Is military advertising effective?: an estimation methodology and applications to recruiting in the 1980s and 1990s, Issue 1591

115 Pages·2003·0.64 MB·English

by  James N. Dertouzos

National Defense Research Institute
Is Military
Advertising
Effective?
An Estimation Methodology
and Applications to Recruiting
in the 1980s and 90s
James N. Dertouzos
Steven Garber
R
Prepared for the
Office of the Secretary of Defense
Approved for public release; distribution unlimited
The research described in this report was sponsored by the Office of
the Secretary of Defense (OSD). The research was conducted in
RAND’s National Defense Research Institute, a federally funded
research and development center supported by the OSD, the Joint
Staff, the unified commands, and the defense agencies under
Contract DASW01-01-C-0004.
Library of Congress Cataloging-in-Publication Data
Dertouzos, James N., 1950-
Is military advertising effective? : an estimation methodology and applications
to recruiting in the 1980s and 90s / James N. Dertouzos, Steven Garber.
p. cm.
“MR-1591.”
Includes bibliographical references.
ISBN 0-8330-3341-7
1. United States—Armed Forces—Recruiting, enlistment, etc. 2. Advertising—
United States—Evaluation. I. Garber, Steven, 1950- II.Title.
UB323.D44 2003
355.2'23'097309048—dc21
2003041264
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PREFACE
This report documents research findings from a RAND project titled
“The Relative Cost Effectiveness of Military Advertising,” the goal of
which was to develop and apply a methodology for assessing the cost
effectiveness of the services’ advertising programs and to provide
guidance for a more efficient allocation of resources in the future.
The project was sponsored by the Director for Accession Policy
(Force Management Policy).
This report examines issues related to the effectiveness of recruiting
advertising during the 1980s and 1990s. It describes the policy con-
text, summarizes the current state of knowledge, and identifies sev-
eral conceptual and methodological issues. In addition, it describes
a framework developed for estimating advertising effects and how
that framework was applied in an analysis of 1980s Army advertising
programs. It also discusses how this methodology was used to ana-
lyze 1993–1997 DoD-wide information. The empirical results from
the study strongly support the view that advertising has been a cost-
effective recruiting tool and provide some guidance for future im-
provements. Data deficiencies and analytic challenges associated
with recruiting environment complexity, however, made it impossi-
ble to determine the most effective mix of advertising. Nonetheless,
the concepts and methods developed can help guide future advertis-
ing research, and the general policy conclusions regarding past
advertising programs remain valid. Additional research is necessary
if future allocations of recruiting resources, including advertising
dollars, are to be made optimally.
iii
iv Is Military Advertising Effective?
This research was conducted within the Forces and Resources Policy
Center of RAND’s National Defense Research Institute, a federally
funded research and development center sponsored by the Office of
the Secretary of Defense, the Joint Staff, the unified commands, and
the defense agencies.
Comments are welcome and may be addressed to the project leader
James N. Dertouzos, [email protected], 310-393-0411, x7476.
For more information on RAND’s Forces and Resource Policy Center,
contact the Director, Susan Everingham, susan_everingham@rand.
org, 310-393-0411, x7654.
CONTENTS
Preface......................................... iii
Figures......................................... vii
Tables.......................................... ix
Summary ....................................... xi
Acknowledgments................................. xvii
Chapter One
INTRODUCTION .............................. 1
Chapter Two
OVERVIEW OF MILITARY ADVERTISING ............ 5
Chapter Three
LITERATURE REVIEW........................... 13
Advertising and Theories of Persuasion .............. 14
Econometric Studies of Consumer-Product
Advertising ............................... 16
Brand Equity.................................. 18
Recruiting Advertising Research ................... 19
RAND Research in the 1980s .................... 19
Other Studies of Recruiting Advertising ............ 21
Summary .................................... 24
Chapter Four
ADDITIONAL CONCEPTUAL ISSUES ............... 27
Advertising Can Influence Youth Behavior at Multiple
Decision Stages............................ 27
v
vi Is Military Advertising Effective?
Data on Army Leads and Contracts Provide Some
Insights about Timing ....................... 28
Advertising in Different Media may Play
Complementary Roles ....................... 30
Advertising Realities Require Complex Analysis ........ 31
Chapter Five
DATA USED TO DEVELOP NEW METHODS
FOR THIS STUDY .............................. 35
Chapter Six
NEW ECONOMETRIC SPECIFICATION.............. 39
Recruiting Possibility Frontier..................... 39
Observed Numbers of Contracts ................... 40
Developing an Estimable Form .................... 45
Reduced Form ................................ 47
Chapter Seven
ESTIMATES FOR THE ARMY IN THE 1980s AND
THEIR IMPLICATIONS .......................... 49
Parameter Estimates............................ 49
Relationships of Enlistments to Advertising Spending on
Different Media............................ 53
Time Patterns of Effects of Different Media ........... 57
Potential Gains from Reallocating or Increasing
Spending................................. 57
Sampling Variability and Its Implications............. 61
Chapter Eight
ADVERTISING EFFECTIVENESS FROM 1993
TO 1997 ..................................... 69
1990s Changes in Recruiting and Marketing
Environments ............................. 69
Data from 1993–1997 ........................... 71
Econometric Approach.......................... 73
Results ...................................... 75
Chapter Nine
CONCLUSIONS................................ 87
Appendix: Model Specification Tests and Time Period
Comparisons ................................. 91
References ...................................... 93
FIGURES
2.1. Nominal Expenditures on Military Advertising in
1986, 1993, and 1997, by Program ............... 6
2.2. Nominal and Real Advertising Budgets for the Four
Services in 1986, 1993, and 1997................. 8
2.3. Shares of Advertising in 1985 and 1995, by Program .. 8
2.4. Seasonal Patterns in Advertising Expenditures for the
Four Services in FY 1997 ...................... 10
4.1. Problems with Constant Elasticity (Log-Linear)
Specification............................... 32
4.2. Problems with a Constant Depreciation Rate Model.. 34
7.1. Effects over Six Months of One-Time Levels in
Spending, Structural Estimates ................. 54
7.2. Effects over Six Months of One-Time Levels in
Spending, Reduced-Form Estimates ............. 54
7.3. Effects of $5 per Capita Extra Spending from Actuals
on Additional High-Quality Contracts, by Month,
Structural Estimates ......................... 58
7.4. Effects of $5 per Capita Extra Spending from Actuals
on Additional High-Quality Contracts, by Month,
Reduced-Form Estimates ..................... 58
vii

