Facts – Traditional Advertising

 

Effectiveness

General Facts

EFFECTIVENESS

FACT: According to a recent Nielsen study, humorous TV commercials are more effective — consistently beating ads that focus on prices and promotions — even when the economy is struggling and consumers are scaling back and spending less. ("Effectiveness" reflects measures such as appeal and likeability, ad recall and purchase intent.) "… the real surprise was the low scores ads focused on price and promotion received, even during the height of the recession," said James Russo, VP for global consumer insights at Nielsen, in a statement provided by the company. "Contrary to what many leading companies might have thought." (Nielsen study of 4,000 packaged-goods commercials from 2006 through 2011; Advertising Age, 6/21/12).

  • “In 2008 and 2009, when the recession was at its worst, humorous ads scored 133 on Nielsen's effectiveness scale, where 100 is the average. Price-driven ads received a score of 73 during the same period.”
  • “Humorous ads' effectiveness dipped somewhat in the recession while price ads improved marginally, but price ads still underperformed other creative approaches, according to the study.”
  • “While price- and promotion-centered ads did not particularly resonate with recession shoppers, however, value propositions did. Instead of focusing primarily on a sale or specific price, Nielsen said, value-centric ads go beyond price to communicate other benefits such as convenience and affordability. Ads pitching value saw a significant lift in effectiveness during the recession, when their scores jumped to 107 from 88, according to Nielsen.”

FACT: When Anheuser-Busch abruptly switched the advertising for Bud Light — abandoning the emotional appeals that had helped it become the number one beer in America for straightforward pitches about process and product attributes — it resulted in the first full-year sales decline in the brand’s history (Advertising Age, 3/15/10).

FACT: 40% of consumers have a "positive attitude" towards ads on TV and in print (magazines and newspapers). Only 22% of consumers have a positive attitude towards ads on social media Web sites (Dynamic Logic Ad Reactions 2009 study; Ad Age magazine, 1/27/10).

FACT: The importance of image: Changes in a company's earnings, sales and other investing fundamentals account for just 30% of explainable moves in stock prices. The other 70% is attributable to marketing and publicity efforts, as well as bad press and negative reviews (University of Michigan study; Seattle Times, 9/27/09).

FACT: Obvious branding works in ads. The more often a brand appears in a TV ad, the more likely consumers are to remember what brand it was for. However, obvious brand placements in TV shows are more likely to backfire. They're better remembered, but more likely to be remembered negatively (The Future of Advertising project, a review of seven marketing databases and 388 marketing studies underwritten by the Wharton School and performed by the Advertising Research Foundation; Ad Age magazine, 6/1/09).

FACT: Each one percent increase in advertising produces a roughly 0.1 point change in sales or market share. As a result, an optimal ad budget is about 10% of gross profits (The Future of Advertising project, a review of seven marketing databases and 388 marketing studies underwritten by the Wharton School and performed by the Advertising Research Foundation; Ad Age magazine, 6/1/09).

FACT: Research data from Marketing Evolution shows print ads are more effective than TV or online advertising at creating "purchase intent." A separate study suggests that print advertising produces a higher sales lift per dollar spent than TV (The Future of Advertising project, a review of seven marketing databases and 388 marketing studies underwritten by the Wharton School and performed by the Advertising Research Foundation; Ad Age magazine, 6/1/09).

FACT: While TV advertising still works as well or better than it did 10 years ago, it loses money for most marketers — except the heaviest spenders (The Future of Advertising project, a review of seven marketing databases and 388 marketing studies underwritten by the Wharton School and performed by the Advertising Research Foundation; Ad Age magazine, 6/1/09).

FACT: Direct results of advertising on 2008 Super Bowl (Ad Age magazine, 1/26/09):

  • The brand awareness for Cars.com grew 12%.
  • Traffic to Audi's Web site swelled 200 percent in the 30 days following the game.
  • Job applications surged 68% on the CareerBuilder site in the three months following the game.
  • More than 300,000 people visited the Hyundai Web site during the game — and stayed there for more than five minutes.
  • Of the 300,000 people who visited the Hyundai site during the game, 25,000 provided personal information, were deemed "rich" sales leads and became "an important source of vehicle sales."
  • The publicity value for GoDaddy's controversial ad was pegged at $11.7 million.
  • Anheuser Busch had 21 million online ad views the week after the game.

