Impact of Generic Fluid Milk and Cheese Advertising on Dairy Markets

The purpose of this study was to analyze the impacts of generic milk and cheese advertising on dairy markets. The results indicated that generic milk and cheese advertising by dairy farmers and fluid milk processors had major market impacts for the dairy industry. The main conclusion of the study is that farmers and processors are receiving a high return on their investment in generic dairy advertising. The impacts of advertising tend to be more profound in increasing price than quantity, which is due to the inelastic nature of demand for milk and cheese. These estimated impacts need to be compared with the other options producers and processors have for marketing their product (e.g., non-advertising promotion, research, new product development, etc.) in order to determine the optimality of the current investment of advertising. Consequently, these results should be viewed as a first step in the evaluation process