How do big companies assess whether their TV ads were useful or not?
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A lot of times they don’t. They run the ads and assume they are working. Other times they do focus groups to figure out what might work. They also look at sales data before and during the ad campaign but this is false info. If you run an ad about sales over a holiday did people buy because of the ad, because of the sale, or because they had time over a holiday?
The true way to test that some companies do is they run an ad in one region and no ad or a different ad in a neighboring region. Then they can compare the data between the two. But that requires them to not advertise somewhere and they are always hesitant to risk their competitors having an advantage.
When we do other market research we will sprinkle in questions about whether they saw advertising, what they saw, what was their impression of it, etc.
Other times we do specifics research explicitly about the advertising.
In addition to other answers, the background behind why they run ads where they do is entirely based on the demographic data of people watching.
If you pay any attention to TV ratings, you’ll often hear that the demo ratings are more important than the total number of viewers, which is absolutely true. A TV network will make far more money selling ads for a show with for example the no.1 ranking among males 25-54 than a show with more overall viewers but not ranking particularly strongly in any specific demography, as they will sell ad spots for that program for a lot of money, as companies with products for males will see that as a very lucrative spot.
Of course, this takes us to a bigger issue, that TV ratings are highly inaccurate and just based off best estimates from a small number of TV ratings boxes in certain homes and then weighting those results.
In the coming decades this will become more accurate, as more networks and TVs adopt the ATSC 3.0 standard (under different names in other countries outside the US), which among other things like 4K capabilities, will allow the network to ‘talk’ to TVs directly and know exactly what people are actually watching.
My first job put of school was at an advertising tracking company. We had people recording TV and radio, and they would track the instances of a particular version of an add being played. This was the first part, to ensure the given media was displaying the expected add as often as they were contracted to. Internet ads were a little easier to track as they often had hidden codes to explicitly identify which version of an ad they were.
As far as effectiveness, different versions of an ad might give you different information, like a discount code to use or something like that. They would also pay people who would wear devices to listen for hidden audio within various media to track the ads these people specifically were exposed to. This isnt directly a measure of effectiveness, but more so of exposure.
By seeing which ads played when and how often and correlating that to changes in sales, companies can then get an idea of how effective the ads they run were.
I remember an old joke that said something like this:
> The marketing director of a company was told “we spend ten million dollars on advertising, but only 10% is effective”. “Well, if you tell me *which* 10%, I’ll give you a million dollars”.
One of the marketing division’s main tasks is to be the most efficient at that, and the research they can do about how much benefit they gain from each of their actions is one of the main tools they have.
One strategy is to use a different toll-free number for ads on different networks, then compare the number of calls to each. Print advertising is similar.
In public health, which runs a lot of ads for things like vaccination, exercise, alcohol/drug consumption, STI prevention, there is a lot of research that can go into the messages before the ads are created. Focus groups etc. This way they can be pretty sure the message is going to resonate with audiences. After the fact, they can look at changes in response, e.g. did more people get vaccinated than last year, more than last week? Are STIs down?
Advertisers also measure something called brand lift, which means did an audience hear about a product recently? They may track how often people heard their product/service before a campaign, and measure it again after. Sometimes you don’t measure ad results just by sales, but also by awareness.
I’m a software engineer in the marketing department of a very large/well known company. Not sure how other companies do it, but advertisement data is very much analyzed by many finance groups, with metrics such as spend, impressions, and clicks (depending on what kind of ad is being tracked)
Lot of wrong answers here. There are entire companies dedicated to tracking exposure to the ads, often with people who opt-in to their “panel” and are modeled out to the population. These people are surveyed or tracked to assess how the ad might have impacted them and that acts as an indicator for how the ads are doing.
Companies are also advertising for a lot of reasons other than sales.
Big companies employ people to do maths to work out the effect of lots of different things on sales. They create models, which are basically just sums that say sales = all these things that influence sales.
This ends up looking like:
Sales = base level of sales + price discounting + Xmas boost + advertising – price increase – competitor advertising
Over time you can see patterns. When we discount sales go up. When we discount AND go on TV sales go up even more. By understanding all of the factors that drive sales, you can put a value on each of them and understand whether your TV ads drove more sales than they cost.
Source: Econometrician – it’s my job to do this.
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