TABLES
2.1. Costs of Advertising in 1986, 1993, and 1997........ 7
2.2. Media Shares of Advertising Programs in 1997 ...... 9
4.1. Time from Contact to Contract, by Recruit Type
and Month of Lead .......................... 30
5.1. Descriptive Statistics for Army Data, July 1981
Through June 1984 .......................... 37
7.1. Estimated Determinants of the Logarithm of High-
Quality Enlistments and Recruiter Effort for the
Army in the Early 1980s....................... 50
7.2. Estimated Effects on High-Quality Contracts of
Actual and Saturation Spending Levels for
Different Media ............................ 55
7.3. Optimal versus Actual Per-Capita Spending
Levels—Potential High-Quality Contributions
from Reallocating and Increasing Budget.......... 59
7.4. Optimal Constant-Budget Spending Levels
Conditional on Various Parameter Estimates
(Army, Early 1980s).......................... 62
7.5. Performance of Constant-Budget Spending Policies
over 500 Draws from Sampling Distributions of
Parameters (Army, Early 1980s)................. 63
8.1. Descriptive Statistics for Data for MEPS-Months
Pairs, FY 1993 Through FY 1997................. 71
8.2. Determinants of Enlistments, All Services,
FY 1993–1997 .............................. 76
8.3. Total Effects of Advertising on Enlistments, and
Average and Marginal Costs for Various Per-Capita
Spending Levels ............................ 79
ix