales or any other outcome parameters due to change in media channels, e.g., TV, radio, newspapers, magazines, digital, social network, etc.

But how does knowing about these effects help you as a data analyst? The answer to this question is that the regression model that you would use for finding the relationship between the sales/revenue and the different KPIs would depend on which of these effects has a stronger presence in the given context.