Measuring Advertising Expenditure Effects on the Nigerian Economy
DOI:
https://doi.org/10.34021/ve.2020.03.03(5)Keywords:
advertising expenditure, macroeconomic variables, correlation, regression, GDP, consumption, inflation, stock market capitalization, savings and FDIAbstract
This study explores relationships between annual advertising expenditure and major macroeconomic variables in Nigeria. Advertising is sometimes viewed as a concern of business units only not worth being researched at macroeconomic level. This nature has been mostly studied on advertising industries in the advanced economies. Due to a lack of high frequency time series data on advertising expenditure in the developing economies, this work has been limited to an exploratory study using the multiple regression and correlation analysis. The study covers the period of 2001 to 2018. Its findings show that advertising has positive relationship with GDP and savings. This study provides further evidence on the cyclical nature of advertising that moves with the state of the economy. During the economic slowdown in the period of 2015 to 2017, Nigeria advertising expenditure continued to fall. In 2013, the period with the highest advertising revenue in the study, the ratio of advertising expenditure as percentage of GDP accounted for 0.061%, which was below 0.2%, a very negligible number indicating more scope for growth in the market.
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References
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Pindyck, R.S., & Rubinfeld, D.L., (1998). Econometric Models and Economic Forecasts. Boston: Irwin/McGraw-Hill.
Pesavento, F., & Marques, A. M. (2016). Advertising Expenditures in Brazil and its Connection with the International Economy. REBRAE Curitiba, 9(1), 43-61. http://dx.doi.org/10.7213/rebrae.v9i1.14192.g13628
PWC. (2017). Nigeria will Be the World’s Fastest Growing E&M Market– PwC Report. Retrieved from https://www.pwc.com/ng/en/press-room/nigeria-will-be-the-worlds-fastest-growing-e-m-market-pwc-report.html
Rehme, G., & Weisser, S.-F. (2007). Advertising, Consumption and Economic Growth: An Empirical Investigation. Darmstadt Discussion Papers in Economics, 178, 1-43.
Spence, M. (1973). Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355-374.
Stigler, G. J. (1961). The Economics of Information. The Journal of Political Economy, 69(3), 213-225.
Sturgess, B. T. (1982). Dispelling the Myth: The Effects of Total Advertising Expenditure on Aggregate Consumption. International Journal of Advertising. The Review of Marketing Communications, 1(3), 201-212.
Teall, J. L. (2018). Financial Trading and Investing. Cambridge: Academic Press.
Wurff, R. V., Bakker, P., & Picard, R. G. (2008). Economic Growth and Advertising Expenditures in Different Media in Different Countries. Journal of Media Economics, 21(1), 28-52. https://doi.org/10.1080/08997760701806827
Zaman, A. (1996). Statistical Foundations for Econometric Techniques. Oxford: Academic Press.
Abdullahi, S. I. (2018). Measuring Consumer Perception of Ethical Issues in Advertising: Evidence from Nigerian Advertising Audience. Middle East Journal of Management, 5(3), 191-206. https://doi.org/10.1504/MEJM.2018.10014703
Ark, B., Hao, J.X., Corrado, C., & Hulten, C. (2009). Measuring Intangible Capital and its Contribution to Economic Growth in Europe. EIB Papers, 14(1), 62-93.
Ashley, R., Granger, C. W. J. & Schmalensee, R. (1980). Advertising and Aggregate Consumption: An Analysis of Causality. Econometrica, 48(5), 1149-1167. https://doi.org/10.2307/1912176
Bagwell, K. (2007). The Economic Analysis of Advertising. In M. Armstrong & R. Porter (Eds.), Handbook of Industrial Organization (pp. 1701-1844). Amsterdam: North-Holland Publishing.
Bearne, A. (1996). The Economics of Advertising: A Reappraisal. Economic Issues, 1(1), 23-38.
Bughin, J. & Spittaels, S. (2012). Advertising as an Economic-Growth Engine: The New Power of Media in the Digital Age. Chicago: McKinsey & Company.
Chen, J. &Waters, G. (2017). Firm Efficiency, Advertising and Profitability: Theory and Evidence. The Quarterly Review of Economics and Finance, 63, 240-248. https://doi.org/10.1016/j.qref.2016.04.004
Chowdhury, A.R. (1994). Advertising Expenditures and the Macro-Economy: Some New Evidence. International Journal of Advertising. The Review of Marketing Communications, 13(1), 1-14.
Davidson, R., & MacKinnon, J. G. (1999). Econometric Theory and Methods. Oxford: Oxford University Press.
Feichtinger, G., Hartl, R.F., & Sethi, S.P. (1994). Dynamic Optimal Control Models in Advertising: Recent Developments. Management Science, 40(2), 195-226.
Galbraith, J.K. (1967). The New Industrial State. Boston: Houghton Mifflin.
