Author(s): Tejasvita Singh
During past few years there is a constant increase in the advertising expenditure by the Indian firms and India is becoming a good market for advertisers. In 2018, according to the report of Pitch Madison Advertising Report (PMAR), the expected growth rate for Indian advertising market was 12.03% but the market takes off with 14.6%, therefore it becomes essential to evaluates this expenditure incurred by the different Indian firms in advertising. The present endeavour evaluates the spending on advertising of top 50 Indian advertisers (rank is based for the year 2017) for the time period of 2013 to 2017. This study aims at identifying the efficiency of top Indian advertising spending firms by using a non-parametric analytical tool i.e., data envelopment analysis technique. This technique is an analytical tool which can be used to evaluate the efficiencies in terms of Organization Efficiency (OE), Managerial Level Efficiency (MLE) and Scale Efficiency (SE) for each firm in different time periods under consideration. DEA is a tool which is capable of handling more than one input and output at once and builds an efficient frontier for benchmarking. Present study deals with advertising expenditure as an input variable and corresponding sales of a company as an output variable. The data related to top 50 advertisers has been obtained from PMAR, while facts and figures related to input and output variables were obtained from prowess software data base maintained by CMIE (Centre for Monitoring Indian Economy). From 50 firms, present study took a sample of 36 firms for the analysis, as the data related to advertising expenditure and corresponding sales was not available for those firms which are eliminated from the present study. Further, the study considered a time period of five years from 2013 to 2017.The study reveals that on an average only 3% (approx) companies in terms of OE and only 8% (approx) in terms of ME are efficiently managing their advertising budget with their corresponding sales. Empirical results of this study also indicate that the firms need to reduce their advertising expenditure by almost 60% (approx) in order to become efficient while maintain same level of output.