2727Copernican Journal of Finance & Accounting e-ISSN 2300-3065 p-ISSN 2300-12402024, volume 13, issue 1 Date of submission: November 24, 2023; date of acceptance: March 1, 2024. * Contact information: collins.ngwakwe@ul.ac.za, Turfloop Graduate School of Leadership, University of Limpopo, Webster Street, Polokwane, South Africa, phone: +27152684252; ORCID ID: https://orcid.org/0000-0002-6954-8897. Ngwakwe, C.C. (2024). Differential Effect of Advertising Frequency on Sales Turnover and Ads to Sales Ratio. Copernican Journal of Finance & Accounting, 13(1), 27–42. http://dx.doi. org/10.12775/CJFA.2024.002 collins c ngwakwe* University of Limpopo differential effect of advertising frequency on sales turnover and ads to sales ratio Keywords: accounting ratio, Ads to Sales Ratio, sales turnover, advertising and finance, repeated Ads. J E L Classification: D25, M4, M41, M3, M37. Abstract: This paper analysed the differential impact of repeated advertising on sales turnover and the attendant effect on accounting Ads to Sales Ratio. The paper adopts a quantitative approach and collects marketing and promoting expenditure data (as proxy for Ads activity) from Amazon Company for twenty years (2003 – 2022). The data was analysed by using the t-test of mean difference statistics and a simple regression. The t-test analysis showed that the Ads to Sales Ratio had a significant increase be- tween two periods of comparison (2003-2012 and 2013-2022); in the same vein, there was a significant increase in mean net sales value by up to nine hundred percent – an increase which dwarfs the hundred percent increases in the Ads to Sales Ratio over the period. Furthermore, a simple regression analysis shows that marketing expendi- tures (used as proxy for Ads activity) produced a highly significant positive effect on net sales at a P-value of less than P<0.00001. This finding shows that current literature suggestion that increased Ads may wane consumer brand patronage may not be appli- cable to all industries, rather, this paper’s result indicates that for companies such as Amazon, increased Ads, or marketing and promotion activities may produce high net sales in some companies such as Amazon. The paper contributes by developing a pro- cess framework for repeated advertisement, Ads to Sales Ratio and net sales. It recom- Collins C Ngwakwe2828 mends further application of the proposed framework in related companies by future researchers.  Introduction Introduction The cost of advertising remains a contentious issue amongst chartered ac- countants and/or chief financial officers; this is because whether it is capital- ised or recognised and written off against revenue as it is incurred, the cost of advertising remains an important accounting costs given the intangible but im- portant impact on both current and future profits of a company including the quagmire about the tax benefit recognition (Maples & Earles, 1999). Hence, the accounting intricacy associated with advertisement expenses makes it imper- ative to consider whether repetitive advertisement really attracts benefits or loss for the company (Verma, 2009). Advertising expenses features prominently as a vital element of operat- ing expenses in the accountant’s financial accounts and in some management accounting analysis (Mun & Jan, 2018; Enache & Srivastava, 2018; Matsuoka, 2020). However, accounting research seldom dwells on advertising expenses and the attendant ramifications on sales revenue. However, there is a grad- ual shift in moder accounting research where some scholars have begun to consider advertising expenditure and/or investment phenomena as impera- tive toward bolstering the strategic decision-making of chief financial officers, marketing managers, production mangers and other managers in the corpora- tion. Perhaps the importance of advertising expenditures and their effective- ness have become more profound in contemporary fourth industrial revolu- tion, where information technology with attendant artificial intelligence and digital marketing has brought unprecedent disruptions and/or innovations in product advertising investments and their various modes of communication (Matsuoka, 2020). One of the extant research that looked at advertising expen- ditures effect include the paper in the Copernican Journal of Finance and Ac- counting, which focussed on the effect of intangible corporate factors on prof- itability – where intangible includes advertising expenses (Kaymaz, Yilmaz & Kaymaz, 2019). The importance of advertising in accounting decision making and hence the significance of this paper is highlighted in a Harvard Business Review paper, which highlighted the shortsighted view of advertising expenditure by man- agement where emphasis seem to focus more on the impact on short-term prof- diffErEntial EffECt of advErtising frEquEnCy on salEs turnovEr… 2929 it and loss accounts. Rather it is advised that management’s view of advertising expenditure should be more of as capital investment whose financial benefits in form of sales revenue would be