Coordinating and controlling advertising strategy within contractual
and administered vertical marketing systems (VMSs) can be a complex task
given the number of channel members involved in the process. Quite often
thousands of intermediaries are involved at different levels each with
their own objectives and areas of responsibility. Conflict within a VMS
can arise when dealers/distributors consider the advertising efforts
of the sponsoring organization to be ineffective and vice versa. One of
the major issues involves how to allocate the advertising budget
throughout the VMS so as to generate the greatest return. To this end we
report the results of a study comparing the current and lagged effects of
national-sponsor advertising to that of local and regional sponsors within
one of the more prominent contractual VMS in the United States—the
automobile industry. Using a direct aggregation approach to model
advertising carryover at both the industry and individual brand level
provides useful information for making decisions regarding the allocation
of advertising budgets.