Advertising sequence response dynamics and the impact of retail environments

• Advertising response in terms of sales shows strong advertising sequence dynamics • First-week sales response is weaker than in-between weeks with increased adspend • Last-week sales response is weaker than in-between weeks with decreased adspend • In-between weeks short-term sales response is stronger for increased vs decreased adspend • Advertising sequence response dynamics strongly depend on the retail environment Consumer packaged goods (CPG) brands’ advertising strategies show considerable variation. Some brands prefer one-week advertising actions (spikes) and/or multiple-week advertising sequences combined with periods without advertising. Other brands opt for (near) always-on strategies that combine lower-level maintenance spending with higher-level multiple-week sequences and/or spikes. However, understanding of the advertising sequence response dynamics that may exist – differing advertising response elasticities depending on the position of advertising actions in a sequence – and the role that the brand’s retail environment in terms of own advertising frequency and price promotion depth as well as category private label and innovation intensity plays in these dynamics is limited. Using a sample of 265 brands in 77 CPG categories – typical supermarket products – we show that, overall, the first week in a sequence has weaker short- and long-term sales effects than other weeks with advertising increases, while the last week in a sequence has weaker short- and long-term sales effects than other weeks with advertising decreases. Observed advertising sequence response dynamics thereby strongly depend on the brands’ retail environment, with different environments requiring different advertising strategies.