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Marketing Assets and Firm Value

In a meta-analysis based on 83 studies, Alexander Edeling and Marc Fischer make the case for marketing investment (from Empirical Generalizations about Marketing Impact, 2nd ed.).

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Advertising and firm value     

The mean firm-value elasticity with respect to advertising expenditures is .04, while the mean firm-value elasticity with respect to marketing-asset variables (including brand and customer relationship) is .54. The elasticities are smaller when firm value is measured as stock returns, as opposed to market capitalization.

Evidence base

Meta-analysis based on 488 elasticities drawn from 83 studies

Managerial implications       

Given that the vast majority of marketing firm-value elasticities is positive, investing in marketing is value-relevant. The potential for growing firm value is especially large with respect to marketing assets. The results suggest that firms are still underinvested in brands and customer relationships, since the firm-value elasticities should be zero at optimal investment levels.

Contributors

Marc Fischer, University of Cologne and University of Technology, Sydney, and Alexander Edeling, University of Cologne

Reference

Edeling, Alexander, and Marc Fischer (2014), “Marketing’s Impact on Firm Value: Generalizations from a Meta-Analysis.” Cambridge, Mass.: Marketing Science Institute, Report No. 14–107

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