TV Advertising Effectiveness and Profitability • Hacker News Board

Re: TV Advertising Effectiveness and Profitability

#181

Post by ryandrake » Wed, Jul 28, 2021, 3:54 AM UTC

solumos wrote: post #144

matsemann wrote: post #128

Earlier quoted context omitted.

A guy doing marketing for a travel company once told me they had to spend an enormous amount of money on Google, for their own brand . People would search "brand cityA cityB", but a competitor would buy the top spot. How much were the competitor willing to spend? Basically their whole margin for that sale, as it was still better than nothing. So this company had to match that. So in the end Google makes more profit p…

You pay less than your competitors for your branded ads via quality score. But yeah, it gets competitive. You should see how much PI lawyers pay for AdWords - it's bonkers. Hundreds of dollars per click.

The Slate Star Codex guy calls this a multipolar trap [1]. A market is in some equilibrium. Then, one person does something "expensive" to gain an edge on everyone else. Eventually, in order to remain competitive, everyone has to do that expensive thing, and the market settles on a new equilibrium where we're back to nobody having the edge but now everyone is paying.

1: https://slatestarcodex.com/2014/07/30/meditations-on-moloch/

Re: TV Advertising Effectiveness and Profitability

#182

Post by Clampower » Wed, Jul 28, 2021, 9:04 AM UTC

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…

I fundamentally disagree with your Coca Cola example. This is a prime example of introducing a new use case for a product which is traditionally associated with summer and warmer climates. It’s done directly to increase sales during the winter time and to associate the brand with Christmas.

Re: TV Advertising Effectiveness and Profitability

#183

Post by bluGill » Wed, Jul 28, 2021, 9:26 AM UTC

rasz wrote: post #177

bluGill wrote: post #117

Earlier quoted context omitted.

The ketchup industry stopped advertising, and over the next 50 years their market share went down. Nobody knows for sure how much was stopping advertising, but nobody wants to take a chance.

??? https://www.today.com/food/heinz-s-new-super-bowl-ad-feature...

They must have finally figured out the lesson ?

Re: TV Advertising Effectiveness and Profitability

#184

Post by Leherenn » Wed, Jul 28, 2021, 12:56 PM UTC

MuffinFlavored wrote: post #107

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…

> Car brands are the obvious example of brand advertising. Car commercials crack me up. Nissan is running commercials lately in the US on how dynamic, sporty, and fun to drive reckless/fast their cars are on TV.

Over here, almost all the ads call the cars "over equipped". Always make me think: could you please remove the superfluous equipment then, and reduce the price?

Re: TV Advertising Effectiveness and Profitability

#185

Post by thatguy0900 » Wed, Jul 28, 2021, 1:06 PM UTC

username90 wrote: post #158

5tyuft wrote: post #101

Earlier quoted context omitted.

This was my first thought. Elon is constantly in the news or doing some memorable stunt. Tesla absolutely advertises it's just through Elon.

Has anyone calculated how much money he saved on ads doing that? Seems like a huge efficiency advantage compared to competitors.

From a Google search, Elon made 11 billion last year in tesla stock options pay, while the ceo of Ford made 11 million, and in 2020, ford spent 2.8 billion on advertising. So in the viewpoint that Elon does all the advertising for them, they are paying quite a premium for it.

Re: TV Advertising Effectiveness and Profitability

#186

Post by 1123581321 » Wed, Jul 28, 2021, 2:30 PM UTC

Spivak wrote: post #179

1123581321 wrote: post #7

Earlier quoted context omitted.

It’s partially a prisoner’s dilemma. Advertising reduces search costs for buyers to a certain point, after which it raises them again due to a glut of similar messaging. There is a moderate point at which buyers are hearing about enough potential options and are able to conduct a more effective search for products/vendors/sellers, and the cost is reasonable for the sellers (it reduces their sales costs, gets their ec…

Which is why I think push advertising is the wrong model for product discovery. Facebook has all the information to be the best shopping meta-search in the world. They could become the go-to place for product discovery usurping Amazon and Google if they just turned their ad platform around and let shoppers drive. AliExpress has this flow almost perfected but they are ultimately still limited by the sellers on their s…

Certainly FB/Ali’s model is appropriate for many markets. There is still a perverse incentive since the publisher/market-maker doesn’t want to limit investment in advertising, but the degree to which campaigns can be measured makes it harder to hide the results of overspending.

