Empirical Study about Advertising Expenses' Effects on Brand Value

Abstract

The purpose of this study is to investigate the effects of advertising expenses on brand value. I select top 200 companies' corporate brand value (CBV) calculated by the model named 'CB valuator' during 2006 and 2011 and analyze the relationship between advertising expenses and CBV. Based on the previous studies, I assume a four-year lagged relation between advertising expenditures and CBV. The result of structural equation modeling (SEM) indicates that the effects of the advertising amount on the corporate brand value is positive and statistically significant.

Previous studies show that the effectiveness of advertising expenses varies. I set a hypothesis that the effectiveness of advertising expenses on CBV is larger in companies with an increase in their CBV than companies with a decrease in their CBV. This hypothesis is not supported.