What I mean by that, is how do companies quantify the results of their advertising expenditures? When a company spends $3 million on a Super Bowl ad, how do they tell if it was worth the money? A general boost in sales? Or is there a method I’m unaware of that they use to correlate sales directly to advertisements?
One thing they do is find out how many people remember seeing an ad, they do surveys for that. Then they ask if seeing the ad made them buy the product or more likely to buy it in the future. Big companies spend a good amount of money to follow up their ads to see how well they work. They go beyond just looking at sales figures following an ad campaign.
Some ads do it much more directly. Ever see an ad that says something like “or order online at www .buythisthing. com/tv7”? Odds are you can buy it just as easily by going to www .buythisthing. com. The “tv7” part just tells them which ad you got the address from. Phone numbers can be done the same way.
That’s really a question for my brother as he does marketing research for a big consumer products company. But as I understand genetics, because one person in your family is good at something, the entire family should be knowledgeable in that area so I feel qualified to answer.
But basically the simple answer is a lot of surveys and statistics. And some of it is just plain old looking at the change in sales once an advertising campaign starts.
It is pretty hard to quantify though. A lot of it is simply "we need to spend x amount on advertising this year. How can we use that so it reaches the most people.
Another thing, there may not actually be a correlation between a particular advertising program and an increase in sales. A lot of advertising is simply getting the brand to take up a significant “mind share” or “brain percentage” or whatever they call it now. For example, if I were to say “name a brand of soda” you would likely say “Coke” or “Pepsi” or perhaps “Dr Pepper” if you wanted to be a smartass. The reason for it is you are constantly being bombarded by images of Coke and Pepsi.
For the most part, people don’t see a commercial and say “I need that” (unless it’s something super cool). At least not in the sense that they will drop what they are doing and run to the store. Usually you are like “I’m thirsty, what should I drink?”
Also, the old print ads that ask you to order by mail and put “Department XXXX” in the address on the envelope are the same way. “Department XXXX” tells them which magazine/newspaper you saw the ad in: “Dept. 1111” would be assigned to, say, Time. “Dept. 2222” would be assigned to Newsweek. “Dept. 3333” would be assigned to TV Guide. “Dept. 4444” would be assigned to the Sunday supplement of the chain your local newspaper belongs to. And so on.
I always wondered what would happen if a very large well known corporation with a massive advertising budget stopped advertising for a period of one year, would it save them money or cost them sales.
For example let’s take Coke. No tv ads, no billboards, no sponsored events, not a single dime spent on advertising for a year.
Would their sales actually drop?
Thanks everyone. I understand the ads with specific tags that can pinpoint the ad source. My question was more about TV ads and msmith537’s reply answered it pretty well.
I am pretty sure they do experiment by cutting all ads in a certain area so they know how that works. A company cutting all ads is very rare - I guess that could happen if they are really in trouble financially. I read the other day that Coke no longer runs ads for Tab but they still sell it. They put all their diet drink ad money into Diet Coke.
I don’t think Coke would see a drop in revenue if they stopped ads for Coca-Cola for one year. Most people are Coke people, Pepsi people or store brand cola people.
Cokes other soda’s, tea’s or juices may suffer if they don’t advertise for those products though but I think Coca-Cola would stay the same.
One of my customers ran an ad during the SuperBowl. We provide a module on their website and we noticed an increase in traffic nearly 10x within 30 seconds of the ad running. It was pretty amazing to watch. But you can get some concrete numbers that way.
Advertising is like routine maintenance. You CAN scrimp on it for awhile, but it WILL come home to roost.
If Coke stopped advertising for a year, there’s be an entire crop of 4 year-olds who never saw a Coke ad at the time they were making their life-long (unconscious) decision about which cola to prefer.
When did you last think of Oldsmobile? My family generally drove Olds when I was a kid. They were around for 45 of my 50 years. I never think of them now. Why? No advertising.
Advertising is a little like painting a ship. You keep adding layer upon layer of paint becasue any small hole in the paint leads to rust. Any one layer, any one ad view or even ad campaign, is only a single layer of paint.
But people’s fallible memories and all the competition with their paint removers aimed at your paint will quickly wear it down to the bare metal and then rust sets into your sales.
I’ve heard that’s what happened to Moxie. It was a very popular soft drink, so popular that the manufacturer decided there was no need to advertise it anymore. Within a few years, sales plummeted.
Ed
From a century ago.
Still totally true.
Yup, it was actually done by some mortgage refinance company or something similar to manage their traffic. As sales increased and their staff got busy they cut back advertising in that area. New calls dropped and the staff caught up on paperwork. The company then put advertising in areas where business was slack. Calls went up, they cut back and put their advertising in a different market, etc.
As for Coke, look at soft drinks that used to be powerhouse brands – Moxie (as noted above), Dr. Pepper, Seven-Up, Royal Crown, etc.
Hey, there. I work in advertising, and specifically in research.
The effectiveness of advertising is measured in a couple of different ways, as others have touched on.
One of the big ways is through what’s called “tracking research”. Most major advertisers conduct regular research studies, in which they ask consumers which brands they’re aware of, which brands they use, which brands’ advertising they can remember seeing recently, etc. Tracking research can be a pretty sensitive tool; you can frequently see changes in the numbers when something changes in the advertising (e.g., change in the level of advertising, premiere of a new ad campaign, etc.)
If you’re in a business in which the ads are trying to directly get the viewer to do something now (i.e., call this 1-800 number, which is called “direct response” advertising), you track response rates to the phone number / web site / whatever. I had one particular DR client who would look at the response rates on a daily basis; if a new ad went on air, and the phone rates didn’t look good the next morning, that new ad was taken off the air instantly.
Some advertisers do test markets with advertising, as well. They might “go dark” (i.e., no ad support) in a market or two, to judge the results, or alternately, “heavy up” (i.e., spend considerably more) in a few markets, again, to see if increasing the budget is worth it. Another common test is to run ad campaign A in some markets, ad campaign B in other markets, and compare the results, to see which campaign is more effective.
Oh, and the OP mentioned the Super Bowl. There are a number of research companies who specifically measure viewers’ response (recall, liking) to the Super Bowl ads. Generally speaking, the Super Bowl is tremendously overpriced for advertisers, and one exposure of one ad won’t do much, but some advertisers (particularly those who are trying to make a big one-time impact, and generate buzz) may feel it’s worth it.
Very well put.
As we’ve been counseling our clients on how to handle spending (or not spending) during the recession, we’ve found studies that were done during earlier recessions, which showed that advertisers who kept spending during recessions tended to not only have better sales during the recession (compared to those who cut their budgets), but have better sales for some time after the recession, as well.
Very interesting information, kenobi 65, thank you.
Keep in mind that there are two very different types of advertising:
Call-to-action ads are trying to sell you something NOW! They’re pretty easy to measure. Say I take out an ad–whether it’s TV, radio, newspaper, magazine, Internet, or a billboard–that says “buy a widget now and get 10% off” or “check out our brand-new widget,” there should be a noticeable increase in sales of that particular widget.
Image ads are much harder to measure. Those are the ones that just show the company’s logo and tagline, keeping them fresh in your head for the next time you make a purchase. When you’re getting ready to buy a car, you may not see the “specials” ads that ran today, but you’ll remember the zillions of ads (at least the good ones) that you’ve seen over the last year, and that’ll influence where you shop.
That’s another excellent point. A lot of times, when people say, “what was that ad supposed to do? It didn’t tell me to buy anything!”, they’re talking about an “image ad”.
After Olds was shut down in 2004 and stopped making cars, their advertising budget was drastically reduced.
