Abstract

Measuring advertising efficiency is an important and challenging issue in marketing. It is important since advertising spending consumes the biggest part of a marketing budget. Yet many firms have difficulty to determine the optimal level of advertising budget and to allocate this budget across different media. And it is challenging since finding a methodology that can incorporate multiple effects of advertising (cognitive, affective and behavioral), measure efficiency in a competitive setting, and provide guidelines for advertising improvement is difficult. This thesis explores the usability of an alternative method, data envelopment analysis, in measuring advertising efficiency. The focus of this research, which comprises of two studies, is to benchmark advertising efficiency of major car-models in U.S. car market with application of DEA. The objective of first study is to measure the level of over-advertising at macro level, in the whole industry, and also to determine the level of advertising inefficiency in each major media. The objective of second study is to measure advertising inefficiency of each car-model in creating different levels of advertising effects, and also to investigate the influence of strategy on advertising effects and efficiency.