Advertising and Financial Performance in the Tourism Industry: The Moderating Role of The Brand Architecture Strategy

Öz

Financial resources are considered one of the important economic resources, which need to be allocated wisely. Despite the increased interest in understanding whether advertising represents an investment or an expense, research on the link between advertising and financial performance is limited. Hence, this study aims to investigate the effect of advertising spending on both operating and market financial performance as well as to analyze the moderating role of brand architecture strategy in the tourism industry. Fixed-effects regression estimations were used to test the proposed effects based on a sample of publicly-listed hospitality firms in the US. The results show that advertising spending boosts both operating and market financial performance. Furthermore, firms applying the house-of-brands strategy were found to benefit more from the positive effects of advertising on return on equity and market value. As such, this study extends the current literature by showing that advertisement represents an investment that contributes to financial performance. Additionally, this research provides the first empirical evidence for the moderating effect of brand strategy on the advertisement and financial performance link. The f indings also provide implications for industry practitioners to make budget decisions and for investors to use advertising expenditures and brand strategy as investment criteria in investing decisions.

Anahtar Kelimeler

• Advertising
• operating performance
• market performance
• brand strategy

Kaynakça

1. Aaker, D. A. (1996). Measuring brand equity across products and markets. California Management Review, 38(3), 102-120. https://doi.org/ 102-120. 10.2307/41165845 google scholar
2. Aaker, D. A. (2004). Brand portfolio strategy: Creating relevance, differentiation, energy, leverage, and clarity. The Free Press. google scholar
3. Aaker, D. A, & JoachimsthaLer, E. (2000). Brand leadership. The Free Press. google scholar
4. Assaf, A. G., Josiassen, A., Ahn, J. S. and, & MattiLa, A. S. (2017). Advertising spending, firm performance, and the moderating impact of CSR. Tourism Economics, 23(7), 1484-1495. https://doi.org/l0.1177/l354816617704739 google scholar
5. Bahadir, S. C., Bharadwaj, S. G., & Srivastava, R. K. (2008). FinanciaL vaLue of brands in mergers and acquisitions: Is vaLue in the eye of the beholder?. Journal of MarKeting, 72(6), 49-64. https://doi.Org/l0.1509/jmkg.72.6.049 google scholar
6. Boyd, B. K., Gove, S., & Hitt, M. A. (2005). Construct measurement in strategic management research: iLLusion or reaLity?. Strategic Management Journal, 26(3), 239-257. https://doi.org/l0.1002/smj.444 google scholar
7. Chemmanur, T., & Yan, A. (2009). Product market advertising and new equity issues. Journal of Financial Economics, 92 (i), 40-65. https://doi.org/10.1016/j.jfineco.2008.02.009 google scholar
8. Chen, M. H. (2015). Cyclical effects of advertising on hotel sales, risk and return. International Journal of Hospitality Management, 46, 169-179. https://doi.Org/l0.1016/j.ijhm.2015.01.004 google scholar

