AN EMPIRICAL INVESTIGATION OF MAGAZINE ADVERTISING CYCLES.
Item
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Title
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AN EMPIRICAL INVESTIGATION OF MAGAZINE ADVERTISING CYCLES.
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Identifier
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AAI8014976
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identifier
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8014976
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Creator
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MALIN, STEVEN R.
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Contributor
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Ralph L. Nelson
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Date
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1980
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Language
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English
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Publisher
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City University of New York.
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Subject
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Economics, Commerce-Business
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Abstract
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Studies of the economics of advertising have been hampered by a lack of detailed advertising data for individual media and vehicles. The present study fills part of that void with the development of a seasonally adjusted quarterly advertising series for the magazine medium. Consumer magazines listed in audits conducted between 1965 and 1976 by Leading National Advertisers, Inc. are reclassified into eight unique classes distinguished by their editorial contents. Current dollar advertising volume data for each class are used to test a number of hypotheses about the relationship between advertising and general economic conditions.;Since the mix of products advertised in magazines differs across classes, each class experiences a unique advertising growth trend and cyclical pattern. Ranking the classes by their respective growth rates reveals characteristics that distinguish relatively higher-growth classes from relatively lower-growth classes. Magazines in relatively higher-growth classes generally aim at men; have narrow editorial foci and concentrated advertising bases; and carry substantial volumes of automotive advertisements. Relatively lower-growth magazine classes typically aim at women; have broad editorial foci and diversified advertising bases; and carry substantial volumes of food advertisements.;Cyclical analyses indicate that turning points of magazine advertising cycles, on the average, lag GNP cycle turns by 1.8 quarters at troughs, 0.6 quarters at peaks, and 1.2 quarters overall. Across classes, the average lag tends to vary directly with the average long-run advertising growth rate. A diffusion index of cycle phases shows that magazine advertising volume fluctuates procyclically and tends to lag briefly at business cycle turning points.;Prevailing economic conditions at the firm level, industry level, and in the national marketplace influence advertising volume, regardless of firms' individual ad-budgeting policies. Magazine advertising fluctuations correlate closely and positively with fluctuations in GNP, industrial production, personal consumption expenditures on goods, and department store sales, each lagged about one quarter. The lag indicates that advertisers do not instantaneously adjust their expenditure levels to changes in business conditions. Econometric estimations reveal that the target ratio of magazine advertising-to-sales and the mean adjustment lag are about 0.8 percent and 1.9 quarters, respectively.;The target ratio of advertising-to-sales and the mean adjustment lag vary widely across magazine classes, reflecting differences in the composition of their respective advertising bases. On the average, the magazine advertising-to-sales ratio tends to be higher for "search" goods and consumer durable goods than for "experience" goods and consumer non-durable goods, respectively. Graphical analyses indicate that fluctuations in consumer durable goods sales are the primary factor in the cyclical adjustment of magazine advertising; the considerably smaller and and less synchronous fluctuations in consumer non-durable goods sales contribute to the overall advertising growth trend. The relative proportions of consumer durable and non-durable goods in each class's advertising base determines the target ratio of advertising-to-sales and the timing of the adjustment mechanism.
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Type
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dissertation
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Source
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PQT Legacy CUNY.xlsx
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degree
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Ph.D.
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Program
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Economics