Galbraith, J.K. (1969). The Affluent Society. Boston: Houghton Mifflin.
Gujarati, D.N., Porter, D.C., & Gunasekar, S. (2012). Basic Econometrics. New Delhi: Tata-Mc Graw Hill Ltd.
Hall, R.E. (2014). What the Cyclical Response of Advertising Reveals about Markups and other Macroeconomic Wedges. Retrieved from https://www.frbsf.org/economic-research/files/Fri_1340_Hall.pdf
Joshi, A., & Hanssens, D.M. (2010). The Direct and Indirect Effects of Advertising Spending on Firm Value. Journal of Marketing, 74(1), 20-33. https://doi.org/10.1509/jmkg.74.1.20
Kshetri, N., Williamson, N.C., & Schiopu, N. (2007). Economics and Politics of Advertising: Evidence from the Enlarging European Union. European Journal of Marketing, 41, 349-366.
Lee, T., Chung, W., & Taylor, R.E. (2011). A Strategic Response to the Financial Crisis: An Empirical Analysis of Financial Services Advertising before and during the Financial Crisis. Journal of Services Marketing, 25(3), 150-164. https://doi.org/10.1108/08876041111129146
Lippman, S.S. &McCall, J.J. (2015). Economics of Information. In J. Wright (Ed.), International Encyclopedia of the Social & Behavioral Sciences, 2nd ed. New York: Elsevier.
Martínez-Fernández, V., Castellanos, P., & Juanatey-Boga, O. (2014). Advertising Investment as a Tool for Boosting Consumption: Testing Galbraith’s Hypothesis for Spain. Revista de Economia Contemporânea – Journal of Contemporary Economics, 18(3), 435-452.
Metwally, M. M. (1975). Advertising and Competitive Behaviour of Selected Australian Firms. The Review of Economics and Statistics, 57(4), 417-427.
Molinari, B., & Turino, F. (2006). The Role of Advertising in the Aggregate Economy: The Work and Spend Cycle. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.520.6821&rep=rep1&type=pdf
Molinari, B., & Turino, F. (2009). Advertising and Business Cycle Fluctuations. Retrieved from https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=MMF2010&paper_ id=160
Nayaradou, M. (2006). Advertising and Economic Growth. Doctorate Thesis in Economics. Paris: University of Paris-Dauphine, World Federation of Advertisers (WFA) and French Association of Advertisers.
OECD. (2008). OECD Science, Technology and Industry Scoreboard. Paris. Retrieved from https://www.oecd.org/sti/inno/oecdsciencetechnologyandindustryoutlook2008.htm
Picard, R.G. (2001). Effects of Recessions on Advertising Expenditures: An Exploratory Study of Economic Downturns in Nine Developed Nations. The Journal of Media Economics, 14(1), 1-14. https://doi.org/10.1207/S15327736ME1401_01
Pindyck, R.S., & Rubinfeld, D.L., (1998). Econometric Models and Economic Forecasts. Boston: Irwin/McGraw-Hill.
Pesavento, F., & Marques, A. M. (2016). Advertising Expenditures in Brazil and its Connection with the International Economy. REBRAE Curitiba, 9(1), 43-61. http://dx.doi.org/10.7213/rebrae.v9i1.14192.g13628
PWC. (2017). Nigeria will Be the World’s Fastest Growing E&M Market– PwC Report. Retrieved from https://www.pwc.com/ng/en/press-room/nigeria-will-be-the-worlds-fastest-growing-e-m-market-pwc-report.html
Rehme, G., & Weisser, S.-F. (2007). Advertising, Consumption and Economic Growth: An Empirical Investigation. Darmstadt Discussion Papers in Economics, 178, 1-43.
Spence, M. (1973). Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355-374.
Stigler, G. J. (1961). The Economics of Information. The Journal of Political Economy, 69(3), 213-225.
Sturgess, B. T. (1982). Dispelling the Myth: The Effects of Total Advertising Expenditure on Aggregate Consumption. International Journal of Advertising. The Review of Marketing Communications, 1(3), 201-212.
Teall, J. L. (2018). Financial Trading and Investing. Cambridge: Academic Press.
Wurff, R. V., Bakker, P., & Picard, R. G. (2008). Economic Growth and Advertising Expenditures in Different Media in Different Countries. Journal of Media Economics, 21(1), 28-52. https://doi.org/10.1080/08997760701806827
Zaman, A. (1996). Statistical Foundations for Econometric Techniques. Oxford: Academic Press.
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Published
2020-07-19
How to Cite
Abdullahi, S. I., & Mukhtar, S. (2020). Measuring Advertising Expenditure Effects on the Nigerian Economy. Virtual Economics, 3(3), 80–93. https://doi.org/10.34021/ve.2020.03.03(5)
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