How do big companies assess whether their TV ads were useful or not?
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It’s something which can be proven to have an effect on the small scale, and on the larger scale it becomes much harder to prove but can be assumed to be having SOME effect.
A big example was an isolated experiment by the tobacco companies in the US. They picked a few towns and ran a series of experiments. In a normal town that they all spend a fair amount of money on advertising in, they all had roughly equal shares of the market. Each company was assigned one town that ONLY they would get to advertise in, the others would stay out. And what they saw was that after a few months about 80-90% of the market was JUST buying the advertised brand even though the other brands were available, just not advertised. Then they doubled up with each experimental town shared by two advertisers. After a few months, they both had an almost perfectly even split of the same 80-90% of the market.
And the biggest experiment of all was a set of towns where all the companies entirely removed all advertising. Their products were still on the shelves, but no billboards, tv/radio ads, no posters, etc. And the result? The same as when they were all spending loads of money on advertising, a near even split of the town’s market for tobacco products.
So the result in these small scale tests was that the tobacco companies realized they had a bit of a game of “Prisoner’s Dilemma” on their hands. If everybody advertised (and spent money) then everyone got an equal share. If NOBODY advertised (and saved money) then everyone got an equal share. But if ONE company advertised when nobody else did, that company won the lions share of the market.
The result?
The tobacco companies immediately stopped lobbying against laws meant to restrict tobacco advertisements. If it was legally enforced that NOBODY could advertise, they didn’t have to worry about anyone breaking ranks for individual profit.
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