FOLLOWING the work of Comanor and Wilson' a growing number of studies,2 have found a positive relation across firms between rate of return and advertising intensity, as measured by firms' advertising to sales ratios. With the exception of Weiss, all these studies treat advertising as a current expense, in accordance with current accounting procedures, in calculating rates of return. The Weiss study treats advertising as an investment. This paper analyzes the bias in rate of return which arises if a firm's advertising expenditures are depreciated incorrectly. Then, employing a set of empirically derived advertising depreciation rates, rates of return are recalculated for a group of heavy advertisers by capitalizing their past advertising expenditures. In contrast to previous findings, these corrected rates of return are found to be unrelated to the firms' advertising intensities.