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EMAC 2021 Annual Conference


Know your enemy: How competitive advertising investments moderate advertising effectiveness in high- and low-informative media channels
(A2021-93923)

Published: May 25, 2021

AUTHORS

Felix Wasser, University of Southern Denmark; Goetz Greve, HSBA Hamburg School of Business Administration; Oliver Schnittka, University of Southern Denmark; Marius Johnen, University of Hamburg; Julian Hofmann, EM Normandie Business School

ABSTRACT

Brands are under constant competitive pressure through competitive advertising investment, hindering the development of brand awareness and sales. Such negative effects are predicted by information processing theory, where information above a certain threshold is processed less effective. In practice, marketing managers often react to competitive advertising investment with additional investment or ignorance. With a data set containing advertising data across 110 brands, we show that these strategies are not effective, as they do not consider the differences between the interactions of high- and low-informative media channels and competitive investments. While high-informative are indeed negatively moderated, we found that low-informative channels on the contrary are moderated positively through competitive advertising investments. Our findings help marketing managers to allocate advertising budgets across media channels with respect to competition and drive advertising effectiveness.