Abstract:

Heavy up TV advertising for packaged goods has been the traditional way of estimating its effect on sales in the United States. With recent advances in information technology, testing can now be replaced by econometric modelling techniques that removes the influences of other marketing factors such as price changes, promotions, distribution and competition. The result is estimates of different sales responses over a range of television GRP delivery levels. This allows the TV budgeting and the local market allocation process to be planned on the basis of its contribution to sales. This paper begins with a discussion of evaluating advertising's sales response in the U.S. in an historical context, beginning as a design-driven process and recently moving to a model-driven process. The subject of econometric analysis for packaged goods product's advertising is introduced, and the technique for handling the residual effects of advertising is discussed. The non- linear nature of the advertising-to-sales relationship is displayed in a unique format for direct, end-user decision- making. Live examples demonstrate the power of the approach on both a national and local basis. There is a discussion of continuous vs. flighting schedules, day parts and limitations of the approach. A special-case application of econometrics is discussed for those who are wedded to test vs. control designs.