The impact of corporate sustainability performance on advertising efficiency

Karl Weinmayer · Marion Garaus · Udo Wagner

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Marketing and Advertising Strategies Corporate Social Responsibility Reporting Environmental Sustainability in Business

Abstract

Abstract Over the years several studies have reported a significant waste of advertising budget, a finding which calls for strategies to increase advertising efficiency. While some factors, such as brand extensions or an optimal marketing mix, have already been identified as relevant determinants of advertising efficiency, changes in consumer psychographics have so far been neglected. The current study fills this gap by investigating how the emerging awareness and demand for corporate sustainability serve as a contextual factor leveraging or hindering advertising efficiency. Furthermore, we investigate how advertising efficiency has changed across various industry sectors from 2010 to 2019. A two-step procedure was applied to analyze the secondary data of 1950 observations from 195 US firms in five industry sectors over a period of 10 years. The resulting time series of firm-specific multi-directional efficiency scores confirms that advertising efficiency varies over time, justifying the relevance of a dynamic perspective for analyzing advertising efficiency. Furthermore, in support of our main claim, the investigation of the relationship between advertising efficiency and the environmental, social and governance performance of firms over time using a time-fixed effects panel regression and a three-level hierarchical regression model confirm the significant impact of corporate sustainability performance on advertising efficiency. Interestingly, this effect varies among different industry sectors and not all corporate sustainability activities impact advertising efficiency to the same extent. The results not only emphasize the relevance of corporate sustainability performance in increasing advertising efficiency, but also guide marketers on strategic marketing decisions related to the allocation of advertising budget.

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References

1973Job Market Signaling 1957The Measurement of Productive Efficiency 1998Consistent Covariance Matrix Estimation with Spatially Dependent Panel Data 2001A slacks-based measure of efficiency in data envelopment analysis 1990WHAT'S IN A NAME? REPUTATION BUILDING AND CORPORATE STRATEGY.2006Corporate Social Responsibility, Customer Satisfaction, and Market Value 2014Testing Weak Cross-Sectional Dependence in Large Panels 2021Firms and social responsibility: A review of ESG and CSR research in corporate finance

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