generated over time in a stream of flows (Dhalla, 1978). Whilst some business executives might seem bewildered by disruptions caused by the digital world regarding product communications and the expen- ditures thereof, the industrial and commercial ecosystem under the current digital world also requires expenditure and/or investment adaptation regard- ing product promotions albeit emerging new forms of product promotion meta- morphosis catalysed by bourgeoning technology. No business can afford to lag as this would mean loss of dire market niche and revenue. Hence, the question by modern corporate executives is whether advertising expenditure or invest- ment still pays off in terms of returning commensurate sales turnover. Answer- ing this question is of vital value to managers as they grapple with growing stiff competition in the fluctuating market environment. Although there is myriad of impacts which advertising investment might have on overall corporate financial performance, the objective of this paper is to evaluate the differential effect of advertising frequency on sales turno- ver. The objective is driven by a problem, which emanates from a very recent empirical study, which reveals that repeated advertising may lead to a loss of consumer patronage, hence loss of sales revenue (Tremor International, 2023). This paper thus attempts to evaluate further applicability of this finding on ad- vertisement to sales ratio (Ads to Sales Ratio) to provide additional information on how adverts may impact on sales revenue and Ads to Sales Ratio using ex- tended company data drawn from financial reports. The paper contributes to extant research given its unique model which shifts slightly from the dominant models which have focussed more on adver- tising expenditure with little focus on advertising frequency and the effect on sales and extension to Ads to Sales Ratio. The paper thus provides practical in- dustry value to Chief Financial Officers (CFOs) with important information to- wards advertising investment decisions to consider investment in advertising expenditure as an important driver of sales revenue flow – hence for companies such as the Amazon Company, a sustained investment in advertising, or mar- keting and promotion should be an important subset of corporate expenditures planning to reap the benefits on sales that should span over many years (Wang, Zhang & Ouyang, 2009; Dhalla, 1978). Collins C Ngwakwe3030 Methodology and the research processMethodology and the research process This paper applies a mix of literature review, quantitative analysis of data and framework (or model development) process (Figure 1). The method is in align- ment with the paper’s objective, which is to analyse the effect of repeated ad- vertisement (advert activity) on sales revenue and on Ads to Sales Ratio. The paper used a close proxy for advertisement activity, which is marketing and promotion expenditure to represent repeated Ads activity. Hence, the paper used real-life company data on marketing and promotion expenses and net sales revenue from the Amazon Company financial statements for twenty years (2003 – 2022) (Amazon, 2024). The data were analysed using the t-test of dif- ference in means and the simple regression. The analysis follows recent litera- ture findings, which revealed a sixteen percent (16%) reduction in consumers purchase intention of brands after being expose to repeated advertisement of the brand (Tremor International, 2023). Accordingly, the paper used the mar- keting expense data (proxy for Ads activity) and net sales revenue for twenty years from Amazon to evaluate how marketing and promotion expenses from the Amazon has affected sales revenue and Ads to Sales Ratio over the twenty- year period. Literature reviewLiterature review In their view on the importance of advertising, Dhalla (1978), stresses that it is important for both newly founded and existing firms to use advertising. For these companies, it becomes even more important because it is essential to building client loyalty and improving brand recognition. In essence, advertising fosters the development of goodwill, an intangible asset. Furthermore, Dhalla (1978) notes that antitrust economists, who generally dislike advertising, hold this same viewpoint whilst contending that the physical capital needed for in- frastructure and equipment can be just as formidable an entry barrier as brand franchise, which is developed through significant investments in mass media (Dhalla, 1978). Although some research finds advertising expenditure to not necessarily catalyse revenue growth (Hossain & Islam, 2019), but others find product promotion as a catalyst that may spur revenue (Abdullahi 2015; Hos- sain & Islam, 2019). In their search for potential correlation, Abdullahi (2015) evaluated the impact of advertising on profitability and sales revenue. Using diffErEntial EffECt of advErtising frEquEnCy on salEs turnovEr… 3131 the OLS statistics, their first hypothesis test revealed that there isn’t a statisti- cally significant positive correlation