The Economic Impact Analysis of Advertising in the Republic of Kosovo

• Pages: 23-35

Vo

l. 7 N

o

. 1

M

arch

,

202

1

ISS

N 2410-391

8

A

cces on

l

ine at www.ii

p

cc

l

.or

g

2

3

A

cademic Journal o

f

Business,

A

dministration, Law and Social Sciences

II

PCCL Publishin

g

, Graz-

A

ustria

The

E

conomic

I

mpact

A

nal

y

si

s

of Advertisin

g

in the Republic of Kosov

o

Don

j

eta Ze

j

nullahu Pllan

a

Department o

f

Marketing, Faculty o

f

E

conomics,

U

niversity o

f

Tetova, North Macedonia

Ab

str

a

ct

T

he study aims to analyze the economic impact of advertising in the Republic of Kosovo. This

a

im is achieved through (1) an analysis of the direct ef‌f ects of advertising on the economy

(the impact of advertising on company sales and the impact of advertising on customer brand

l

oyalty); and (2) an analysis o

f

the indirect e

f‌f

ects o

f

advertising on the economy that includes

a

n analysis of the impact of advertising spending on the prof‌i tability of banks in Kosovo. This

s

ection includes an analysis of the eight largest banks in the country and the data used cover

the period 2011-2018. The study f‌i ndings speak of a signif‌i cant positive impact of advertising

on the economy of Kosovo, both directly as well as indirectly.

I

n general, companies spending

m

ore on advertising, achieve be er f‌i nancial performance, such as higher sales and higher

p

rof‌i tability and thus they have a positive impact on the relevant industry and the economy

i

n

g

eneral.

Ke

y

words

:

A

dvertising,

A

dvertising Spending,

E

conomic

E

f‌f ects, Sales, Prof‌i tability.

I

ntr

odu

ct

io

n

I

n terms o

f

advertising, it can be claimed that it is a

p

rominent

f

eature in economic li

f

e.

Ad

vertising reac

h

es consumers t

h

roug

h

te

l

evision, ra

d

io, news

p

a

p

ers, magazines,

mai

lb

oxes, emai

l

s, etc.

I

t is not sur

p

rising t

h

at s

p

en

d

ing in a

d

vertising continues to

b

e enormous

f

rom

y

ear to

y

ear.

S

ince it has existed, advertising has had a great role and im

p

act on the econom

y

o

f

a countr

y

, thus a

f‌f

ecting man

y

o

f

the most im

p

ortant macroeconomic com

p

onents.

H

owever, it is sur

p

rising how economists o

f

the 19

th

centur

y

, an

d

even ear

l

ier,

h

ave

p

aid so li le a ention and im

p

ortance to the stud

y

o

f

this

f‌i

eld. The stud

y

o

f

advertising

f

rom an economic

p

oint o

f

view is entirel

y

a ste

p

taken in the 20t

h

centur

y

.

T

he reason wh

y

advertising was not anal

y

zed

f

rom an economical

p

ers

p

ective be

f

ore

th

e

2

0

t

h

c

entur

y

ma

y

be because 19t

h

c

entur

y

economic research was

p

rimaril

y

f

ocused

o

n develo

p

ing a theor

y

o

f

p

er

f

ect com

p

etition, and at that time such a theor

y

did

n

ot envision a role

f

or advertising. S

p

eci

f‌i

call

y

, the anal

y

sis o

f

advertising

f

rom an

e

conomic

p

ers

p

ective began with Marshall (1890, 1919) and then continued with

C

hamberlin (1933), thus making the second hal

f

o

f

the 2

0

t

h

centur

y

s

h

ow a ra

p

i

d

advancement in economic anal

y

sis o

f

advertising.

P

erha

p

s the main role o

f

advertising in the econom

y

is related to the advertising

s

p

ending, or in other words to the ex

p

enditure incurred b

y

com

p

anies to advertise the

p

roducts/services the

y

of‌f er. It is

q

uite sim

p

le to argue that this

p

art of organizational

i

nvestment would not exist i

f

the advertising industr

y

through which

p

roducts and

services are

p

romoted did not initiall

y

exist.

I

n man

y

as

p

ects it can be stated that the

advertising industr

y

is the backbone o

f

a large

p

art o

f

the econom

y

, in

f‌l

uenced b

y