9. Choi, K., Kang, K. H., Lee, S., & Lee, K. (2011). Impact of brand diversification on firm performance: a study of restaurant firms. Tourism Economics, 17(4), 885-903. https://doi.org/l0.5367/te.2011.0059 google scholar
10. Denizci, B., & Li, X. (2009). Linking marketing efforts to financiaL outcome: An expLoratory study in tourism and hospitaLity contexts. Jour-nal of Hospitality & Tourism Research, 33(2), 211-226. https://doi.org/l0.1177/l096348008329871 google scholar
11. Fan, D. X., Hsu, C. H., & Liu, A. X. (2023). Transforming brand identity to hoteL performance: The moderating effect of sociaL capitaL. Journal of Hospitality & Tourism Research, 47(7), 1270-1298. https://doi.org/l0.1177/l0963480221074278 google scholar
12. Garcîa-Gomez, C. D., Demir, E., Chen, M. H., & Dîez-Esteban, J. M. (2022). Understanding the effects of economic policy uncertainty on US tourism firms' performance. Tourism Economics, 28(5), 1174-1192. https://doi.org/10.1177/1354816620983148 google scholar
13. Gentry, R. J., & Shen, W. (2010). The reLationship between accounting and market measures of firm financiaL performance: How strong is it?. Journal of Managerial Issues, 22(4), 514-530. https://www.jstor.org/stable/25822528 google scholar
14. Hsu, L., Fournier, S., & Srinivasan, S. (2016). Brand architecture strategy and firm vaLue: how Leveraging, separating, and distancing the corporate brand affects risk and returns. Journal of the Academy of MarKeting Science, 44, 261-280. https://doi.org/10.1007/s11747-014-0422-5 google scholar
15. Hyun, S. S., Kim, W., & Lee, M. J. (2011). The impact of advertising on patrons’ emotional responses, perceived value, and behavioral intentions in the chain restaurant industry: The moderating role of advertising-induced arousal. International Journal of Hospitality Management, 30(3), 689-700. https://doi.Org/l0.1016/j.ijhm.2010.10.008 google scholar
16. Joshi, A., & Hanssens, D. M. (2010). The direct and indirect effects of advertising spending on firm value. Journal of MarKeting, 74(1), 20-33. https://doi.Org/l0.1509/jmkg.74.1.20 google scholar
17. Kang, K. H., & Lee, S. (2014). The moderating role of brand diversification on the relationship between geographic diversification and firm performance in the US lodging industry. International Journal of Hospitality Management, 38, 106-117. https://doi.org/10. 1016/j.ijhm.2013.01.001 google scholar
18. Kekre, S., & Srinivasan, K. (1990). Broader product line: a necessity to achieve success?. Management Science, 36(10), 1216-1232. https:// doi.org/10.1287/mnsc.36.10.1216 google scholar
19. Kim, J., Jun, J., & Tang, L. R. (2019). How well does advertising work on restaurant performance? A dynamic and quadratic approach. Inter-national Journal of Hospitality Management, 81, 11-20. https://doi.Org/10.1016/j.ijhm.2019.02.010 google scholar
20. Kim, J., Jun, J., Tang, L., & Zheng, T. (2018). The behavioral and intermediate effects of advertising on firm performance: An empirical investigation of the restaurant industry. Journal of Hospitality & Tourism Research, 42(2), 319-337. https://doi.org/10.1177/ 1096348015597031 google scholar
21. Kim, H. B., & Kim, W. G. (2005). The relationship between brand equity and firms' performance in luxury hotels and chain Restaurants. Tourism Management, 26(4), 549-560. https://doi.Org/l0.1016/j.tourman.2004.03.010 google scholar
22. Kim, J., Kim, J., Lee, S. K., & Tang, L. R. (2020). Effects of epidemic disease outbreaks on financial performance of restaurants: Event study method approach. Journal of Hospitality and Tourism Management, 43, 32-41. https://doi.org/10.1016/jjhtm.2020.01.015 google scholar
23. Kivetz, R., & Zheng, Y. (2017). The effects of promotions on hedonic versus utilitarian purchases. Journal of Consumer Psychology, 27(1), 59-68. https://doi.org/l0.1016/jjcps.2016.05.005 google scholar
24. Landes, E. M., & Rosenfield, A. M. (1994). The durability of advertising revisited. The Journal of Industrial Economics, 42(3), 263-276. https://doi.org/10.2307/2950569 google scholar
25. Luo, X., & de Jong, P. J. (2012). Does advertising spending really work? The intermediate role of analysts in the impact of advertising on firm value. Journal of the Academy of MarKeting Science, 40, 605-624. https://doi.org/10.1007/s11747-010-0240-3 google scholar
26. Markowitz, H. (1952). Portfolio selection, Journal of Finance, 7(i), 77-91. google scholar
27. McAlister, L., Srinivasan, R., Jindal, N., & Cannella, A. A. (2016). Advertising effectiveness: The moderating effect of firm strategy. Journal of MarKeting Research, 53(2), 207-224. https://doi.org/l0.1509/jmr.13.0285 google scholar