between the companies’ sales income and their advertising expenses. On the other hand, the results of the second hypoth- esis test showed a strong positive link between advertising and the companies’ profitability. Thus, this study concluded that advertising is an important com- munication tool that affects business performance in a variety of ways. In other related research, Hossain and Islam (2019) found a negative rela- tionship between advertising and sales revenue, and a positive association be- tween sales incentives, revenue and profit (Hossain & Islam, 2019). The impact of advertising costs on Taiwanese hotels’ sales, profitability, risk, and returns is examined by (Chen, 2015). They also investigated whether the economic cy- cle affects how advertising costs impact hotel sales, profitability, risk, and re- turns. Their panel regression test’s show that, in terms of occupancy rate and revenue per available room, the ratio of advertising costs to total assets signif- icantly increases hotel sales revenue. This finding is close to the findings of Ji (2017), who found that advertising expenditure has a significant positive effect on sales. On the other hand, Chen (2015) results show that regarding return on equity and return on assets, advertising expenditure has no appreciable im- pact on hotel profitability. The inverted U-shaped link between advertising ex- penses and occupancy is curvilinear (Chen, 2015). Like the foregoing findings, another related study by Kaymaz et al. (2019) evaluated the impact of intangi- ble factors such as sales expenses on profitability in Muscat Securities Market listed companies; they found a positive relationship between intangible factors (such as advertising expenses) and profitability. This finding corroborates the finding by Akan (2016) which found that investment in advertising assists to maximise discounted profits over a long-term period. Following the uncertainties expressed in some empirical results, some re- searchers have rather considered the long-term effect of advertising expen- ditures, which highlights the need to look beyond the immediate short-term when investing on advertising (Wang et al., 2009; Leong, Ouliaris & Franke, 1996; Chemmanur & Yan, 2019; Kim, Jun & Tang, 2019). Other researchers such as Wang et al. (2009) investigated how advertising affects a company’s intangible assets by analysing the relationship between ad- vertising and business value through the usage of consumer-based brand equi- ty marketing research, which challenges the conventional assumption utilized in accounting and finance disciplines. Wang et al. (2009) used techniques and financial data to create new metrics to evaluate how well advertising creates Collins C Ngwakwe3232 intangible brand value. Their results support the idea that advertising expens- es have qualities like those of an asset or investment by indicating that adver- tising has cumulative and sustainable effects on a company’s intangible assets. Wang et al. (2009) study also shows how different companies are at building brand equity through advertising and offers an empirical approach for assess- ing long-term advertising performance. In their further analysis of the long term implication of advertising expenditure, Leong et al. (1996) highlights that when estimating the long-term effects of one variable on another, co-integra- tion econometrics provide a number of theoretical advantages over standard methods. They opine that rather than relying on conclusions from short-term relationships, it is possible to directly evaluate the long-term effects by es- tablishing possible co-integration between advertising and sales data. Hence, Leong et al. (1996) presents a method for identifying and estimating co-inte- grating relationships using conventional least-squares regression algorithms. Their application and analysis of the Lydia Pinkham data, which spans 1907 to 1961, reveals a strong, positive correlation between sales and Lydia Pinkham’s advertising over the long run. Another related study on the short and long-term effects of advertising on stock returns was carried out by (Chemmanur & Yan, 2019). Even after adjust- ing for other price predictors like size, book-to-market, and momentum, the analysis showed that a higher level of advertising is associated with a better stock return in the year of advertising but a lower stock return in the following year. The researchers postulated that throughout the advertising year, inves- tors’ attention is drawn to the company’s stock, causing the stock price to rise. But eventually, the attention that it garners fades, and the stock price drops the next year. This theory was evaluated in the study, and consistent results showed that advertising raises a company’s visibility among investors with the possibility of raising stock returns with more increases in advertising. Kim et al. (2019) looked at both quadratic and dynamic connections in their investigation of the relationship between restaurant performance and adver- tising. Using stock value, sales, and