Determining the optimal return on investment for an advertising campaign

Determining the optimal return on investment for an advertising campaign

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Article ID: iaor19991117
Country: Netherlands
Volume: 95
Issue: 3
Start Page Number: 511
End Page Number: 521
Publication Date: Dec 1996
Journal: European Journal of Operational Research
Authors: ,
Keywords: media planning
Abstract:

In this paper we adopt the point of view that advertising is an investment, and propose a simple formula for calculating the level of media spending which maximizes the return on investment. The information which must be supplied for the calculation is commonly available, and we express the optimal expenditure level in terms which are meaningful to media planners. We show that when maximizing return on investment not all of the allocated media budget should be spent.

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