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Related Experiment Videos

Ad spending: maintaining market share.

J P Jones1

  • 1Newhouse School of Public Communications, Syracuse University.

Harvard Business Review
|December 10, 1989
PubMed
Summary
This summary is machine-generated.

Manufacturers can improve advertising budgeting accuracy by using share of voice alongside market share. This approach helps determine optimal advertising spend for new brands investing in the market and established brands taking profits.

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Area of Science:

  • Marketing Strategy
  • Advertising Effectiveness

Background:

  • Current advertising budgeting relies on the case rate system, linking budgets directly to sales.
  • This traditional method often leads to inaccurate budget allocations for manufacturers.

Purpose of the Study:

  • To introduce and evaluate the share of voice metric as a superior alternative for advertising budgeting.
  • To demonstrate the relationship between market share and share of voice in strategic brand management.

Main Methods:

  • Comparing a brand's market share with its share of voice.
  • Analyzing "investing" (new brands) and "profit taking" (popular brands) scenarios.

Main Results:

  • Share of voice provides a more accurate measure for advertising budgeting than the case rate system.

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  • New brands often overinvest in share of voice relative to market share.
  • Established brands may underinvest in share of voice while maintaining market share.

    • Conclusions:

    • The interrelationship between market share and share of voice is crucial for effective advertising budget determination.
    • Adopting share of voice analysis can lead to more strategic and responsive advertising pressure.
    • This method of market testing is expected to increase in importance for advertisers.