profitability as performance metrics, the researchers analyzed data from 137 public restaurant companies in the Unit- ed States between 1991 and 2016 using three stage least squares estimate. Their findings showed that the impact of advertising varied according on the amount spent, with spending on advertising having a quadratic influence on all three variables. Furthermore, the research revealed noteworthy correla- tions among sales, profitability, and advertising expenditure, underscoring diffErEntial EffECt of advErtising frEquEnCy on salEs turnovEr… 3333 the fluidity of these variables in the restaurant sector. Restaurant managers are urged to consider their performance goals and the evolving efficacy of ad- vertising in light of these findings. In a similar research pursuit, Lee, Kim and Rhee (2021) developed a model which they applied to evaluate the effect of marketing strategic decisions and financial performance. Using data from the Korean franchise chains, their results indicate that promotion and advertising expenses show a positive effect on financial performance – which thus suggest that advertising and promotion investment has the propensity to impact a bal- anced business profitability (Lee, Kim & Rhee, 2021). The improved perfor- mance effect of advertising is echoed by Mani, Thiyagarajan, Azhaguraja and Janakiraman (2022), who indicates particularly that modern medium of ad- vertising may possess the propensity to increase companies return on invest- ment. They highlight that social media advertising has particularly proven to improve companies’ sales performance. Furthermore, in response to the bourgeoning effect of artificial intelligence in business and other human endeavour, the effect of artificial intelligence (AI) has also been brought to the fore in contemporary accounting, finance, and business literature. Accordingly, in their research on the role of AI on advertising, Qin and Jiang (2019) opine that traditional advertising approaches cannot keep up with the growing demand for advertising in the burgeoning e-commerce sector. Artifi- cial Intelligence (AI) platforms and advertisers are using these technologies to increase efficiency and meet consumer demands. Qin and Jiang (2019) gathered insights into the use of AI technology in advertising through their five years of observations in the Chinese advertising sector. In their conclusion, Qin and Ji- ang (2019) propose that the four main elements of the AI-powered advertising process are: ad design, media planning and buying, ad impact evaluation, and consumer insight finding. This cutting-edge advertising strategy is tool-based, synchronized, and incredibly successful. It is supported by a data-driven plat- form with algorithms at its heart (Qin & Jiang, 2019). In relation to AI influence on customer behaviour and engagement, Du, Zhang and Ge (2023) opine that AI Generated Content Advertising exert significant positive influence on customer behavioural engagement with products. Other researchers have thus tried to analyse if and how advertising affects customer decisions to buy service offerings (Ali, 2021). Accordingly, in their survey study of the effect of advertisement on students’ choice of higher edu- cational institute, Ali (2021) found that advertisements of academic offerings Collins C Ngwakwe3434 made in the social media and television had a significant impact on students’ choice and on the number of student customers. Similarly, Verma (2009) con- ducted a study to investigate how contextual and repeating ads affect customer behaviour. A connection between contextual commercials and consumer pur- chase decisions as well as a link between repeating advertisements and con- sumer buying decisions were established by the study using a Chi-square test. Their findings of the Kendall tau-b test also showed a negative correlation be- tween paying attention to commercials, being persuaded to buy, and continu- ing to support repeat and contextual marketing. This current paper contributes to the existing literature by contributing a process framework of effect of repeated advertisement on accounting Ads to Sales Ratio and net sales. It examines the uncertain phenomenon of Ads ver- sus sales turnover by expanding the dependent variable through the analysis of how Ads activity constitute a joint effect on sales turnover and Ads to Sales Ratio by using real company data from Amazon company spanning a period of twenty years. Results and conclusions of the research processResults and conclusions of the research process A foundation for the paper’s statistical analysis is based on the author’s devel- opment of horizontal impact framework of repeated advertising, sales turnover, and Ads to Sales Ratio (in Figure 1). The implication of this paper’s framework is fundamental for theory, academia and practice because whereas convention- al literature holds that increase in Ads to Sales Ratio or increase in repeated Ads may connote weak returns of advertising, promotions and/or marketing expenditures to overall net sales revenue (Tremor