Perils of Using 01^ to Estimate Muitimedia Communications Effects

1 . INTRODUCTION Companies invest millions of dollars every year in various fonns of marketing communications to influence customers and prospects to buy products and services. For example. General Motors spent over $2.8 billion last year to promote its lines of automobiles. Brand managers, senior management, and shareholders therefore have an interest in knowing whether or not their media advertising had any marketplace effects. Moreover, managers would like to know what combination of media were the most effective to plan future promotional campaigns. To this end, marketing and advertising communities have developed "metrics" that provide market feedback on various measures such as consumer awareness, attitudes, and purchases. Indeed, the metrics related to marketing and marketing communications appear to be the Holy Grail for most marketing managers (see, e.g.. Ambler, 2000). To utilize this information, managers analyze the relevant marketing metrics via techniques that are known as marketing-mix modeling (MMM). Gatignon (1993) and Mantrala (2002) provide a thorough literature review. Marketing-mix models are estimated using regression analysis so that managers can (1) assess the incremental effect of marketing and communication investments in generating sales over that which would nonnally be expected, and (2) parse out the various media or communication forms that contributed to those increases. Due to increased availability of singlesource data from frequent shopper programs, household panels, and other data generating sources, MMM has become the "de facto" tool to determine the effectiveness of marketing activitira for major consumer product companies. Tlie current practice entails tracking weekly brand sales or awareness and then estimating the effects of multiple marketing activities. In the context of marketing communications program, such analyses reveal the effectiveness of multiple media, cross-media synergies, and carryover effects of marketing communication programs. Indeed,