Very interesting article on general advertising by Erwin Ephron & Gerry Pollak over at Ephron on Media. Check it out. Commenting on the ad industry as a whole, Ephron points out that "campaigns that measurably increase sales are outnumbered by campaigns that don’t by at least two-to-one." Ouch. Ephron & Pollak describe how most advertising effectiveness studies focus on consumer package goods advertising. CPG advertising is less effective than average due to several factors: mature consumer markets, high brand awareness, intense competition, low product differentiation, high concentration on TV, etc. Using a marketing database covering 45 firms and 3/4 of a billion dollars in spend, they show that non-CPG advertisers enjoy "substantially better" sales-to-ad-spend ratios than CPG advertisers. But -- and here's the kicker -- on average, the non-CPG folks still don't enjoy a positive return. Ouch again. They break out the sample in more detail in this graph: that's what they've always done. Bad reason.) Sure, I understand general advertising intellectually. But in my gut, I honestly don't get brand advertising. I don't understand why any firm would run advertising they can't track, or would run advertising which costs more than it returned. I was trained in direct. Every day I work in direct. So that's my bias. I grok direct. I also believe in word-of-mouth, and agree that markets are conversations. But general advertising which destroys value? Just don't get it. OK, I'll climb off my soapbox now. Time to head back to my safe world of direct. Give me tracking codes, response rates, and test cells. And, yeah, old-fashioned bottom line.
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