Advertising Spending Efficiency Among Top U. S. Advertisers From 1985 To 2012: Overspending Or Smart Managing?

The current study tests two competing predictions of long-term adspend efficiency: the overspending perspective predicts continued high inefficiency, while the smart manager perspective predicts improved efficiency. Longitudinal analysis of efficiency among top 100U.S. advertisers from 1985 to 2012 using data envelopment analysis reveals that inefficiency has increased over time. Approximately 61% of top advertisers are inefficiently using their ad dollars and are overspending by an average of 34%. Findings also indicate that the Internet, a medium highly praised and utilized for the amount and depth of consumer data it generates, has not impacted overall efficiency in any meaningful way.