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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 a

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.

mjburgess 5y ago
Indeed. When I walk into the store there are a very limited number of colas on offer: a can of pepsi, a can of coke, etc. What exactly is the advert for? My choice has largely been made.
- hammock 5y ago
  A lot of marketing money is "paid" (simplifying here, but I can expand if desired) to get that shelf space from the store, as well, in ways that you probably didn't know/haven't thought about.
  - bluGill 5y ago
    depends on the Store. WalMart doesn't sell shelf space the way most others do. Though WalMart is doing their own something that I don't understand.
- handmodel 5y ago
  I think I have the opposite reaction from the same data. The reason I can't get my own sugar water on a grocery store shelf is because the grocery store doesn't want to give space to something that only sells half as well. And, they are humans too, so I'm sure they are biased by the ads/perception of what they think other people want. I think a lot of the long-term bonus of ads is to simply build a moat that other competitors find difficult to surmount.
  - nickff 5y ago
    I think you're overlooking a couple of grocery-specific issues. Many major retailers will require that new brands invest a certain amount of money in advertising product to their region/market before stocking the product. It's also common to 'lease' shelf space to manufacturers.
    - handmodel 5y ago
      I think we largely agree. I know people who have launched food items (bug snacks) that were piloted in a dozen or so Whole Foods. They didn't sell enough in the trial period that they weren't given offer/lease to return. It was a super niche product they were making but were up against a couple products that I've at least seen ads for online. I think, theoretically, if those other companies didn't have a brand presence then perhaps my friends snacks would have had a slightly better shot at staying on the shelfs. However, from the other products data they may have seen no short-term gain from their ads.
- edmundsauto 5y ago
  1. You may already have a brand, but many don't - so they want people to switch. 2. People who don't drink soda need to get hooked somehow! 3. Increasing consumption. Think about the "Got Milk?" campaigns of the 90s - they weren't saying "drink XYZ brand milk", they were looking to increase milk consumption. I think #3 is probably the biggest factor, tbh. That's why you see ads for cotton, milk, beef, avocado, etc.
  - nickff 5y ago
    I think you're missing the biggest reason for product advertising, which is to notify/remind potential users/consumers that the product exists. Many people are unaware that a given product exists at all, and others are unaware of all its potential uses; even occasional users can sometimes forget that they liked a product or found it useful.
  - bluGill 5y ago
    #3 is because there are middlemen that don't count. The middlemen in dairy want you to buy their brand of milk. However the guy who owns the cows sells to whichever dairy gives the best deal (the big farms all have a contract with one dairy to supply only them, but there are enough small guys who sell to who ever they can). The guy who owns the cows wants you to buy milk and doesn't care what brand it is. The same applies to the others you named: sure there are brand, but there is something large below the brand that doesn't care what brand, only that you are eating.
- hogFeast 5y ago
  Exactly. The cost and effectiveness of advertising is why there are a limited number of choices. Your choice has been made for you.
nemothekid 5y ago
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 detergent and Tide felt the safest. I've been watching Tide ads for the better part of 18 years and I feel that had to have some decision into why I paid a 10% premium for the brand.
- truffdog 5y ago
  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.
  - fumar 5y ago
    What about Tide made it better?
long_time_gone 5y ago
==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 intangible assets of $11.2 billion. That $29 billion of Goodwill makes up about 32% of Coke's total assets of $90 billion. https://finance.yahoo.com/quote/KO/balance-sheet?p=KO https://finance.yahoo.com/quote/KO/balance-sheet?p=KO
- hengri 5y ago
  I was under the impression that marketing costs fall under a cost of revenue column and goodwill is just a BS account item to account for differences in money spent and 'market value' during m&a. See https://www.investopedia.com/terms/g/goodwill.asp https://www.investopedia.com/terms/g/goodwill.asp
  - ghaff 5y ago
    Not market value as the term is usually used. Value of assets less liabilities.
  - long_time_gone 5y ago
    The third sentence of your link: "The value of a company’s brand name, solid customer base, good customer relations, good employee relations, and proprietary technology represent some reasons why goodwill exists." The first three are directly tied to advertising and brand-building. You call it "BS" for some reason (you seem not to believe in it), but it is a real thing and we have financial methods to account for it.
    - bokstavkjeks 5y ago
      > You call it "BS" for some reason (you seem not to believe in it) The balance sheet is typically abbreviated as BS, so a BS account is a balance sheet account. It's been a while since I've had anything to do with goodwill, but if I remember correctly it's most commonly the difference in the assets net market value and the purchase price of a company. So if company A buys company B, which has assets of $50 for $100, then they'll add $50 in goodwill to account for the difference. This is, of course, a simplification as I'm sure goodwill is regulated under GAAP/IFRS. But it does mean that you can't use goodwill to accurately estimate the effects of brand advertising as there could reasons other than brand marketing for a company being traded above its assets' fair market value at the time of the sale.
ghaff 5y ago
A lot of marketing activity is measured these days. A lot of the measurement ends up being through proxies that may correlate poorly with what you really care about. But you might be surprised at the amount of data associated with marketing campaigns, content marketing, events, and so forth. It's a lot more than used to be the case.
hogFeast 5y ago
It clearly is quantifiable. The market is changing but if you capitalize advertising costs in financial results then you see that long-term investment in advertising does produce results, and companies in these industries view this investment as their moat (and btw, if you sell a FMCG into a grocer, they will want to know what you are investing into the brand...they know it works too). Now, to be clear, this isn't the same thing as saying that all TV advertising has a positive ROI. It doesn't, I would guess that most is negative. But it is also true that there are a small number of firms who have made it work (as in most things, 80/20), and most of this gain is not easily measurable over discrete periods...it is continuous investment over decades. But the market has clearly changed. People are spending their time doing different things. I think TV advertising time at certain periods is maybe cheap, but almost all the rest is overvalued junk. AdTech online isn't particularly well developed for this kind of campaign, online advertising isn't particularly effective either (the move to intention doesn't fit the long-term strategy that FMCG and similar big buyers of TV ads have) but it is probably more effective. Maybe if TV costs go down this will change, but...I don't know (radio and door-to-door is undervalued imo).