Re: TV Advertising Effectiveness and Profitability

#187

Post by mbesto » Wed, Jul 28, 2021, 2:41 PM UTC

morei wrote: post #151

mbesto wrote: post #113

Earlier quoted context omitted.

You mean zero-sum. Advertising is a zero sum game. I can't find the tweet but someone referenced the fact that if you lump traditional and digital media together, the TAM of advertising has basically been stagnate for decades. We just think its grown because FB/Google/etc have gobbled it all up.

It's not quite true that advertising is a zero-sum game. There are economic benefits from increased competition, and from improvements in presented choice. It is definitely true that the economic benefits don't accrue to the advertiser! And it's also true that the economic benefits decrease as advertising saturates. But it's still not zero.

Let me rephrase because I don't think you understand what part of the advertising industry I'm referring to as zero-sum.

Advertising is basically cultivation of people's attention. There is a finite amount of eyeballs/"time of eyeballs" in any given any day for their attention. If all advertisers are trying to capture this attention, it means that for every advertiser who is able to capture an eyeball, it means another advertiser loses the ability to capture the eyeball (hence why Google/Facebook ads are auction based).

Re: TV Advertising Effectiveness and Profitability

#188

Post by truffdog » Wed, Jul 28, 2021, 2:56 PM UTC

nemothekid wrote: post #56

andreilys wrote: post #32

Earlier quoted context omitted.

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.

But it's hard to refute the case that it's not true. I haven't watched TV in years nor have I seen Coca Cola bear in a time longer than that but I'm still acutely aware of Coca Cola's brand. 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 dete…

I always buy Tide because my mom used to work in the Clorox lab, and the techs there all agreed that Tide was the best.

Re: TV Advertising Effectiveness and Profitability

#189

Post by long_time_gone » Wed, Jul 28, 2021, 3:27 PM UTC

scott00 wrote: post #126

long_time_gone wrote: post #59

Earlier quoted context omitted.

==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…

Goodwill only ever shows up as the result of an acquisition. If a company with a book value of $1B gets acquired for $10B, the balance sheet of the acquirer will see its goodwill increase by $9B after the acquisition closes. Nobody's doing a bottom up estimate of brand value to come up with that $9B, it's just the fudge factor double entry accounting needs in order to make the Equity = Assests - Liabilities equation…

This is true from a pure accounting perspective. In reality, if a company only has discounted cash flows to imply a $1b valuation but sells for $10b, there must be something to explain that difference. In accounting, it's just an equation to make things balance. However, for the firm who decided to offer $10b, there is clearly some additional value they are applying to the $1b book.

Re: TV Advertising Effectiveness and Profitability

#190

Post by scott00 » Wed, Jul 28, 2021, 3:28 PM UTC

zeusk wrote: post #148

scott00 wrote: post #126

Earlier quoted context omitted.

Goodwill only ever shows up as the result of an acquisition. If a company with a book value of $1B gets acquired for $10B, the balance sheet of the acquirer will see its goodwill increase by $9B after the acquisition closes. Nobody's doing a bottom up estimate of brand value to come up with that $9B, it's just the fudge factor double entry accounting needs in order to make the Equity = Assests - Liabilities equation…

Why not just pare down the assets by $9B to reflect the expenditure of acquisition?

In double entry accounting, the $9B has to go somewhere, or you defeat the primary objective, which is to make it harder to forget transactions by maintaining a number of invariants. The two relevant ones here are [Equity]_t = [Assests]_t - [Liabilities]_t, and [Equity]_t = [Equity]_t-1 + [Profit]_t + [net cash from stock issuance/buybacks]_t - [dividends]_t

The method that GAAP chooses is to move the $9B from cash to goodwill (assuming a cash transaction), which is a transfer from one type of asset to another. The alternative that I think you're suggesting is to move it from cash to expenses for the period in question. There's not necessarily a right answer to this question, accounting conventions are subjective, but I think most people think that the market premium you pay in an acquisition is more like acquiring an asset that will yield future business profits than an expense which, now that you've paid it, will have no future utility to the business. And it's easy enough to look at it the other way if you care to: the goodwill is reported in the balance sheet, and the cash flow statement shows the huge outlay of cash.