51–60 of 197 posts
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.
e.g. You don't burn a dollar to save 20 cents on income tax because you are still loosing 80 cents.
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 neither Pepsi or Coca-Cola advertised I think its plausible their positions in the market relative to each other could be the same proportion they are now. However, it would make it easier for restaurants, grocery stores, etc. to go with non-brand sodas (that also don't advertise).
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…
"Been on the leading edge of marketing and advertising for over 12 years "
Aaaaaah, I see! It is your personal interest to be payed very well for unsubstantiated claims! Fishing in troubled waters. We will consider your !!opinion!! accordingly....
Earlier quoted context omitted.
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.
A lot of marketing money is "paid" (simplifying here, but I can expand if desired) to get that shelf space from the store, as well, in ways that you probably didn't know/haven't thought about.
Earlier quoted context omitted.
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.
1. You may already have a brand, but many don't - so they want people to switch. 2. People who don't drink soda need to get hooked somehow! 3. Increasing consumption. Think about the "Got Milk?" campaigns of the 90s - they weren't saying "drink XYZ brand milk", they were looking to increase milk consumption. I think #3 is probably the biggest factor, tbh. That's why you see ads for cotton, milk, beef, avocado, etc.
Many people are unaware that a given product exists at all, and others are unaware of all its potential uses; even occasional users can sometimes forget that they liked a product or found it useful.
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.
Another example where this is more clearly felt is consumer goods. I always buy Tide - I couldn't tell you why until someone pointed it out to me. When I went to college and had to buy detergent there was easily 10 brands of detergent and Tide felt the safest. I've been watching Tide ads for the better part of 18 years and I feel that had to have some decision into why I paid a 10% premium for the brand.
Earlier quoted context omitted.
How exactly does their logic not add up? This is actually a specific example of a prisoners dilemma taught in some intro to game theory classes, with the classic example being the tobacco companies
Well it assumes a zero-sum game from the perspective of the competitors. The combined advertising effort of all competitors could grow the entire pie that they each share. Even though their percentage of the pie stays the same, the magnitude of the slice could be bigger, and that improvement in magnitude could outstrip the advertising cost, thus making it worthwhile.
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.
I feel that there is different types of advertisement. Brand advertising isn't so much about acquiring new customers but about reassuring existing ones. Like I honestly feel car makers don't need to advertise on the web or TV, yet they do it anyway. I have the car I have and I'm not looking to buy another for 5-7 years, yet Toyota and Ford will advertise to me as if to say "I'm still here in case you change your mind…
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.
It gets quantified as "Goodwill" any time a company is valued (acquisition, IPO, investment, etc.) or releases financial statement (it's on the balance sheet).
Coca-Cola is coming up a lot in this discussion. They have Goodwill of $17.7 billion, along with additional intangible assets of $11.2 billion. That $29 billion of Goodwill makes up about 32% of Coke's total assets of $90 billion.
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…
Car brands are the obvious example of brand advertising. They are among the most common TV advertisers but they don't expect people to immediately go out and spend $50k on a new Mercedes-Benz after watching a 30 second commercial. They just want to establish Mercedes-Benz as a brand of luxury, performance, technology, etc. That way the next time you are in the market to buy a car you already have an ingrained positive perception of Mercedes-Benz that might help sway your decision.