mjburgess 5y ago

Indeed. When I walk into the store there are a very limited number of colas on offer: a can of pepsi, a can of coke, etc. What exactly is the advert for? My choice has largely been made.

hammock 5y ago
A lot of marketing money is "paid" (simplifying here, but I can expand if desired) to get that shelf space from the store, as well, in ways that you probably didn't know/haven't thought about.
- bluGill 5y ago
  depends on the Store. WalMart doesn't sell shelf space the way most others do. Though WalMart is doing their own something that I don't understand.
handmodel 5y ago
I think I have the opposite reaction from the same data. The reason I can't get my own sugar water on a grocery store shelf is because the grocery store doesn't want to give space to something that only sells half as well. And, they are humans too, so I'm sure they are biased by the ads/perception of what they think other people want. I think a lot of the long-term bonus of ads is to simply build a moat that other competitors find difficult to surmount.
- nickff 5y ago
  I think you're overlooking a couple of grocery-specific issues. Many major retailers will require that new brands invest a certain amount of money in advertising product to their region/market before stocking the product. It's also common to 'lease' shelf space to manufacturers.
  - handmodel 5y ago
    I think we largely agree. I know people who have launched food items (bug snacks) that were piloted in a dozen or so Whole Foods. They didn't sell enough in the trial period that they weren't given offer/lease to return. It was a super niche product they were making but were up against a couple products that I've at least seen ads for online. I think, theoretically, if those other companies didn't have a brand presence then perhaps my friends snacks would have had a slightly better shot at staying on the shelfs. However, from the other products data they may have seen no short-term gain from their ads.
edmundsauto 5y ago
1. You may already have a brand, but many don't - so they want people to switch. 2. People who don't drink soda need to get hooked somehow! 3. Increasing consumption. Think about the "Got Milk?" campaigns of the 90s - they weren't saying "drink XYZ brand milk", they were looking to increase milk consumption. I think #3 is probably the biggest factor, tbh. That's why you see ads for cotton, milk, beef, avocado, etc.
- nickff 5y ago
  I think you're missing the biggest reason for product advertising, which is to notify/remind potential users/consumers that the product exists. Many people are unaware that a given product exists at all, and others are unaware of all its potential uses; even occasional users can sometimes forget that they liked a product or found it useful.
- bluGill 5y ago
  #3 is because there are middlemen that don't count. The middlemen in dairy want you to buy their brand of milk. However the guy who owns the cows sells to whichever dairy gives the best deal (the big farms all have a contract with one dairy to supply only them, but there are enough small guys who sell to who ever they can). The guy who owns the cows wants you to buy milk and doesn't care what brand it is. The same applies to the others you named: sure there are brand, but there is something large below the brand that doesn't care what brand, only that you are eating.
hogFeast 5y ago
Exactly. The cost and effectiveness of advertising is why there are a limited number of choices. Your choice has been made for you.

