OPTIMAL MEDIA ALLOCATION DECISIONS FOR GENERIC ADVERTISERS

Media allocation rules are derived for generic advertisers under a var iety of market structures, marketing technologies and policy settings. The rules indicate that once the budget is set, allocation decisions cart proceed strictly on the basis of media-specific advertising elast icities. The investment decision, however is more complex. In addition to the media-specific advertising elasticities, generic advertisers n eed to take into account the price sensitivity of consumers, supply re sponse, markup behaviour, advertising 'tax' incidence, policy setting, and competitive conditions. A general finding is that protection blun ts the incentive to advertise collectively, while imperfect competitio n enhances the incentive.