Cumulative Advertising Effects: The Role of Serial Correlation*

Since its publication, Palda's 12 initial work which supported the existence of a lagged relationship between advertising expenditures and sales has been frequently discussed and criticized. That criticism has been directed at both methodological and structural issues. This paper is an attempt to answer some of the questions which have been raised regarding the structural issues concerning the role of autocorrelation in Palda's results and to develop the implications of these structural issues for the marketing manager.