Is Military Advertising Effective? An Estimation Methodology and Applications to Recruiting in the 1980s and 90s

Is Military Advertising Effective? An Estimation Methodology and Applications to Recruiting in the 1980s and 90s

James N. Dertouzos
Steven Garber
Copyright Date: 2003
Edition: 1
Published by: RAND Corporation
Pages: 114
https://www.jstor.org/stable/10.7249/mr1591osd
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  • Book Info
    Is Military Advertising Effective? An Estimation Methodology and Applications to Recruiting in the 1980s and 90s
    Book Description:

    The Defense Department has been spending over $100 million annually on recruiting advertising. Previous econometric studies of military advertising's effects have relied on data from time periods unlike today's and have used models possibly inappropriate for supporting today's decisionmakers. This report details improved methods developed to assess military advertising's effectiveness and illustrates them using early 1980s and mid-1990s data.

    eISBN: 978-0-8330-3598-1
    Subjects: Political Science, Management & Organizational Behavior

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. PREFACE
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-vi)
  4. FIGURES
    (pp. vii-viii)
  5. TABLES
    (pp. ix-x)
  6. SUMMARY
    (pp. xi-xvi)
  7. ACKNOWLEDGMENTS
    (pp. xvii-xviii)
  8. Chapter One INTRODUCTION
    (pp. 1-4)

    During the late 1990s, the Department of Defense (DoD) spent more than $100 million annually on advertising programs in support of military recruiting. These expenditures were made through five programs, those of the four services and a joint service program (Joint Recruiting Advertising Program, or JRAP). Historically, the Army has received the largest share of these dollars, averaging about 50 percent of the overall advertising budget. Over all programs, about 50 percent of media purchases were for television advertising, with the remainder spent on radio, magazine, and newspaper advertising. There has been considerable year-to-year variation in total spending, in the...

  9. Chapter Two OVERVIEW OF MILITARY ADVERTISING
    (pp. 5-12)

    This chapter provides an overview of military advertising. The budget figures presented are expenditures by the five advertising programs (one for each service, and one joint-service program) to purchase advertising time on broadcast stations (over-the-air and cable television, and radio) and space in print media (newspapers and magazines). These figures exclude administrative costs, advertising agency fees, and costs for special events or promotions.

    Figure 2.1 shows nominal total advertising expenditures for 1986, 1993, and 1997. As can be seen, military advertising purchases totaled $120 million for all five programs in 1997. Since then, purchases have held fairly steady. Nominal, or...

  10. Chapter Three LITERATURE REVIEW
    (pp. 13-26)

    We reviewed literature related to advertising in psychology, marketing, and economics, as well as studies of advertising effectiveness in military recruiting. Insights from these materials helped us to develop new conceptual foundations and econometric specifications for estimating how recruiting advertising affects enlistment and for assessing the cost effectiveness of such advertising.

    The empirical literature on advertising effectiveness in promoting sales of consumer products has generated more controversy than consensus. Most fundamentally, sometimes advertising is found to be effective and sometimes it is not.

    It is very difficult to estimate reliably the sales effects of advertising. Major analytic challenges include the...

  11. Chapter Four ADDITIONAL CONCEPTUAL ISSUES
    (pp. 27-34)

    This chapter addresses several conceptual issues that have important implications for the design of an econometric strategy for assessing advertising effectiveness. First, we discuss the multiple stages of the enlistment decisionmaking process and discuss implications for dynamic properties of econometric specifications. We then describe data on Army recruiting leads and subsequent enlistments to provide additional insights about such dynamics. Additional complexities that are introduced if media alternatives complement rather than substitute for each other are described next, followed by additional discussion about the relative merits of alternative functional forms and dynamic specifications for estimation.

    Young people who enlist often, and...

  12. Chapter Five DATA USED TO DEVELOP NEW METHODS FOR THIS STUDY
    (pp. 35-38)

    The goal of our study was to develop improved methods for estimating advertising effects and to apply those methods to recent data. As an interim step, we applied new methods to the monthly data for the Army for July 1981 through June 1984 (36 months) that Dertouzos and Polich (1989) used. The unit of observation was a Military Entrance Processing Station (MEPS) area during a month. There were 66 MEPS areas during this period, so we had 2,376 month-MEPS pairs available for analysis.

    We used as the outcome measure the number of high-quality contracts signed during a month regardless of...

  13. Chapter Six NEW ECONOMETRIC SPECIFICATION
    (pp. 39-48)

    The goal of our econometric analysis was to estimate the effects of advertising on potential high-quality enlistments.¹ We examined both a structural version and a reduced-form version. In the former case, we estimated the effects of advertising on high-quality youths who signed contracts in a given month, holding both recruiter levels of effort and number of low-quality recruits constant. In the reduced-form version we also estimated the effects of advertising on the number of high-quality enlistments, but in this case we held recruiter effort constant and allowed the number of low-quality enlistments to adjust to changes in recruiting opportunities. This...

  14. Chapter Seven ESTIMATES FOR THE ARMY IN THE 1980s AND THEIR IMPLICATIONS
    (pp. 49-68)

    We begin this chapter by reporting econometric estimates of the parameters introduced in Chapter Six based on the Army data for the early 1980s that were described in Chapter Five. We then use graphical methods to explore implications of the estimates for the functional form and dynamic patterns of advertising effects on high-quality enlistments. We also analyze the extent to which enlistment potential might have been improved by reallocating advertising spending across media and by increasing total spending. Finally, we consider the implications of sampling variability for the confidence we can attach to estimates of the effectiveness of advertising and...

  15. Chapter Eight ADVERTISING EFFECTIVENESS FROM 1993 TO 1997
    (pp. 69-86)

    Results based on the 1980s Army data may be of limited value to today’s policymakers because of various developments since the early 1980s. This chapter reports on analyses of data for all four services from FY 1993 through FY 1997, the latest period for which detailed advertising data are available.¹

    There are several reasons the detailed results for the 1980s may not provide a reliable basis for designing advertising policies today. Specifically, those results describe outcomes of Army advertising policies implemented during the early 1980s, when the creative content, seasonal timing of expenditures, and mix of media were quite different...

  16. Chapter Nine CONCLUSIONS
    (pp. 87-90)

    Advertising appears to have been effective in increasing enlistments both in the early 1980s and during the mid-1990s. Although substantial improvements might have been achieved during the mid-1990s by changing the mix of the media used to advertise—specifically, by using more television—and by concentrating expenditures in fewer months, advertising compares quite favorably with other options for attracting young men and women into the Armed Forces.

    Using the elasticity estimates reported in Chapter Eight (in column 2 of Table 8.2), we computed marginal cost estimates so that we could compare alternative policies. These estimates are provided in Table 9.1....

  17. Appendix: MODEL SPECIFICATION TESTS AND TIME PERIOD COMPARISONS
    (pp. 91-92)
  18. REFERENCES
    (pp. 93-96)