28. Mizik, N. and, & Jacobson, R. (2008). The financial value impact of perceptual brand attributes. Journal of MarKeting Research, 45(1), 15-32. https://doi.org/l0.1509/jmkr.451.015 google scholar
29. Morgan, N. A., & Rego, L. L. (2009). Brand portfolio strategy and firm performance. Journal of MarKeting, 73(i), 59-74. https://doi.org/10. 1509/jmkg.73.1.059 google scholar
30. Ozdemir, O., Erkmen, E., & Demirciftci, T. (2019). The effect of brand diversification on IPO returns: An examination of restaurant IPOs. Journal of Foodservice Business Research, 22(6), 483-508. https://doi.org/l0.1080/l5378020.2019.1653150 google scholar
31. Park, K., & Jang, S. S. (2012). Duration of advertising effect: Considering franchising in the restaurant industry. International Journal of HospitalitY Management, 31(1), 257-265. https://doi.Org/l0.1016/j.ijhm.2011.05.001 google scholar
32. PergeLova, A., & AnguLo-Ruiz, F. (2017). Comparing advertising effectiveness in South-American and North-American contexts: testing Hofstede's and IngLehart's cultural dimensions in the higher education sector. International Journal of Advertising, 36(6), 870-892. https://doi.org/10.1080/02650487.2017.1364032 google scholar
33. Peterson, R. A., & Jeong, J. (2010). ExpLoring the impact of advertising and R&D expenditures on corporate brand value and firm-Level financial performance. Journal of the AcademY of Marketing Science, 38, 677-690. https://doi.org/10.1007/s11747-010-0188-3 google scholar
34. PetromiLLi, M., Morrison, D., & MiLLion, M. (2002). Brand architecture: BuiLding brand portfolio value. StrategY & Leadership, 30(5), 22-28. https://doi.org/10.1108/10878570210442524 google scholar
35. Qi, R., Cârdenas, D. A., Mou, X., & Hudson, S. (2018). The strategic value of advertising expenditures in the tourism and hospitality industry. Tourism Economics, 24(7), 872-888. https://doi.org/l0.1177/l354816618786845 google scholar
36. Rao, V. R., AgarwaL, M. K., & DahLhoff, D. (2004). How is manifest branding strategy reLated to the intangibLe vaLue of a corporation?. Journal of Marketing, 68(4), 126-141. https://doi.Org/l0.1509/jmkg.68.4.126.42735 google scholar
37. Rust, R. T., AmbLer, T., Carpenter, G. S., Kumar, V., & Srivastava, R. K. (2004). Measuring marketing productivity: Current knowLedge and future directions. Journal of Marketing, 68(4), 76-89. https://doi.Org/l0.1509/jmkg.68.4.76.42721 google scholar
38. Rust, R. T., Moorman, C., & Dickson, P. R. (2002). Getting return on quaLity: revenue expansion, cost reduction, or both?. Journal of Marketing, 66(4), 7-24. https://doi.Org/l0.1509/jmkg.66.4.7.18515 google scholar
39. SeLLers-Rubio, R., & CaLderon-Martînez, A. (2021). Brand strategy scope and advertising spending: The more the better?. Tourism Economics, 27(i), 70-85. https://doi.org/l0.1177/l354816619882135 google scholar
40. Servaes, H., & Tamayo, A. (2013). The impact of corporate sociaL responsibiLity on firm vaLue: The roLe of customer awareness. Manage-ment Science, 59(5), 1045-1061. https://doi.org/l0.1287/mnsc.1120.1630 google scholar
41. Sheth, J. N., & Sisodia, R. S. (2002). Marketing productivity: issues and analysis. Journal of Business Research, 55(5), 349-362. https://doi. org/l0.1016/S0148-2963(00)00164-8 google scholar
42. Shah, S. Z., & Akbar, S. (2008). VaLue reLevance of advertising expenditure: A review of the Literature. International Journal of Management Reviews, 10(4), 301-325. https://doi.org/l0.111l/j.1468-2370.2007.00228.x google scholar
43. Spence, M. (1973). Job market signaling. The QuarterlY Journal of Economics, 87(3), 355-374. google scholar
44. Tajeddini, K., & Ratten, V. (2020). The moderating effect of brand orientation on inter-firm market orientation and performance. Journal of Strategic Marketing, 28(3), 194-224. https://doi.org/l0.1080/0965254X.2017.1293138 google scholar
45. Tosi Jr, H. L., & SLocum Jr, J. W. (1984). Contingency theory: Some suggested directions. Journal of Management, 10 (i), 9-26. https://doi. org/10.1177/014920638401000103 google scholar
46. Wang, Y. C., & Chung, Y. (2015). HoteL brand portfoLio strategy. International Journal of ContemporarY HospitalitY Management, 27(4), 561-584. https://doi.org/l0.1108/IJCHM-01-2014-0031 google scholar
47. Vogus, T. J., & WeLbourne, T. M. (2003). Structuring for high reliability: HR practices and mindful processes in reliability-seeking organi-zations. Journal of Organizational Behavior, 24(7), 877-903. https://doi.org/10.1002/job.221 google scholar