Retailing tycoon John Wanamaker once said, "I know that half of my advertising doesn't work. The problem is, I don't know which half." Your company may be spending millions of dollars on advertising, but how do you know which ads are effective? A thorough evaluation of your company's television advertising would likely show that some of the current advertising is not effective, while other ads are moderately helpful, and still others are very helpful. Leonard Lodish of the Wharton School has developed a model for measuring the effectiveness of television advertising. Companies which have used the model have found it be a highly effective management tool.
The fundamental question for Lodish's research was, why do some advertising treatments have an impact on sales and others do not? He found that many firms accept as given certain television advertising "rules". Many of these "rules" are, however, of questionable veracity. For example, most firms believe that the following are beyond dispute:
- In order to increase market share, television advertising's share of voice must be larger than current market share.
- At least three exposures per person are required to make a significant impact.
- More television advertising is better than less.
- Television advertising takes a long time to work.
Lodish tested a variety of common perceptions about television advertising for consumer packaged goods. He found that many of the long-held nostrums about television advertising are not valid, leading him to conclude that all television advertising must be tested constantly to determine as precisely as possible what works and what does not work.
When television advertisements worked, they produced considerable volume effects: a mean increase of 18% in sales.
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