DETERMINING THE OPTIMAL RETURN ON INVESTMENT FOR AN ADVERTISING CAMPAIGN

In this this paper we adopt the point of view that advertising is an i nvestment, and propose a simple formula for calculating the level of m edia spending which maximizes the return on investment. The informatio n which must be supplied for the calculation is commonly available, an d we express the optimal expenditure level in terms which are meaningf ul to media planners. We show that when maximizing return on investmen t not all of the allocated media budget should be spent.