The Impact of Corporate Sustainability Performance on Advertising Efficiency

Advertising efficiency is a key metric in marketing and over the years several
studies reported a significant waste of advertising budget, a finding which calls for
strategies to increase advertising efficiency. While some factors, such as brand ex-
tensions or an optimal marketing mix, have already been identified as relevant de-
terminants of advertising efficiency, changes in consumer psychographics have so far
been neglected. The current study fills this gap by investigating how the emerg-
ing awareness and demand for corporate sustainability serves as a contextual factor
leveraging or hindering advertising efficiency. Furthermore, we investigate how ad-
vertising efficiency changed across various sectors from 2010 to 2019. A two-step
procedure was applied to analyze the secondary data of 1,950 observations from 195
US firms in five sectors over a period of 10 years. The resulting time series of firm-
specic multi-directional efficiency scores confirms that advertising efficiency varies
over time, justifying the relevance of a dynamic perspective for analyzing advertising
efficiency. Furthermore, in support of our main claim, the investigation of the rela-
tionship between advertising efficiency and the environmental, social and governance
performance of firms over time using a time-fixed effects panel regression confirms the
significant impact of corporate sustainability performance on advertising efficiency.
The results not only emphasize the relevance of corporate sustainability performance
in increasing advertising efficiency, but also guide marketers on strategic marketing
decisions related to the allocation of advertising budget.