ADPULS: An Advertising Model with Wearout and Pulsation

Abstract

Although empirical evidence shows that advertising wears out over time and that advertising pulsation may be superior to a strategy of constant spending, current advertising models neither represent the wearout phenomenon nor consider pulsation as an optimal strategy. In this article, the wearout phenomenon is represented in a model which distinguishes between level stimuli and differential stimuli of advertising. The model is applied to several brands, and both advertising stimuli are found to be significant. A pulsation strategy is shown to be optimal under both an unconstrained and a constrained advertising budget.

Determining Optimal Advertising Strategies: A Markov Decision Model Approach

“…As the literature cited above illustrates, the empirical evidence for advertising wearout is quite significant. However, with the exception of Mesak [21] [22] [23], Mesak and Darrat [24], Luhmer, Steindl, Feichtinger, Hartl, and Sorger [19], and Simon [32], the vast literature comparing pulsing versus uniform advertising policies seems to have ignored the generation-satiation-decay cycle.…”

“…The present paper is in the vein of Simon [32], Luhmer et al [19], Mesak [21] [22] [23], and Mesak and Darrat [24], in that advertising wearout and the differences between the learning and forgetting of advertisements are included in the model. Simon [32] uses a discrete time model based on adaptation level theory, and Luhmer et al [19] use the methodology of dynamic optimal control theory; whereas Mesak [21] [22] [23] and Mesak and Darrat [24] use a differential equations approach and perform a steady state analysis. In comparison, our modeling methodology involves the formulation of discrete time Markov decision models.…”

“…'I was used to obtain optimal control limit policies. Feichtinger, Hartl, and Sethi [lo] note that advertising practitioners are interested in determining the optimal duration of advertising pulses, and in this regard the papers by Simon [32] and Mesak [23] fall short by exogenously determining the same, whereas Luhmer et al…”

On Comparing Alternative Advertising Policies of Pulsation*

“…The issue of whether an advertising policy of pulsing is superior to a uniform policy (even-spending over time) is of significant interest to both academicians and advertising practitioners. Optimal pulsation policies in a monopolistic market have been examined by several authors [12] [ [49]. A summary of the basic results of these studies is given below.…”

“…Horsky [17] suggested that the optimal policy was composed of an advertising pulse settling on the optimal market share followed by a constant level of advertising. Simon [49] and later Mesak [30], upon modeling Haley's [15] wearout phenomenon, found that a pulsation policy with alternate periods of high and low advertising intensities was optimal under both constrained and unconstrained advertising budgets. Mesak 1291 derived the conditions for which advertising pulsing policy would be superior to uniform advertising policy for both stationary and nonstationary markets.…”