Since advertising has the ability to attract new buyers, a proportion of whom will buy the brand repeatedly into the future, it is important to factor in the long-term impact on profits when deciding how much to spend on advertising. It is common for advertising to cost more than the extra profit it generates if you only consider a 12 month time frame but if you look at the effects over 18 months or more, the commercial return becomes more and more compelling.

Thank you to eminent econometrician Paul Dyson for tweaking the figures so they are consistent with the patterns seen from sales modelling. Paul also points out that the upweight option could have generated less absolute profit than the default option not more e.g. if the spend was so high that too much of it was wasted as a result of diminishing returns.

See the article for thoughts on how to set your advertising budget and this page to learn why share of spend (and advertising quality) needs to be considered when budget setting.

For more information, check out:
This analysis of advertising ROIs from WARC
'The Long and the Short of It' by Les Binet and Peter Field
The classic Harvard Business Review article about the topic.

​What to learn more? Try asking Virtual Dan White.