Marketing’s Impact on Firm Value: Generalizations from a Meta-Analysis

Alexander Edeling and Marc Fischer
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Key Takeaways

​The analysis is based on 100 studies published between 1977 and 2013, which deliver 621 marketing–firm value elasticities (% change in firm value for a 1% increase in the marketing-input variable).

The mean advertising-expenditure elasticity is only .04.

The mean marketing-asset elasticity is .54, with customer-related elasticities being larger (mean of .72) than brand-related elasticities (mean of .33).

Marketing assets are more effective than marketing actions in driving firm value.

From an efficiency point-of-view, firms are close to the optimum with respect to advertising expenditures, but not with respect to marketing assets.

Article Snapshots: Executive Summaries from the Journal of Marketing Research​​

This meta-analysis summarizes the existing research on the impact of marketing on firm value and finds a small positive firm-value effect of advertising expenditures and a large positive firm-value effect of marketing assets, such as brands or customer relationships.



Research

i. There is a growing number of primary studies that relate marketing variables to firm-value variables (summarized under the term marketing-finance interface research). Yet, no comprehensive meta-analysis of findings exists.

ii. The major gap was the question how marketing metrics differ in their ability to enhance firm value (e.g., do marketing actions assert a weaker or stronger effect on firm value than marketing assets?).

iii. Our main hypothesis is that marketing actions such as advertising expenditures have a weaker effect on firm value than marketing assets (i.e., brands and customers).

Method

From 100 primary studies that investigate the effect of marketing variables on firm value, we extracted information on the elasticity (i.e., the % change in firm value for a 1% increase in the marketing variable). We aggregated these elasticities and calculated mean elasticities for different marketing drivers, such as advertising expenditures, brand-related marketing assets (e.g., brand equity), or customer-related marketing assets (e.g., customer satisfaction). In a subsequent analysis, we assessed the influence of moderating variables pertaining to market setting and methodology.





​Findings

The main takeaway from the meta-analysis is that the effect of marketing assets such as brands or customer relationships on firm value is substantially larger than the effect of advertising expenditures. Among marketing assets, the effect of customer-related assets is larger than the effect of brand-related assets. This finding empirically supports the often-hypothesized hierarchy-of-effects structure from marketing actions via brands (i.e., reputational assets) and customers (i.e., relational assets) to the ultimate performance metric firm value.

Implications

Executives, consumers, and policy makers sometimes wonder whether marketing is a value-enhancing tool for companies or a waste of money. This meta-analysis finds a small positive firm-value effect of advertising expenditures and a large positive firm-value effect of marketing assets. Thus, marketing is indeed value-relevant. Managers interested in increasing value for their companies’ shareholders should focus on optimizing marketing assets such as brand value or customer satisfaction; these findings pertain especially to firms with relatively high marketing spending (e.g., FMCG, pharma).


 

Full Article
Alexander Edeling and Marc Fischer (2016), “Marketing’s Impact on Firm Value: Generalizations from a Meta-Analysis.” Journal of Marketing Research, 53 (4), pp. 515-534.
doi: http://dx.doi.org/10.1509/jmr.14.0046​

Alexander Edeling is Assistant Professor of Marketing, University of Cologne (e-mail: edeling@wiso.uni-koeln.de).

Marc Fischer is Professor of Marketing and Market Research, University of Cologne, and Professor of Marketing, University of Technology Sydney (e-mail: marc.fischer@wiso.uni-koeln.de).


Author Bio:

 
Alexander Edeling and Marc Fischer
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