Investors’ response to advertising: the role of media

ABSTRACT

Firm value is a powerful metric for assessing advertising managers’ performance: investors evaluate advertising decisions and incorporate their evaluations in the stock price, thus influencing the company’s value in the stock markets. Previous studies have analysed the impact of some advertising decisions on investors, namely, the advertising expenditure level and messages. However, previous research has ignored what happens with other advertising decisions, such as media mix. The present study examines the differential effects of media on investors’ response to advertising, that is, whether advertising expenditure and brand messages equally increase firm value when delivered through different media. Our results indicate that the effect of advertising expenditure depends on which media companies use. We also find that brand messages increase firm value only when broadcast through some specific media.

KEYWORDS:

• Advertising
• performance
• accountability
• effectiveness
• metrics
• customer orientation
• Integrated Marketing Communications (IMC)
• firm value

Acknowledgments

The advertising data employed in this research has been kindly provided by Arce Media S.A.

Additional information

Notes on contributors

Pablo J. López-Tenorio

Pablo J. López-Tenorio is marketing consultant at PabloTenorio and Lecturer at Universidad Autónoma de Madrid. He holds a PhD in marketing. His research interests include the financial implications of corporate communication activities, particularly the impact of advertising on stock returns and the profitability of sport sponsorship.

Jaime Romero is Associate Professor of Marketing at the Faculty of Economics and Business of the Universidad Autónoma de Madrid. He holds a PhD in marketing and has published his research in journals like Journal of Interactive Marketing, Online Information Review, Cornell Hospitality Quarterly, Journal of Hospitality Marketing and Management and International Journal of Market Research, among others. His research interests include marketing profitability, customer management, and retailing.