Current Issue Summary
June 2023 (Vol. 64, Issue 2)
When Brands Go Dark: A Replication and Extension—Examining Market Share of Brands that Stop Advertising for a Year or Longer
In 2021, an Ehrenberg-Bass Institute research team, led by Nicole Hartnett, published their analysis of what happens to sales when brands stop advertising for a year or longer. It was one of JAR‘s most-read articles on record. In 2023 part 2 arrives, expanding the focus to the impact on market share. The authors are Peilin Phua (UniSABusiness/University of South Australia), Hartnett, Virginia Beal and Rachel Kennedy (all three at Ehrenberg-Bass) and Giang Trinh (Northern Virginia Community College).
The difference in this new work is not only its focus on the impact of going dark on market share, but its use of much more extensive data, with farther-reaching conclusions and recommendations for future research. It also adds robustness to the prior evidence which indicates that when brands stop advertising, declines become more common and more significant, on average, as time increases. Whereas the 2021 study’s data were for a single product category—alcoholic beverages in Australia (bulk keg sales to bars and pubs and units sold by specialty alcohol retailers)—the 2023 data span 22 consumer goods categories and 365 brands sold widely in supermarkets in the U.S. Both studies look at brand size and prior trajectory conditions, but the 2023 research adds whether the relationship between advertising cessation and market-share change holds across product categories. Ultimately, practitioners can use this work as a baseline to determine the possible effects of stopping advertising when budget cuts are required, and as input into business cases to keep their ad budgets. Among the findings:
- The market share of brands that stopped advertising for at least one year declined on average at a steady rate, year-over-year.
- Losses were quantified as declining by 10 percent after one year, 20 percent after two years and 28 percent after three, relative to the last advertised year, on average.
- Brand size and market share trajectory, before stopping advertising, affect the rate of market-share decline. Brands already in decline and smaller brands suffered a greater loss of market share.
- This research adds to the evidence that advertising continuity, over the long term, benefits brand performance.