Causes of advertising expenditure variations in Sweden 1975-1987

Date of publication: September 1, 1989

Abstract:

Advertising expenditure in traditional media has risen faster than inflation during the period of analysis, with the exception of 1980 and 1981. Surveys and analyses show that expenditure in direct mail and various forms of sales promotion were about equal to those in the traditional media. The increase in advertising expenditure varied from 5.6 to 22 per cent during the period. These variations may be explained by two factors: -1 the demand for advertising space, determined by advertisers; and -2 the supply of advertising space, determined by the media. The demand for advertising space is determined by corporate profitability and the general business cycle. The rapid introduction of new products, as well as more positive attitudes towards advertising, also affects the demand for advertising space. The supply of advertising space was affected by the gradual expansion of the direct mail medium as well as by the abolition of the 15 per cent commission system in 1980. This abolition forced the media to become more actively self-promoting.

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