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So at best the tweet was a futule exercise and at worst a total cockup.
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For context, advertising for most big brands drives between 5 to 10% of annual sales, and that is typically brands spending millions per year on TV, so a shitty little press and social campaign, with associated negative PR will have no effect at all.
There's a really interesting recent paper which looks at TV advertising for some of the biggest consumer-packaged-goods brands and the findings challenge not just the conventional wisdom that 'advertising works' (otherwise why would companies spend billions on it!?) but also a backlog of previous marketing literature suggesting it was fairly effective at boosting sales. Previous literature estimated ad elasticities of 0.15-0.2 (so if you double your ad spending you increase your sales by 15-20%), while this new paper finds an ad elasticity of 0.01. New study is substantially superior in methodology and sample size. Combining the ad spend of these brands with these elasticities gives negative ROIs for over 80% of the brands in their sample, implying that for those brands reducing advertising would increase their profits!
The authors wondered why it was that firms spent all this money on advertising if these results were 'correct'. They had two interesting views. (1) while these firms are aggressively profit maximizing entities, the advertising manager at the firm may have skewed incentives; if they did lots of digging into effectiveness they might put themselves out of a job. (2) it's very hard to measure effectiveness and simple empirical methods that are readily understood by corporate types won't account for the massive endogeneity problem that you are dealing with ie firms advertise more during periods of high demand - if you don't account for the fact that demand would naturally be higher during certain periods when firms tend to advertise more, and you falsely attribute that increase in sales to the causal effect of advertising, that could lead you to overstate the effect of ads. So you need a clever approach as part of an econometric analysis to deal with this.
Big qn I guess is this research seems to suggest a lot of TV advertising is wasteful but digital - ie targeted - advertising might be much more effective...
Paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3273476
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Stonehedge
kerplaagh
@Sam_w
It's my job to understand what drives people to purchase stuff, and change behaviour. I'm pretty sure that;
For context, advertising for most big brands drives between 5 to 10% of annual sales, and that is typically brands spending millions per year on TV, so a shitty little press and social campaign, with associated negative PR will have no effect at all.