International, 2023), this pa- per demonstrates that in some instances like in this case of Amazon, increase in their marketing and promotion expenditures led to increases in their Ads to Sales Ratio and also led to a significant increase in their net sales revenue con- tinuously over the twenty years period examined in this paper (2003 – 2022). Importantly, the increase in their net sales outweighs the increase in their Ads to Sales Ratio. This performance thus shows that some industries such as Am- azon in this study may experience more sales returns as they engage and in- vest more in their sales promotion and marketing expenses; the findings of this study demonstrates that increases in Ads or marketing and promotion activity can be a worthwhile investment for companies such as Amazon or the likes of diffErEntial EffECt of advErtising frEquEnCy on salEs turnovEr… 3535 Amazon. Accordingly, since this paper used Amazon’s data for analysis, further research may consider using other companies that are similar to the business of Amazon to evaluate the possibility of replicating the findings of this paper. Hence, this paper develops a framework (Figure 1), which is in alignment with the findings of the analysis results in Table 1 to Table 5. Figure 1. A Process Framework of Effect of Repeated Advertisement on Accounting Ads to Sales Ratio and Net Sales RESULTS AND CONCLUSIONS OF THE RESEARCH PROCESS A foundation for the paper’s statistical analysis is based on the author’s development of horizontal impact framework of repeated advertising, sales turnover, and Ads to Sales ratio (in Figure 1). The implication of this paper’s framework is fundamental for theory, academia and practice because whereas conventional literature holds that increase in Ads to sales ratio or increase in repeated Ads may connote weak returns of advertising, promotions and/or marketing expenditures to overall net sales revenue (Tremor International, 2023), this paper demonstrates that in some instances like in this case of Amazon, increase in their marketing and promotion expenditures led to increases in their Ads to sales ratio and also led to a significant increase in their net sales revenue continuously over the twenty years period examined in this paper (2003 – 2022). Importantly, the increase in their net sales outweighs the increase in their Ads to sales ratio. This performance thus shows that some industries such as Amazon in this study may experience more sales returns as they engage and invest more in their sales promotion and marketing expenses; the findings of this study demonstrates that increases in Ads or marketing and promotion activity can be a worthwhile investment for companies such as Amazon or the likes of Amazon. Accordingly, since this paper used Amazon’s data for analysis, further research may consider using other companies that are similar to the business of Amazon to evaluate the possibility of replicating the findings of this paper. Hence, this paper develops a framework (Figure 1), which is in alignment with the findings of the analysis results in Table 1 to Table 5. Figure 1. A Process Framework of Effect of Repeated Advertisement on Accounting Ads to Sales Ratio and Net Sales Source: author’s framework. To provide a quantified demonstration of the above framework, the author used marketing and promotions expenditure (as proxy for Ads activity) and net sales revenue from the Amazon company for twenty years covering 2003 to 2022. Accordingly, Table 1 presents repeated Ads exposures attracts brand interest repeated Ads elicits purchase intention increase in Ads to Sales Ratio increase in net sales turnover increase in net sales turnover outweighs increase in Ads to Sales Ratio S o u r c e : author’s framework. To provide a quantified demonstration of the above framework, the author used marketing and promotions expenditure (as proxy for Ads activity) and net sales revenue from the Amazon company for twenty years covering 2003 to 2022. Accordingly, Table 1 presents the Net Sales and Marketing Expenses for The Amazon Company. The Amazon data in Table 1 is subsequently used to prepare the Ads to Sales Ratio in Table 2. Thereafter, Table 3, Table 4 and Ta- ble 5 presents the t-test of difference in net sales revenue between previous ten years of Amazon (2002 – 2012) and current ten years of Amazon (2013 – 2022) (see Table 3), t-test of difference in Ads to Sales Ratio between previous ten years of Amazon (2002 – 2012) and current ten years of Amazon (2013 – 2022) (see Table 4), and simple regression of the effect of marketing expenses on net sales revenue (Table 5). The t-test statistics of difference in mean (Table 3) shows a significant mean difference in net sales revenue between previous ten years of Amazon (2002 – 2012) and current ten years of Amazon (2013 – 2022). The difference is in net sales highly significant at P=0.0003 (in one-tail test) and P=0.0003 (in two-tail test), which shows high net sales during periods of higher marketing expendi- ture. Similarly, (Table 4) shows a significant mean