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TV Advertising Effectiveness and Profitability

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Re: TV Advertising Effectiveness and Profitability

#161

Post by rmah »

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?

I don't know the details, but I'm pretty sure it's tax related. I'll bet companies would love to be able to do that. Because then that company could deduct that capital loss from their income to lower or eliminate their tax burden.

Re: TV Advertising Effectiveness and Profitability

#162

Post by MuffinFlavored »

ProfessorLayton wrote: post #125
MuffinFlavored wrote: post #107

Earlier quoted context omitted.

> 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.

"Boring" utilitarian cars have gotten much, much better over time, and can easily match acceleration times of previous "pony" cars of the 90s and earlier — cars that were once considered fast, sporty, and fun to drive. They can do it while being much larger and achieving much better MPG, as well as being a lot safer. Utilitarian electric vehicles are even better, but not quite commonplace yet.

> "Boring" utilitarian cars have gotten much, much better over time

I would rather the commercial tell me how purposeful their car is, not how much fun it would be to drive. It's extremely fake/in bad taste/disconnected from reality to try to sell me a Nissan Versa based on how much fun I am going to have in it.

Re: TV Advertising Effectiveness and Profitability

#163

Post by s1artibartfast »

malshe wrote: post #154
s1artibartfast wrote: post #149

Earlier quoted context omitted.

In short, %80 return means that if you spend 1.0, you only get back 0.8. You forever lose the $1 spent, but get more sales and worth $0.8 after costs. Here are more details (repeated for clarity) Assumptions: 20% corporate tax rate (assessed on total profit) 80% Marginal rate of return for advertising (next dollar you can spend) 1) You have $2 profit (before taxes). You can take it and pay $0.4 in taxes, leaving $1.6…

Ok, thanks for the explanation. I got confused because of your definition of ROI. Normally, ROI of 80% would mean you invest $1 and get back $1.8 in return. see https://www.investopedia.com/terms/r/returnoninvestment.asp . What you described will mean -20% return and not 80% return. But I get the point you are making and I agree with it.

I see, sorry for the confusion.

Re: TV Advertising Effectiveness and Profitability

#164

Post by midasuni »

I bought some woodstain the other week. I chose to seals quick drying woodstain because it’s woodstain that’s quick drying and from ronseals. It does exactly what it says on the tin

The only reason I chose this was because of the pervasive tv adverts in the 1990s when I was a teenager. Back then I had no need for woodstain, and very limited idea on what I would want it for, I didn’t buy any until 15 years after I stopped watching live tv (and thus tv adverts).

First place I’m going to look for a new sofa would be DFS, again because of the adverts, again from the 90s.

How do studies catch the roi over decades?

Re: TV Advertising Effectiveness and Profitability

#165

Post by slg »

Jtsummers wrote: post #134
slg wrote: post #132

Earlier quoted context omitted.

If Elon Musk is one of the richest men in the world and draws roughly a minimum wage salary, is salary really that valuable to building personal wealth? That is the equivalent of what you are asking. Musk has other forms of income and wealth accumulation that other people don't have. Therefore his salary shouldn't be used to compare to people who don't have those other methods of income. Similarly Tesla has other adv…

"Lack of advertisement" should be "Lack of conventional advertisement" Musk is strongly associated with Tesla in many people's minds and he's very capable of keeping himself in the public's focus. Then there's SpaceX which literally launched a Tesla into space. Umm, that launch was advertising. Even if it didn't come out of an "Advertising" budget line. Every manned SpaceX launch uses a Tesla vehicle to get the astro…

It is semantic debate and what you are talking is certainly marketing, but it isn't really advertising. Advertising usually requires paying someone else to communicate the message.

Re: TV Advertising Effectiveness and Profitability

#166

Post by quickthrowman »

slg wrote: post #132
reader_mode wrote: post #110

Earlier quoted context omitted.

If the hottest company in auto is spending 0 on ads are ads really that valuable to auto industry ?

If Elon Musk is one of the richest men in the world and draws roughly a minimum wage salary, is salary really that valuable to building personal wealth? That is the equivalent of what you are asking. Musk has other forms of income and wealth accumulation that other people don't have. Therefore his salary shouldn't be used to compare to people who don't have those other methods of income. Similarly Tesla has other adv…

> Musk has other forms of income and wealth accumulation that other people don't have.

Yes, most people don’t have billions of dollars of equities they can borrow against to finance their lifestyle.

Re: TV Advertising Effectiveness and Profitability

#167

Post by hellbannedguy »

slg wrote: post #132
reader_mode wrote: post #110

Earlier quoted context omitted.

If the hottest company in auto is spending 0 on ads are ads really that valuable to auto industry ?

If Elon Musk is one of the richest men in the world and draws roughly a minimum wage salary, is salary really that valuable to building personal wealth? That is the equivalent of what you are asking. Musk has other forms of income and wealth accumulation that other people don't have. Therefore his salary shouldn't be used to compare to people who don't have those other methods of income. Similarly Tesla has other adv…

"If Elon Musk is one of the richest men in the world and draws roughly a minimum wage salary, is salary really that valuable to building personal wealth?"

These rich boys take out loans at 0, or 1%, and take their pay from that.

I still don't know quite how the tax dodge works? It makes sence. You get a loan, and that is not taxed, and eventually pay it back at a low interest rate. I thought corporate expenditures were scrutinized a bit more though?

Re: TV Advertising Effectiveness and Profitability

#168

Post by megablast »

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.

Does it??

Re: TV Advertising Effectiveness and Profitability

#169

Post by megablast »

reader_mode wrote: post #110
slg wrote: post #83

Earlier quoted context omitted.

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.

If the hottest company in auto is spending 0 on ads are ads really that valuable to auto industry ?

Exactly. Every car company just needs to appoint Elon musk as it’s CEO.

Re: TV Advertising Effectiveness and Profitability

#170

Post by mhuffman »

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.

>spends 0 on advertising

I mean there is probably a number you can put on having one of the most famous people on Earth hawking the brand 24/7 ...

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