The Cost-Effectiveness of Military Advertising: Evidence from 2002-2004
RAND CORP SANTA MONICA CA
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The four military Services spent over 600 million on recruiting advertising in 2007. This represents a 150 percent increase since the 1999 fiscal year FY. In addition, the mix of advertising programs has changed significantly. In particular, the Army share of traditional advertising primarily print, radio, and television advertising has gone down relative to the other Services, especially the Air Force and Marine Corps. In addition, all the Services are spending relatively more on new advertising vehicles, namely, the Internet and cable television. These patterns in the data suggest several policy questions worthy of investigation. First, does all this spending on advertising produce enlistments On a marginal cost basis, how does advertising compare with such alternatives as bonuses or adding more recruiters Which Service programs are most effective Does this depend on the size or mix of the budget Finally, what are the inter-Service effects Has the increase in the Air Force and Marine Corps budgets harmed the Armys andor Navys recruiting efforts These questions are addressed in an econometric analysis of military enlistments. Using data on advertising expenditures for the 2002-2004 time period, the study controls for other factors such as recruiters, bonuses, the local economy, demographic changes, and the mission and isolates the impact of advertising on active-duty enlistments. The results for the Army indicate that advertising remains a very effective recruiting tool. At spending levels that prevailed during 2000-2002, contracts increased annually by about 13,000. With expansions in the budget, the marginal advertising cost of a contract was about 10,000. In contrast, the cost from adding recruiters was 15,000. The cost from increasing bonuses, even if targeted effectively, was over 90,000.
- Economics and Cost Analysis
- Personnel Management and Labor Relations
- Military Forces and Organizations