Journal of Advertising, vol. 39, no. 3 (Fall 2010), pp. 39–55. © 2010 American Academy of Advertising. All rights reserved. ISSN 0091-3367 / 2010 $9.50 + 0.00. DOI 10.2753/JOA0091-3367390303 During the past few decades, expenditures in manufacturing and general management have been declining while marketing costs have risen (Sheth and Sisodia 1995). From a “budgetary” context perspective, the biggest part of marketing expenditures usually goes to advertising and promotion (Ambler 2000). Some empirical evidence suggests that, in the long-term, advertising has a positive effect on differentiation and brand equity, while this is not the case for promotion (Boulding, Lee, and Staelin 1994; Jedidi, Mela, and Gupta 1999). Although recent studies have found that promotion has a role in building brand knowledge (e.g., Palazón-Vidal and Delgado-Ballester 2005), the “traditional wisdom” of advertising enhancing brand equity has given rise to very high amounts of advertis- ing budgets. However, researchers claim that advertising is “rife with productivity problems” (Sheth and Sisodia 1995, p. 19). Consequently, advertising is under increasingly severe scrutiny because of the growing emphasis on accountability of advertising results (Bhargava, Donthu, and Caron 1994). The pressure to justify advertising expenditures has led marketers to look for a new advertising mix, stressing Internet usage. Online advertising is believed to be highly cost-effective relative to other media, particularly when taking into account its ability for more precise targeting and two-way dialogue with customers (e.g., Briggs and Hollis 1997). At the begin- ning of 2006, marketing chief officers of Fortune 500 companies announced that they planned to increase online advertising spending up to 32% compared to the previous year. Could this be part of the way of making advertising more efficient? Academic research in Internet advertising has grown expo- nentially in the past decade in search of the role of the Internet as a marketing tool. Researchers refer to the Internet’s capabil- ity of addressing individual customers (Deighton 1997), its interactivity and ability to store vast amounts of information (Peterson, Balasubramanian, and Bronnenberg 1997), and the fact that it allows customers to seek unique solutions to their needs (Sheth, Sisodia, and Sharma 2000). Moreover, Internet advertising attracts attention because of the current shift in advertising strategy in favor of deriving maximum response from selected target groups instead of maximum exposure to many unknown audience groups (Yoon and Kim 2001, p. 53). The accountability of online advertising along with its contribution to marketing efficiency and effectiveness are expected to lead to further growth in Web-based advertising efforts (Brackett and Carr 2001; Hollis 2005; Sharma and Sheth 2004). In spite of the expanding attention to the role of the Internet in advertising, the contribution of online advertising to overall advertising efficiency still remains unclear because of a lack of studies that deal with this issue. This study, therefore, aims to address this gap in the literature and assess the advertising efficiency with a focus on the role of the Internet. We verify whether the use of the Internet as an advertising tool affects the overall advertising efficiency in the Spanish automobile industry over a period of seven years. The research approach Albena Pergelova (M.S., Universitat Autonoma de Barcelona) is an assistant professor of marketing in the Department of Business Eco- nomics and Administration, Universitat Autonoma de Barcelona. Diego Prior (Ph.D., Universitat Autonoma de Barcelona) is a full professor of accounting and management control in the Department of Business Economics and Administration, Universitat Autonoma de Barcelona. Josep Rialp (Ph.D., Universitat Autonoma de Barcelona) is an associ- ate professor of marketing in the Department of Business Economics and Administration, Universitat Autonoma de Barcelona. The authors gratefully acknowledge financial support from the Commissioner for Research and Universities of the Departament d’Innovaciò, Universitat i Empresa de la Generalitat de Catalunya and the European Social Fund, as well as the Spanish Ministry of Science and Education (projects SEJ2007–60995/ECON and SEJ2007–67895-C04–02). ASSESSING ADVERTISING EFFICIENCY Does the Internet Play a Role? Albena Pergelova, Diego Prior, and Josep Rialp This research focuses on a major concern for marketers addressing the claims of inefficiency of the spending on advertis- ing. We examine whether the Internet can help increase overall advertising efficiency. Using a sample from the Spanish automobile industry, we combine a nonparametric method—Data Envelopment Analysis—with recent important insights from statistics and econometrics studies, and we find that online advertising improves the efficiency levels and this effect is more pronounced in the long-term temporal framework.