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TV Advertising Effectiveness and Profitability

onlinelibrary.wiley.com

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Re: TV Advertising Effectiveness and Profitability

#31

Post by echelon »

hammock wrote: post #27

There is a fundamental misunderstanding (intentional or not) with these types of studies and claims. Limited-time promotions, e.g. a 10% off sale, work on short timescales that are easily measured. You can easily say what the ROI is of an advertised promotion, and it is often positive. (Side note, these promotions have a more-difficult-to-measure detrimental effect on your long-term profitability, closely related to…

> Source: Been on the leading edge of marketing and advertising for over 12 years

Would you say that might be a source of bias?

Look at SpaceX and Tesla. They barely advertise and have huge brand recognition.

I'd buy Sennheiser over Beats. Krispy Kreme over Dunkin. Costco.

My partner loves Zara.

I don't have a high opinion of brands that advertise.

Re: TV Advertising Effectiveness and Profitability

#32

Post by andreilys »

hammock wrote: post #27

There is a fundamental misunderstanding (intentional or not) with these types of studies and claims. Limited-time promotions, e.g. a 10% off sale, work on short timescales that are easily measured. You can easily say what the ROI is of an advertised promotion, and it is often positive. (Side note, these promotions have a more-difficult-to-measure detrimental effect on your long-term profitability, closely related to…

And for these reasons hard if not impossible to measure or control for confounders - but that doesn't mean it doesn't work!!

One of the ways that advertisers and marketing people stay employed is they say that the output of their effort and money spent is not quantifiable.

Re: TV Advertising Effectiveness and Profitability

#33

Post by dang »

lupire wrote: post #14

Title is critically incorrect. It should be: > The ROI analysis shows negative ROIs at the margin for more than 80% of brands, implying over-investment in advertising by most firms.

Submitted title was "Advertisement has a negative return on investment for more than 80% of brands", which broke the site guidelines, which ask: "Please use the original title, unless it is misleading or linkbait; don't editorialize.". We've fixed it now.

https://news.ycombinator.com/newsguidelines.html

Re: TV Advertising Effectiveness and Profitability

#34

Post by nabla9 »

hammock wrote: post #27

There is a fundamental misunderstanding (intentional or not) with these types of studies and claims. Limited-time promotions, e.g. a 10% off sale, work on short timescales that are easily measured. You can easily say what the ROI is of an advertised promotion, and it is often positive. (Side note, these promotions have a more-difficult-to-measure detrimental effect on your long-term profitability, closely related to…

> And for these reasons hard if not impossible to measure or control for confounders

Are you saying that you don't know if long term brand advertisement works?

Re: TV Advertising Effectiveness and Profitability

#35

Post by rhizome »

singhrac wrote: post #26
evancox100 wrote: post #20

Earlier quoted context omitted.

You are correct, but if you look at total instead of marginal the picture's not much better. While 80% of brands have negative marginal ROI, 67% (2/3) have negative net ROI, and so would presumably be better off with zero advertising.

Not necessarily. The thing to measure is the marginal ROI at zero advertising spend. Derivatives are not bounded by their average value across a range.

I'm not an MBA nor even a math person really, what is the "I" in this equation when the ad spend is zero?

Re: TV Advertising Effectiveness and Profitability

#36

Post by mjburgess »

andreilys wrote: post #32
hammock wrote: post #27

There is a fundamental misunderstanding (intentional or not) with these types of studies and claims. Limited-time promotions, e.g. a 10% off sale, work on short timescales that are easily measured. You can easily say what the ROI is of an advertised promotion, and it is often positive. (Side note, these promotions have a more-difficult-to-measure detrimental effect on your long-term profitability, closely related to…

And for these reasons hard if not impossible to measure or control for confounders - but that doesn't mean it doesn't work!! One of the ways that advertisers and marketing people stay employed is they say that the output of their effort and money spent is not quantifiable.

Indeed.

When I walk into the store there are a very limited number of colas on offer: a can of pepsi, a can of coke, etc.

What exactly is the advert for? My choice has largely been made.

Re: TV Advertising Effectiveness and Profitability

#37

Post by marcosdumay »

fighterpilot wrote: post #10
paxys wrote: post #3

Advertising is at its core a prisoner's dilemma. If every competitor in a certain space puts in $100 in advertising, they can all expect $0 in returns. However if a single company put in nothing they would be in a worse place because their competitors' returns would automatically become higher.

If this is true, wouldn't it show up in the study as a positive ROI?

This has no relation with the number on the headline.

Re: TV Advertising Effectiveness and Profitability

#38

Post by rhizome »

retzkek wrote: post #19
paxys wrote: post #6

Earlier quoted context omitted.

It's bizarre to me that the government hasn't stepped in to regulate/ban medical advertising in America. Nobody wants it – not consumers, not doctors, not even the drug manufacturers themselves.

There's at least one group that likes drug ads: the advertising industry. High-dollar clients with long commercials (to fit in all their required disclaimers), and they're probably the ones with the connections to the appropriate regulators. Personally I absolutely despise drug commercials, there's not much that will make me change the channel, mute, or turn off the TV faster. Is there a more blatant display of the f…

It's not even attributable to "capitalism," per se, because the US and New Zealand are the only places on Earth where they are legal. I may be blinkered as to global laws, so maybe I'll just say the Western Earth.

Re: TV Advertising Effectiveness and Profitability

#39

Post by altdataseller »

nabla9 wrote: post #34
hammock wrote: post #27

There is a fundamental misunderstanding (intentional or not) with these types of studies and claims. Limited-time promotions, e.g. a 10% off sale, work on short timescales that are easily measured. You can easily say what the ROI is of an advertised promotion, and it is often positive. (Side note, these promotions have a more-difficult-to-measure detrimental effect on your long-term profitability, closely related to…

> And for these reasons hard if not impossible to measure or control for confounders Are you saying that you don't know if long term brand advertisement works?

Absolutely not. It’s hard for me to tell how much of an effect exercising will have on my lifespan. Will it add 4.5 years? 10 years?

But I know that exercising daily will most likely have a positive effect.

Re: TV Advertising Effectiveness and Profitability

#40

Post by weego »

giantg2 wrote: post #29

How do the tax write-offs factor in? It seems almost impossible that advertising doesn't provide benefit when you consider the money would have otherwise gone to taxes.

That's not how taxes work. It's also kind of damming of the entire industry if that's the fallback excuse for existing.
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