difference in Ads to sales ra- Collins C Ngwakwe3636 tio between previous ten years of Amazon (2002 – 2012) and current ten years of Amazon (2013 – 2022). The difference Ads to Sales Ratio is highly significant at P=0.0004 (in one-tail test) and P=0.0009 (in two-tail test). Contrary to some recent empirical research, which finds that repeated Ads may wane consum- er brand patronage (Hossain & Islam, 2019; Tremor International, 2023), this current analysis shows that comparatively, the Ads to Sales Ratio increased by (100 percent) between previous ten years of Amazon (2002 – 2012) and cur- rent ten years of Amazon (2013 – 2022). In contrast, the net sales revenue in- creased by (over 900 percent) between previous ten years of Amazon (2002 – 2012) and current ten years of Amazon (2013 – 2022). This indicates that, for some companies such as the Amazon, increases in Ads (using marketing & pro- motions expenses as proxy) may provide a high booster to sales revenue. A fur- ther test, which uses the simple regression (Table 5), shows that marketing expense has a highly significant and positive effect on net sales revenue of Am- azon Company. This is a further confirmation, that increase in Ads activity (us- ing marketing expenses as proxy) has a high propensity of boosting net sales in a company like Amazon used in this paper. The practical and theoretical im- plications is that for companies such as Amazon, which uses much of online sales, increasing Ads or marketing promotions may catalyse a good return on investment. Theoretically, this finding indicates the need for researchers and academics delineate between companies with dominant online sales outlet and companies with dominant physical location sales outlet when studying the ef- fect of Ads activity on sale revenue. Table 1. Net Sales and Marketing Expenses (Amazon) TEN YEARS 2013 - 2022 TEN YEARS 2003 - 2012 MARKETING EXPENSES ($M) 2013-2022 NET SALES($M) MARKETING EXPENSES ($M) 2003-2012 NET SALES ($M) 3045 74452 122 5263 4207 88988 158 6921 5062 107006 192 8490 7233 135987 259 10711 10069 177866 336 14835 13814 232887 469 19166 diffErEntial EffECt of advErtising frEquEnCy on salEs turnovEr… 3737 TEN YEARS 2013 - 2022 TEN YEARS 2003 - 2012 MARKETING EXPENSES ($M) 2013-2022 NET SALES($M) MARKETING EXPENSES ($M) 2003-2012 NET SALES ($M) 18878 280522 660 24509 22008 386064 2340 34204 32551 469822 1591 48077 42238 513983 1002 61093 S o u r c e : Amazon 2003 – 2022 Annual Reports (Amazon, 2024). Table 2. Analysis Of Ads to Sales Ratio 2003-2012 ADS TO SALES RATIO 2013-2022 ADS TO SALES RATIO 0.023 0.041 0.023 0.047 0.023 0.047 0.024 0.053 0.023 0.057 0.024 0.059 0.027 0.067 0.068 0.057 0.033 0.069 0.016 0.082 S o u r c e : author’s Analysis with data from Table 1 (Amazon, 2024). Key to Table 2: Ads to Sales Ratio (advertising to sales ratio): is calculated as follows (with data from Table 1): 4207 88988 158 6921 5062 107006 192 8490 7233 135987 259 10711 10069 177866 336 14835 13814 232887 469 19166 18878 280522 660 24509 22008 386064 2340 34204 32551 469822 1591 48077 42238 513983 1002 61093 Source: Amazon 2003 – 2022 Annual Reports. (Amazon, 2024). Table 2. Analysis Of Ads to Sales Ratio 2003-2012 ADS TO SALES RATIO 2013-2022 ADS TO SALES RATIO 0.023 0.041 0.023 0.047 0.023 0.047 0.024 0.053 0.023 0.057 0.024 0.059 0.027 0.067 0.068 0.057 0.033 0.069 0.016 0.082 Source: author’s Analysis with data from Table 1 (Amazon, 2024). Key to Table 2: Ads to Sales Ratio (advertising to sales ratio): is calculated as follows (with data from Ta- ble 1): Advertising expenses Net Sales Turnover Table 3. t-Test: Paired Two Sample for Means for Amazon’s Net Sales Before and Fol- lowing Increases in Marketing & Promotions 013-022NET SALES 003-012NET SALES Mean 246757.7 23326.9 Variance 25892555204 358081383.4 Observations 10 10 Hypothesized Mean Difference 0 df 9 t Stat 4.964577975 P(T<=t) one-tail 0.000387821 t Critical one-tail 1.833112933 P(T<=t) two-tail 0.000775643 t Critical two-tail 2.262157163 Source: author’s Model Analysis (Using Amazon’s Marketing Expenses Data). Table 1. Net Sales… Collins C Ngwakwe3838 Table 3. t-Test: Paired Two Sample for Means for Amazon’s Net Sales Before and Following Increases in Marketing & Promotions 013-022NET SALES 003-012NET SALES Mean 246757.7 23326.9 Variance 25892555204 358081383.4 Observations 10 10 Hypothesized Mean Difference 0 df 9 t Stat 4.964577975 P(T<=t) one-tail 0.000387821 t Critical one-tail 1.833112933 P(T<=t) two-tail 0.000775643 t Critical two-tail 2.262157163 S o u r c e : author’s Model Analysis (Using Amazon’s Marketing Expenses Data). Table 4. t-Test: Paired Two Sample for Means for Amazon’s Ads to Sales Ratio Before and Following Increases in Marketing & Promotions 2013-222ADS TO SALES RATIO 2003-2012ADS TO SALES RATIO Mean 0.058035945 0.028476082 Variance 0.000149768 0.000214134 Observations 10 10 Hypothesized Mean Difference 0 df 9 t Stat 4.817558665 P(T<=t) one-tail 0.0004751 t Critical one-tail 1.833112933 P(T<=t) two-tail 0.0009502 t Critical two-tail 2.262157163 S o u r c e : author’s Model Analysis (Using Amazon’s Net Sales and Marketing Expenses Data). diffErEntial EffECt of advErtising frEquEnCy on salEs turnovEr… 3939 Table 5. Simple Regression on the Effect of Amazon’s Marketing Expense on Net Sales Over Twenty Years t Critical two-tail 2.262157163 Source: author’s Model Analysis (Using Amazon’s Marketing Expenses Data). Table 4. t-Test: Paired Two Sample for Means for Amazon’s Ads to Sales Ratio Before and Following Increases in Marketing & Promotions 2013-222ADS TO SALES RATIO 2003-2012ADS TO SALES RATIO Mean 0.058035945 0.028476082 Variance 0.000149768 0.000214134 Observations 10 10 Hypothesized Mean Difference 0 df 9 t Stat 4.817558665 P(T<=t) one-tail 0.0004751 t Critical one-tail 1.833112933 P(T<=t) two-tail 0.0009502 t Critical two-tail 2.262157163 Source: author’s Model Analysis (Using Amazon’s Net Sales and Marketing Expenses Data). Table 5. Simple Regression on the Effect of Amazon’s Marketing Expense on Net Sales Over Twenty Years Source: author’s Analysis (Using Amazon’s Net Sales and Marketing Expenses Data). DISCUSSION AND CONCLUSION Scholars have diverse opinions on the accounting benefit of advertising. Whilst some hold a positive viewpoint, others do not and this calls for care by accountants, CFOs, operations SUMMARY OUTPUT Regression Statistics Multiple R 0.984857 R Square 0.969944 Adjusted R Square 0.968274 Standard Error 28483.23 Observations 20 ANOVA df SS MS F Significance F Regression 1 4.71E+11 4.71E+11 580.8728 0.000001 Residual 18 1.46E+10 8.11E+08 Total 19 4.86E+11 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 25430.16 7826.162 3.249378 0.004452 8988.00389 41872.32 8988.0039 41872.31718 MARKETING 13.18769 0.547178 24.1013 0.000001 12.0381146 14.33727 12.038115 14.33726933 S o u r c e : author’s Analysis (Using Amazon’s Net Sales and Marketing Expenses Data).  Discussion and conclusion Discussion and conclusion Scholars have diverse opinions on the accounting benefit of advertising. Whilst some hold a positive viewpoint, others do not and this calls for care by account- ants, CFOs, operations and marketing managers. As an instance, Verma (2009) opines that researchers have determined that advertising is one of the most potent and successful tools available for improving sales related performance. Sometimes, though, it could not be as effective as first thought. Despite this, the idea that advertising operates through powerful types of manipulation or per- suasion is not well-supported by hard data. Because there are so many com- mercials in today’s world, some consumers may likely be resistive and/or un- interested in many adverts. Consequently, marketers are coming up with fresh ideas to get people to interact with their advertisements such as the bourgeon- ing usage of artificial intelligence (AI). Given the growing costs associated with corporate expenses and growing corporate financial failures, this paper proceeded to analyse the differential impact of repeated advertising (using marketing expenses as proxy for Ads ac- tivity) on sales turnover and the attendant effect on accounting Ads to Sales Ratio. Subsequently the author used marketing expense and net sales reve- Collins C Ngwakwe4040 nue data from the Amazon company covering a period of twenty years (2003 – 2022) to analyse the difference in net sales and Ads to Sales Ratio as a result of increases in marketing expenses (used as a proxy for activity). Findings from the t-test analysis shows that the Ads to Sales Ratio increased by hundred percent. The net sales revenue increased by over nine hundred per- cent during the period of differential analysis. Thus, the increase in net sales significantly outweighs the increase in Ads to Sales Ratio over the period. Ac- cordingly, this increase in net sales suggest that, for some companies similar to Amazon, increases in Ads (using marketing promotions expenses as proxy) may provide a significant booster to sales revenue. A further test with sim- ple regression statistics indicates that Ads or marketing and promotions has a highly significant and positive effect on net sales revenue of the Amazon. These findings show that companies with high concentration on online sales may have a higher propensity of generating return on marketing and promo- tions as reflected through net sales increases in Amazon over the past twenty years. This paper opens an avenue for further research to apply this paper’s framework for future analysis of this important corporate phenomenon. Such future research may consider expanding the sample size with more time series and additional companies in the data pool.  