Advertising elasticity

Advertising elasticity of demand is the change in sales that results from each monetary unit (e.g. each pound or dollar) that is spend on advertising. It is a similar measure to other elasticities such as price elasticity and is:


where Q is the quantity sold
A is the advertising expenditure
ΔQ is the change in quantity sold and
ΔA is the change in advertising expenditure

Cross elasticities of advertising will be strong for competing products, some complementary products and other products bearing the same or related (in consumers' perception) branding.
Copyright Graeme Pietersz © 2005-2016