FACT: The first year GoDaddy advertised on the Super Bowl (2005), its market share jumped from 16% to 25% (and held). The next year it advertised (2006), market share jumped from 25% to 32%. And every year thereafter has produced similar results. Currently, the company has a market share of 46% (Bob Parsons, GoDaddy founder and CEO; Ad Age magazine, 1/26/09).

FACT: When surveyed, most TV watchers are able to correctly recall a traditional TV ad nine to 25% of the time (Wall St. Journal, 5/20/08).

FACT: A single consumer must see a display advertisement at least nine times before considering making a purchase (Direct Marketing Association research; The Globe and Mail, no date).

FACT: Apple's wildly popular Mac versus IBM TV ad campaign has increased the company's market share by 4% to 5% (Ad Age Digital magazine, 1/28/08).

FACT: After three viewings of the same print ad, readers of magazines and newspapers stop responding to it (and actually start to get annoyed by it). For TV ads, most people reach this "wear out" stage after eight viewings of the same advertisement (Kate Sirkin, EVP global research, Starcom MediaVest Group; Ad Age magazine, 12/1/08).

FACT: TV ads with a storyline wear out more slowly than those with an aggressive call-to-action (Starcom MediaVest Group study; Wall St. Journal, 10/1/07).

FACT: TV ads taken off the air for 12 weeks can start again with their original effectiveness (Starcom MediaVest Group study; Wall St. Journal, 10/1/07).

FACT: Acquiring a new customer costs about five to seven times as much as maintaining a profitable relationship with an existing customer (Mark Fleishhacker Ogilvy Consulting; Wall St. Journal, 11/26/08).

FACT: A number of studies have shown that pharmaceutical companies earn $2 in sales (over the life of the drug) for every dollar they spend on consumer-targeted ads for the drug (Wall St. Journal, 10/08).

FACT: Consumers exposed to the advertising of 13 mid-to-large brands for several months spent 5% to 8% more money on those brands than they did prior to the advertising exposure. Consumers in the brands' target demographic boosted their spending even more (8% to 12%). Joint study performed by Arbitron and Nielsen; Wall St. Journal, 2/27/07.

GENERAL FACTS

FACT: “Advertisers are willing to pay between $30 to $40 to reach 1,000 people between 18 and 49 years old on a broadcast network in prime-time, sums that are up more than 10% from last year for some ads, buyers say. The average cost per thousand households for a TV spot at any time of day on network television during the last TV season was $14.50, according to media forecasting company SQAD Inc. For cable, it was $6” (Wall St. Journal, 9/21/11).

FACT: “We receive more than 3,000 commercial images a day; our subconscious absorbs more than 150 images and roughly 30 reach our conscious mind” (Advertising Age, 9/23/10).

FACT: Companies that cut their advertising when the economy is down typically end up paying four to five times the amount saved to regain lost market share once the economy rebounds (David Sable, COO, Wundrman/WPP Group; Wharton newsletter, 11/26/08).

FACT: In a study of 600 business-to-business companies, McGraw-Hill Research found that businesses that maintained or increased their advertising expenditures during the 1981 -1982 recession averaged higher sales growth during the recession and in the three years following. By 1985, sales of the more aggressive recession advertisers had risen 256% over those that cut back on advertising (paper titled "Innovation through Recession" by professor Andrew J. Razeghi, Kellogg School of Management, copyright 2008).

FACT: The automotive industry spends more than any other on advertising, accounting for more than 12% of all advertising spending in the U.S. (Wall St. Journal, 8/7/08).

FACT: 67% of the online population is driven by offline messages to perform online searches for more information on a company, service or product. Thirty-nine percent of those respondents then make a purchase (2007 Ipsos survey of U.S. consumers).

FACT: Advertising in the U.S. is currently growing at about 4% to 5% annually, while advertising in China is growing at about 18% (head of large U.S. ad agency interviewed by Wall St. Journal, 12/6/06).

FACT: A minimum of 20% of customers leave a merchant in any given year (report: "How to Overcome Retail-Customer Erosion by Capturing New Residents," created by the direct-marketing firm Moving Targets; DM News, 7/21/06).

FACT: In 2005, about 700 new products were being introduced into the marketplace every day (Los Angles Times, 3/26/05), and consumers were exposed to about 500 advertising messages a day (Wall St. Journal, 7/30/04).

 

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