References References Abdullahi, D.A.U.D.A. (2015). Effect of advertising on the sales revenue and profitability of selected food and beverages firms in Nigeria. A Research Thesis submitted to the School of Post Graduate Studies, Ahmadu Bello University, Zaria. https://www. academia.edu/download/49983074/PROJECT_DORKAS.pdf (accessed: 19.11.2023). Akan, M. (2016). A dynamic model of a nonlife insurance company. Copernican Journal of Finance & Accounting, 5(1), 9-24. https://doi.org/10.12775/CJFA.2016.001. Ali, B.J. (2021). Assessing (The impact) of advertisement on customer decision making: Evidence from an educational institution. Afak for Science Journal, 6(01), 267-280. https://ssrn.com/abstract=3764088 (accessed: 19.11.2023). Amazon (2024). Investor Relations - Annual Reports. https://ir.aboutamazon.com/an- nual-reports-proxies-and-shareholder-letters/default.aspx (accessed: 29.02.2024). Chemmanur, T.J., & Yan, A. (2019). Advertising, attention, and stock returns. Quarterly Journal of Finance, 9(03). https://doi.org/10.1142/S2010139219500095. 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/10.1016/j. ijhm.2015.01.004. diffErEntial EffECt of advErtising frEquEnCy on salEs turnovEr… 4141 Dhalla, N.K. (1978). Assessing the Long-Term Value of Advertising, Harvard Business Review. https://hbr.org/1978/01/assessing-the-long-term-value-of-advertising (ac- cessed: 16.11.2023). Du, D., Zhang, Y., & Ge, J. (2023, July). Effect of AI Generated Content Advertising on Consumer Engagement. In International Conference on Human-Computer Interaction (pp. 121-129). Cham: Springer Nature Switzerland. https://link.spring- er.com/chapter/10.1007/978-3-031-36049-7_9 (accessed: 29.02.2024). Enache, L., & Srivastava, A. (2018). Should intangible investments be reported sepa- rately or commingled with operating expenses? New evidence. Management Science, 64(7), 3446-3468. https://doi.org/10.1287/mnsc.2017.2769. Hossain, M., & Islam, T. (2019). Effect of advertising expenses and sales incentives on financial performance: dissecting the cases of two market leaders. Business and Economic Research, 9(1), 69-83. https://doi.org/10.5296/ber.v9i1.14019. Ji, H.K. (2017). The effects of advertising expenditure on sales in fashion companies. International Journal of Costume and Fashion, 17(1), 17-28. http://doi.org/10.7233/ ijcf.2017.17.1.017. Kaymaz, M.O., Yilmaz, I., & Kaymaz, O. (2019). The impact of intangible factors on prof- itability: evidence from corporations traded at Muscat Securities Market in Oman. Copernican Journal of Finance & Accounting, 8(2), 25-47. https://doi.org/10.12775/ CJFA.2019.007. Kim, J., Jun, J., & Tang, L.R. (2019). How well does advertising work on restaurant per- formance? A dynamic and quadratic approach. International Journal of Hospitality Management, 81, 11-20. https://doi.org/10.1016/j.ijhm.2019.02.010. Lee, E., Kim, J.H., & Rhee, C.S. (2021). Effects of marketing decisions on brand equity and franchise performance. Sustainability, 13(6). https://doi.org/10.3390/su13063391. Leong, S.M., Ouliaris, S., & Franke, G.R. (1996). Estimating the long-term effects of adver- tising on sales: a co-integration perspective. Journal of Marketing Communications, 2(2), 111-122. https://doi.org/10.1080/135272696346187. Mani, R., Thiyagarajan, S., Azhaguraja, N., & Janakiraman, S. (2022). Users’engagement In Banking Activities On Social Media: A Study With Reference To Facebook. Copernican Journal of Finance & Accounting, 11(3), 27-48. http://dx.doi.org/10.12775/ CJFA.2022.012. Maples, L., & Earles, M. (1999). When should advertising be capitalized?. Journal of Accountancy, 187(5), 49. https://www.journalofaccountancy.com/issues/1999/may/ maples.html (accessed: 24.11.2023). Matsuoka, K. (2020). Exploring the interface between management accounting and marketing: a literature review of customer accounting. Journal of Management Control, 31(3), 157-208. http://dx.doi.org/10.1007/s00187-020-00299-9. Mun, S.G., & Jang, S.S. (2018). Restaurant operating expenses and their effects on prof- itability enhancement. International Journal of Hospitality Management, 71, 68-76. https://doi.org/10.1016/j.ijhm.2017.12.002. Qin, X., & Jiang, Z. (2019). The impact of AI on the advertising process: The Chinese experience. Journal of Advertising, 48(4), 338-346. https://doi.org/10.1080/00913 367.2019.1652122. Accountancy, 187(5), 49. https://www.journalofaccountancy.com/issues/1999/may/maples.html Accountancy, 187(5), 49. https://www.journalofaccountancy.com/issues/1999/may/maples.html http://dx.doi.org/10.1007/s00187-020-00299-9 Collins C Ngwakwe4242 Tremor International (2023). How repeating ads affect CTV viewers’ brands & plat- forms. https://magnaglobal.com/wp-content/uploads/2023/07/MAGNA-Media-Trials- Nexxen-Its-All-in-the-Delivery.pdf (accessed: 20.11.2023). Verma, S. (2009). Impact of repetitive and contextual advertisements on consumer behavior: An exploratory study. In 2009 International Association of Computer Science and Information Technology-Spring Conference. IEEE. https://ieeexplore. ieee.org/abstract/document/5169344/ (accessed 24.11.2023). Wang, F., Zhang, X.P., & Ouyang, M. (2009). Does advertising create sustained firm value? The capitalization of brand intangible. Journal of the Academy of Marketing Science, 37(2), 130-143. https://doi.org/10.1007/s11747-008-0112-2. https://magnaglobal.com/wp-content/uploads/2023/07/MAGNA-Media-Trials-Nexxen-Its-All-in-the-Deliver https://magnaglobal.com/wp-content/uploads/2023/07/MAGNA-Media-Trials-Nexxen-Its-All-in-the-Deliver