Despite their heightened attention to advertising spend, managers still have a hard time getting it precisely right. This should occasion no surprise: the task is extremely - perhaps even impossibly - difficult. There are problems everywhere: data are often unreliable, internal accounting and control systems irrelevant, performance criteria inappropriate, budgets unpredictable, time horizons for decisions unclear or unreasonable, and managerial incentives unfocused.

These problems do not remove the burden of getting it right. But they do redefine a bit the yardstick by which "right" gets measured. Greater accuracy and precision are, of course, always welcome. But the primary merit of any new approach to making decisions about advertising spend is to embed throughout an organization a consistent, shared discipline for systematically thinking through the complex dynamics of value creation and capture.

Such consistent discipline is especially important given the relatively fragile state of knowledge about the true economic value of advertising. There are, for example, a couple of facts about advertising that almost everyone knows. For much of the 1980s, ad spending boomed at a double-digit clip. Then, in the 1990s, expenditure began to decline in real terms. Among managers...