Understanding the Coevolution of Ad Spend by Media Channel and Retail Format Sales at the Country Level: A Multicountry Examination

Abstract

The marketing literature has long recognized the positive relationship between advertising spending and sales at the firm level. However, this literature overlooks country-level heterogeneity of both the advertising channel and retail format evolution, limiting global managers’ understanding of the heterogeneity and evolution of advertising channels and retail formats across country markets and, therefore, managers’ ability to effectively formulate a global marketing strategy that adjusts for such differences. The authors call for a glocal approach when considering the association between ad spend by media channels and retail format sales at the country level, accounting for country institutional environments. They explore this topic using a 29-country, seven-year unbalanced panel data set. The authors find that there is substantive heterogeneity in ad spend by media channels and retail format sales across countries. Further, they find that changes in ad spend in specific media channels are positively associated with changes in related retail format sales at the country level, whereas the associations between changes in ad spend in media channels with unrelated retail format sales are more nuanced. The findings are informative to international marketing managers navigating the complex and ever-evolving retail landscape and highlight the importance of thinking globally while acting locally.