Bidirectional Links between Aggregate Advertising and Goods Consumption at the National Level
- A longstanding question in marketing and economics is whether all of advertising affects aggregate consumption. If it does not, the advertising–consumption system would be a zero-sum game; if it does, advertising can grow markets and represents an economic force of interest for marketing, economics, and public policy. Ashley, Granger, and Schmalensee (1980) test advertising’s potential causal impact on aggregate goods consumption. Challenging prior empirical studies that suggested advertising drives aggregate consumption (Taylor & Weiserbs, 1972), Ashley et al. show that advertising does not influence consumption; rather, consumption causes advertising in a landmark methodological study of the Granger causality test. Yet recent conceptualizations suggests this empirical result and especially the linear autoregression-based Granger method to be inconclusive. Wilkie and Moore (1999) propose a complex aggregate systems view to discussing macro impacts of marketing, and in such systems the Granger tests typically fails (Sugihara et al.A longstanding question in marketing and economics is whether all of advertising affects aggregate consumption. If it does not, the advertising–consumption system would be a zero-sum game; if it does, advertising can grow markets and represents an economic force of interest for marketing, economics, and public policy. Ashley, Granger, and Schmalensee (1980) test advertising’s potential causal impact on aggregate goods consumption. Challenging prior empirical studies that suggested advertising drives aggregate consumption (Taylor & Weiserbs, 1972), Ashley et al. show that advertising does not influence consumption; rather, consumption causes advertising in a landmark methodological study of the Granger causality test. Yet recent conceptualizations suggests this empirical result and especially the linear autoregression-based Granger method to be inconclusive. Wilkie and Moore (1999) propose a complex aggregate systems view to discussing macro impacts of marketing, and in such systems the Granger tests typically fails (Sugihara et al. 2012). The present research extends prior studies with a new more appropriate nonlinear method (convergence cross-mapping) to test the causal links between television or digital advertising and three types of aggregate consumption—durables, non-durables, and service consumption. The novel test, unlike the Granger causality test, confirms the existence of a bidirectional causal link between advertising and aggregate goods consumption. Specifically, and similar to the brand level, advertising effects on consumption are stronger for durable than for non-durable goods.…
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