Determining the optimal return on investment for an advertising campaign

Peter J. Danaher, Roland T. Rust

Research output: Contribution to journalArticleResearchpeer-review

31 Citations (Scopus)

Abstract

In this this paper we adopt the point of view that advertising is an investment, and propose a simple formula for calculating the level of media spending which maximizes the return on investment. The information which must be supplied for the calculation is commonly available, and we express the optimal expenditure level in terms which are meaningful to media planners. We show that when maximizing return on investment not all of the allocated media budget should be spent.

Original languageEnglish
Pages (from-to)511-521
Number of pages11
JournalEuropean Journal of Operational Research
Volume95
Issue number3
DOIs
Publication statusPublished - 20 Dec 1996

Keywords

  • Advertising
  • Beta-binomial
  • Media planning
  • Optimization

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