Evaluating Impact of Advertising Intensity on Firm Performance:Iranian Automobile and Food Industries

Debate on advertising effectiveness and its role on improving firm performance has recently been one of the top discussions in marketing. One reason of that is high advertising expenditures in business. In This study we try to evaluate impact ofadvertising intensity (ad expenditure ratio to sales) on performance and profitabilityof the automobile and food firm in Tehran stock exchange market. AnnualInformation of 25 companies (17 food companies and 8 automobile companies) has been gathered form balance sheet and financial statement. By applying unbalanced panel data with total 211 observations, we evaluated impact of advertising intensity on return on asset (ROA), profit margin and sales growth. Regressions results show thatadverting intensity is positively related to profit margin in food industry. Inautomobile industry advertising intensity has positive relationship with ROA,profit margin and sales growth. Total results in both industries show that impact ofadvertising intensity on firm performance and profitability is positive and significant. Coefficient in food industry has been estimated more than automobile industry