How Advertising Decisions are Taken

Abstract

Advertising is suspected of being in excess of both its social and commercial optimum level. Profit-maximising businessmen have no reason to carry the activity beyond the point where the last pound spent on advertising brings in exactly one pound more of net revenue. Yet it is almost certain that they exceed or undershoot this level. Why should this be so? How do businessmen decide on their advertising budget levels? How do they allocate their budget among the various media available? This chapter is concerned with providing answers to these questions.