One of the chief difficulties in applying scientific methods to the determination of advertising budgets and to the measurement of advertising effectiveness is the absence of any general agreement as to what is or is not a legitimate charge to advertising. Carefully prepared lists have been set up of those expenditures which are clearly advertising, those which are borderline, and those which should not be charged to advertising. But very few companies have accepted these lists, except in prin¬ciple.
For example, one large food company, with sales in excess of $100 million annually, charges samples, free goods, and showroom displays to sales promotion. One of this company's principal competitors, on the other hand, not only charges such items to advertising, but also charges the cost of publicity, of customer entertainment, and of participation in trade meetings and in conventions to advertising. All these, of course, are in addition to newspaper, magazine, radio, television and other measured media advertising.
A manufacturer of machine tools and equipment charges all printed matter to advertising, including catalogs, leaflets, and direct-mail material sent to dealers and customers. Their largest competitor does no advertising. The competitor restricts its promotional efforts to trade-show participation and limited amounts of printed matter. This latter is charged to administrative overhead, while the participation in trade shows is charged to entertainment.
Failure to determine what is advertising, and charging to advertising expenses not otherwise classified, are two common failings in the management of the advertising budget. This complicates the problem of determining the returns from advertising.
In spite of these shortcomings, business managers have a fairly One of the chief difficulties in applying scientific methods to the determination of advertising budgets and to the measurement of advertising effectiveness is the absence of any general agreement as to what is or is not a legitimate charge to advertising. Carefully prepared lists have been set up of those expenditures which are clearly advertising, those which are borderline, and those which should not be charged to advertising. But very few companies have accepted these lists, except in principle.
For example, one large food company, with sales in excess of $100 million annually, charges samples, free goods, and showroom displays to sales promotion. One of this company's principal competitors, on the other hand, not only charges such items to advertising, but also charges the cost of publicity, of customer entertainment, and of participation in trade meetings and in conventions to advertising. All these, of course, are in addition to newspaper, magazine, radio, television and other measured media advertising.
A manufacturer of machine tools and equipment charges all printed matter to advertising, including catalogs, leaflets, and direct-mail material sent to dealers and customers. Their largest competitor does no advertising. The competitor restricts its promotional efforts to trade-show participation and limited amounts of printed matter. This latter is charged to administrative overhead, while the participation in trade shows is charged to entertainment.
Failure to determine what is advertising, and charging to advertising expenses not otherwise classified, are two common failings in the management of the advertising budget. This complicates the problem of determining the returns from advertising.
advertising dollars among measurable media, we can obtain a picture of how different types of industries use one or another medium.
The type of product handled has a great deal to do with the type of medium used to tell the story to the consumer. Thus, we find that "the big three" in automobiles-General Motors, Ford and Chrysler-spend be¬tween 30 and 37 per cent in newspapers, between 20 and 25 per cent in magazines, between 18 and 20 per cent on television network and another 3 to 5 per cent on television spots.
On the other hand, "the big three" in the soap and detergent business-Procter & Gamble, Lever Brothers and Colgate-Palmolive-spend less than 10 per cent in newspapers, from 6 to 15 per cent in magazines, from 45 to 54 per cent on television network advertising and another 25 to 44 per cent on television spots.
The marketing student will note that all six companies cited in the foregoing are predominantly consumer-goods manufacturers. Their advertising budgets currently range from $50 million to $110 million and are much larger than the advertising budgets of typical industrial-goods manufacturers.
Such an industrial giant as United States Steel, for example, spends less than one-tenth as much for advertising as is spent by General Motors or Procter & Gam¬ble, and only one-fifth as much as is spent by Colgate- Palmolive or Chrysler.
No comments:
Post a Comment