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TV Advertising Effectiveness and Profitability

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Re: TV Advertising Effectiveness and Profitability

#81

Post by DaveExeter »

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…

>There's at least one group that likes drug ads: the advertising industry.

There's another group that likes drug ads: media corporations! Part of the reason big pham spends $billions on ads is to buy the support of the media giants.

Re: TV Advertising Effectiveness and Profitability

#82

Post by samat »

reader_mode wrote: post #71
slg wrote: post #60

Earlier quoted context omitted.

>Brand advertising, in contrast, works on a spread-out scale of years or decades...The actual effect that a brand advertisement has, is to add PENNIES (not dollars) to their sales every day, for the next 100 YEARS. It's a long-term investment. And for these reasons hard if not impossible to measure or control for confounders - but that doesn't mean it doesn't work!! Car brands are the obvious example of brand adverti…

And yet the most valuable car company in the world (for whatever that's worth) spends 0 on advertising and sells everything they can produce.

I would not call Elon Musks Twitter and other public performances ‘no advertising whatsoever’. They don’t pay for it cash to adv companies, but they got in hot waters with SEC because of it, for example.

Re: TV Advertising Effectiveness and Profitability

#83

Post by slg »

reader_mode wrote: post #80
slg wrote: post #79

Earlier quoted context omitted.

>sells everything they can produce. That is the important part. Their production capability is limited to a level that is below current demand. It therefore doesn't make any sense for them to invest in increasing future demand until their production capability consistently exceeds the level of current demand.

But their supply is constantly expanding and demand is following right up. They have 0 ads and yet everyone knows about Tesla.

What is your point? No one is claiming that advertising is the only way to increase demand. It is simply one option to increase demand, an option that Tesla has no use for at the moment.

Re: TV Advertising Effectiveness and Profitability

#84

Post by echelon »

handmodel wrote: post #47
echelon wrote: post #31

Earlier quoted context omitted.

> 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.

I think its fair to say that the reasons a rocket company does not need to advertise dont apply to companies that people buy weekly/monthly on a grocery store shelf. Besides, the advertising budget of other government contractors/satellite companies is also close to zero. The better question is "If I ran Pepsi today - would I drastically lower the advertising budget". I'm not sure what my move would be but I don't th…

> rocket company does not need to advertise dont apply to companies that people buy weekly/monthly on a grocery store shelf.

Starlink? That's consumer-facing.

Re: TV Advertising Effectiveness and Profitability

#85

Post by reader_mode »

r00fus wrote: post #78
reader_mode wrote: post #71

Earlier quoted context omitted.

And yet the most valuable car company in the world (for whatever that's worth) spends 0 on advertising and sells everything they can produce.

Market cap (ie, stock price) is not a good indicator of present value, but perceived future value. Edit: I also think TSLA isn't a car company. More like a battery company.

Someone here was arguing that advertising can't be measured only through impact on present sales but "good will and long term value". Tesla seemingly has good will beyond any competitors.

Also Tesla is buying battery cells, sells cars and expects to have third parties supply batteries long term - how can they be a battery company ?

Re: TV Advertising Effectiveness and Profitability

#86

Post by yosito »

vikramkr wrote: post #12
yosito wrote: post #9

Earlier quoted context omitted.

Your logic doesn't add up.

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

> 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.

Assume competitors A, B and C and all put $100 each into advertising. That's $300 spent on advertising. Each competitor only has to earn $101 in sales to get > $0 returns. There is no theoretical limit on how much each competitor can earn in sales. Let's randomly say each company makes $500 in sales. That's a return of $400 per company. If a single company puts in nothing, they may likely earn less in sales, so let's say company A spends nothing on advertising but still earns $450 in sales, meanwhile B and C spend $150 on advertising and make $475 in sales. Company A gets a return of $450, and companies B and C get a return of $325 each.

Anyway, all this math is irrelevant. OP said each company should expect $0 in returns. Where does that $0 come from? There is no rule that says they will earn $0 in returns.

> This is actually a specific example of a prisoners dilemma taught in some intro to game theory classes

You are correct that prisoner's dilemma is taught in intro to game theory, but you are not correct that this is an example of it.

Re: TV Advertising Effectiveness and Profitability

#87

Post by reader_mode »

samat wrote: post #82
reader_mode wrote: post #71

Earlier quoted context omitted.

And yet the most valuable car company in the world (for whatever that's worth) spends 0 on advertising and sells everything they can produce.

I would not call Elon Musks Twitter and other public performances ‘no advertising whatsoever’. They don’t pay for it cash to adv companies, but they got in hot waters with SEC because of it, for example.

I didn't say they do no advertising, I said they spend 0 on ads.

Re: TV Advertising Effectiveness and Profitability

#88

Post by giantg2 »

s1artibartfast wrote: post #51
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.

It is not an issue because taxes are on profit, not revenue. Needlessly wasting revenue shrinks profit faster than it shrinks tax liability. e.g. You don't burn a dollar to save 20 cents on income tax because you are still loosing 80 cents.

If they can't get 80% back, that's pretty bad. I was wondering how these marginal net negative numbers worked. If they're saying it's 95% back, then that's still higher than 80%.

Re: TV Advertising Effectiveness and Profitability

#89

Post by giantg2 »

weego wrote: post #40
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.

I'm wondering if that was a factor in the marginal net negative calculations. That could be enough to switch them positive.

Re: TV Advertising Effectiveness and Profitability

#90

Post by r00fus »

reader_mode wrote: post #85
r00fus wrote: post #78

Earlier quoted context omitted.

Market cap (ie, stock price) is not a good indicator of present value, but perceived future value. Edit: I also think TSLA isn't a car company. More like a battery company.

Someone here was arguing that advertising can't be measured only through impact on present sales but "good will and long term value". Tesla seemingly has good will beyond any competitors. Also Tesla is buying battery cells, sells cars and expects to have third parties supply batteries long term - how can they be a battery company ?

Same way Apple is a computer company but Foxconn does most of the building of said computers?
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