nemothekid 5y ago

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 detergent and Tide felt the safest. I've been watching Tide ads for the better part of 18 years and I feel that had to have some decision into why I paid a 10% premium for the brand.

truffdog 5y ago
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.
- fumar 5y ago
  What about Tide made it better?

long_time_gone 5y ago

==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 intangible assets of $11.2 billion. That $29 billion of Goodwill makes up about 32% of Coke's total assets of $90 billion. https://finance.yahoo.com/quote/KO/balance-sheet?p=KO https://finance.yahoo.com/quote/KO/balance-sheet?p=KO

hengri 5y ago
I was under the impression that marketing costs fall under a cost of revenue column and goodwill is just a BS account item to account for differences in money spent and 'market value' during m&a. See https://www.investopedia.com/terms/g/goodwill.asp https://www.investopedia.com/terms/g/goodwill.asp
- ghaff 5y ago
  Not market value as the term is usually used. Value of assets less liabilities.
- long_time_gone 5y ago
  The third sentence of your link: "The value of a company’s brand name, solid customer base, good customer relations, good employee relations, and proprietary technology represent some reasons why goodwill exists." The first three are directly tied to advertising and brand-building. You call it "BS" for some reason (you seem not to believe in it), but it is a real thing and we have financial methods to account for it.
  - bokstavkjeks 5y ago
    > You call it "BS" for some reason (you seem not to believe in it) The balance sheet is typically abbreviated as BS, so a BS account is a balance sheet account. It's been a while since I've had anything to do with goodwill, but if I remember correctly it's most commonly the difference in the assets net market value and the purchase price of a company. So if company A buys company B, which has assets of $50 for $100, then they'll add $50 in goodwill to account for the difference. This is, of course, a simplification as I'm sure goodwill is regulated under GAAP/IFRS. But it does mean that you can't use goodwill to accurately estimate the effects of brand advertising as there could reasons other than brand marketing for a company being traded above its assets' fair market value at the time of the sale.

ghaff 5y ago

A lot of marketing activity is measured these days. A lot of the measurement ends up being through proxies that may correlate poorly with what you really care about. But you might be surprised at the amount of data associated with marketing campaigns, content marketing, events, and so forth. It's a lot more than used to be the case.

hogFeast 5y ago

It clearly is quantifiable. The market is changing but if you capitalize advertising costs in financial results then you see that long-term investment in advertising does produce results, and companies in these industries view this investment as their moat (and btw, if you sell a FMCG into a grocer, they will want to know what you are investing into the brand...they know it works too). Now, to be clear, this isn't the same thing as saying that all TV advertising has a positive ROI. It doesn't, I would guess that most is negative. But it is also true that there are a small number of firms who have made it work (as in most things, 80/20), and most of this gain is not easily measurable over discrete periods...it is continuous investment over decades. But the market has clearly changed. People are spending their time doing different things. I think TV advertising time at certain periods is maybe cheap, but almost all the rest is overvalued junk. AdTech online isn't particularly well developed for this kind of campaign, online advertising isn't particularly effective either (the move to intention doesn't fit the long-term strategy that FMCG and similar big buyers of TV ads have) but it is probably more effective. Maybe if TV costs go down this will change, but...I don't know (radio and door-to-door is undervalued imo).