Archive for the 'Empirical Generalizations' Category

How Important are ads for brands?

What’s happening with brands? Customers are price sensitive; more products are failing; more trips to discount outlets

Changes in promotion spending – it’s up –  advertising has shrunk at the expense of trade promotions.

A longer-term view: looks at “quantity premium” – how much more a brand sells compared to similar brands, and  “margin premium” – Brand marketers want to see a high quantity premium and a high margin premium

Advertising and distribution increases quantity premium; discounting hurts (finding from study that looked at poor performers and good performers).

Strategy and price premiums: distribution and discounting reduce price premium; advertising increases it.

Sum – many brands are flailing, short-term orientation favors discounting, long-term metrics favor advertising

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Six Degrees of Engagement

Mike Bloxham, Mike Holmes

Empirical Findings – less than one-third of the consumer’s day is spent in a “media only” condition.

More than half of all media exposure occurs concurrently with a non-media life activity, such as eating, change a diaper, etc.

Mike presented a very rich chart on simultaneous media usage which described how media become primary and secondary.  An interesting example is TV. When it’s a primary medium, it dominates consumption. But when another medium is added, TV takes on a secondary role, becoming a background medium. The switch from foreground to background has implications for advertising.

Advertising: What’s New? What Works? And Why Barry Diller Has a Headache.

In an article in The Wall Street Journal Barry Diller sums up some of the challenges facing advertisers and agencies in today’s environment: “You really want to get a headache?  Try to understand internet advertising. Social networking advertising is being discounted because there is so much inventory [of available ad spots], and because methods have not yet been found to make it very effective. Will that get figured out? I absolutely believe it will. What form will it take? Absolutely unknown.”

From the Internet to social networks to cell phones, many emerging channels and models that are challenging traditional, one-way, mass media communications and teaching the old spot new tricks. But which of these experiments will be be successful? Which ones actually work? What do we know from past experience about the “immutable” laws of advertising, and which ones need to be reexamined in today’s changing environment? It is no wonder that an astute advertiser such as Diller might have a headache. While much remains unknown, however, Diller is not completely right when he describes this world as terra incognita.

We already have quite a bit of knowledge and experience — decades of rigorous research on advertising, and diverse recent experiments with new models. In fact, the Internet facilitates rapid experimentation and analysis. On December 4-5, The Wharton School’s SEI Center (through its Future of Advertising Project), along with many other partners, will draw together an international group of thought leaders from academia and industry to assess what we know about advertising and what works (empirical generalizations). The results of the invitation-only Empirical Generalizations in Advertising conference will be published in a special issue of the Journal of Advertising Research, but we will offer updates here as the conference unfolds. We expect to shed some important light on this brave new world.

Robert Gunther

PS: To whet your whistle or for more information, check out the conference agenda and recent blog posts on the SEI Center Future of Advertising site.