An econometric identification of ineffective common-cold advertising

Abstract

Purpose This study aims to highlight potential savings in advertising budgets. Design/methodology/approach This study uses modern computer-based tools including stochastic dominance to check if advertising expenses are increasing sales by using modern causality assessment tools which allow for nonlinearities and use sophisticated assessment of causal impact of ads on sales. Findings This study identifies specific media spots where ad budget savings are possible. The marketing managers can take the next step to make small-scale local experiments to reassess this study’s findings. Research limitations/implications This study is a statistical observational assessment not based on controlled experiments. Practical implications The authors have tools to identify ineffective advertising which can produce huge savings for the organization. The over-the-counter cold remedies have become important due to the pandemic. The tools have wider applicability in marketing research. Social implications Less wasteful expenses always benefit the society. Originality/value To the best of the authors’ knowledge, this may be the first such attempt to use sophisticated causal identification tools. Remedies for the common cold sold by seven major US retailers help identify specific retailers and specific media with negative returns on investment.