Estimating the Effectiveness of Advertising: Some Pitfalls in Econometric Methods

Abstract

The attempt to estimate the effectiveness of advertising by means of standard econometric models often fails because (i) data are contaminated, (ii) the preconditions for the applicability of the statistical model are not met, (iii) the underlying economic model is defective. These sources of difficulties are discussed in detail, some suggested ways of avoiding the difficulties are examined, and the future of such approaches is assessed.