Digital video recorders don’t reduce the (possibly zero) effect of ads. For years, digital video recorders like TiVo, which give viewers the option to skip commercials, have had television advertisers worried. But a study … rebuts the conventional wisdom that the recorders (DVRs) dampen sales. … Matching … each household’s shopping history one year before and two years after the TiVo’s arrival, the researchers found no effect on the purchase of advertised brands, even among those who used DVRs the most. (UofC Magazine Jan’11p25;
As to the question of whether advertising has any effect, I find very interesting the comments by Steve Sailer on this thread and especially the follow-up.
People do large controlled experiments with advertising, but the information is proprietary. It is not clear who has good information. He often describes Proctor & Gamble as at the vanguard of this, sometimes with the implication that no one else followed them. But other times, as where he says that these studies "were likely one factor in the recession that his TV advertising in the otherwise prosperous mid-late 1980s," suggests that the information quickly became widespread. Indeed, wikipedia says that this firm is now employed by 95% of the Fortune 500 CPG, which suggests that they should be showing much more effective ads than 30 years ago. I suspect that it's an empty ritual to be scientific, but they don't actually think about the results.
This isn't particularly shocking. I've always assumed television advertising to be the least effective kind anyway. People have been "skipping" ads for decades - either by changing the channel in an increasingly diverse cable landscape or just getting up and leaving the room for a few minutes until the commercials are over. TV executives have been scamming advertisers for years...
I'm surprised by this result, but I don't think it affects business' decisions.
Geico doesn't care if their advertising increases all spending. They're buying ads to increase spending on Geico and decrease spending on All State. If their commercials are to be believed, this would on net decrease total spending.
This study illuminates that TV ads have little effect on our buying decisions in general. They are a relic of the pre-internet, limited exposure to marketing messages era that exist pimarly because that is how the system is set up - not because they make a drastic difference.
I think those who were afraid failed to take into account human laziness: my kids (teenagers) will watch a movie on live TV - commercials and all - because they're too lazy to get up and put in the DVD we have of the same movie. I've even seen them watching something that's recorded on the DVR (same TV, same remote) because they don't want to scroll down through 10 pages of stuff looking for it.
If advertising does not increase sales, why advertise? Considering the amount firms spend on advertising, "no effect" suggests a massive market failure that does not square with profit-maximization. If (to adopt your formula) "advertising is not about selling," what is it about?
Robin's last line made me think there is evidence studies aren't powerful enough to find effects, even when they are real. But then I remembered how meta-analysis shows most found effects dissipate with larger sample sizes (ascribed to the file-cabinet effect).
It's seems like a good example of why it's important to have a control group. Wouldn't you expect that advertising leads you to buy more of the products advertised, such that if you avoided more advertisement your buying habits would remain more stagnant? If you had a control group that tended to slightly increase their purchases of products advertised and another group, that had DVRs, that didn't change, wouldn't that show a DVR effect? Just looking at the abstract, it doesn't look like they accounted for this.
But is this evidence against DVR's or against the efficacy of ads?
Or is it evidence of how bad these studies are at teasing out cause and effect for complicated things like the effects of ads in a world where a new device lets you selectively skip a few ads while bathing in ads otherwise?
As to the question of whether advertising has any effect, I find very interesting the comments by Steve Sailer on this thread and especially the follow-up.
People do large controlled experiments with advertising, but the information is proprietary. It is not clear who has good information. He often describes Proctor & Gamble as at the vanguard of this, sometimes with the implication that no one else followed them. But other times, as where he says that these studies "were likely one factor in the recession that his TV advertising in the otherwise prosperous mid-late 1980s," suggests that the information quickly became widespread. Indeed, wikipedia says that this firm is now employed by 95% of the Fortune 500 CPG, which suggests that they should be showing much more effective ads than 30 years ago. I suspect that it's an empty ritual to be scientific, but they don't actually think about the results.
This isn't particularly shocking. I've always assumed television advertising to be the least effective kind anyway. People have been "skipping" ads for decades - either by changing the channel in an increasingly diverse cable landscape or just getting up and leaving the room for a few minutes until the commercials are over. TV executives have been scamming advertisers for years...
I'm surprised by this result, but I don't think it affects business' decisions.
Geico doesn't care if their advertising increases all spending. They're buying ads to increase spending on Geico and decrease spending on All State. If their commercials are to be believed, this would on net decrease total spending.
This study illuminates that TV ads have little effect on our buying decisions in general. They are a relic of the pre-internet, limited exposure to marketing messages era that exist pimarly because that is how the system is set up - not because they make a drastic difference.
I think those who were afraid failed to take into account human laziness: my kids (teenagers) will watch a movie on live TV - commercials and all - because they're too lazy to get up and put in the DVD we have of the same movie. I've even seen them watching something that's recorded on the DVR (same TV, same remote) because they don't want to scroll down through 10 pages of stuff looking for it.
If advertising does not increase sales, why advertise? Considering the amount firms spend on advertising, "no effect" suggests a massive market failure that does not square with profit-maximization. If (to adopt your formula) "advertising is not about selling," what is it about?
Robin's last line made me think there is evidence studies aren't powerful enough to find effects, even when they are real. But then I remembered how meta-analysis shows most found effects dissipate with larger sample sizes (ascribed to the file-cabinet effect).
It's seems like a good example of why it's important to have a control group. Wouldn't you expect that advertising leads you to buy more of the products advertised, such that if you avoided more advertisement your buying habits would remain more stagnant? If you had a control group that tended to slightly increase their purchases of products advertised and another group, that had DVRs, that didn't change, wouldn't that show a DVR effect? Just looking at the abstract, it doesn't look like they accounted for this.
But is this evidence against DVR's or against the efficacy of ads?
Or is it evidence of how bad these studies are at teasing out cause and effect for complicated things like the effects of ads in a world where a new device lets you selectively skip a few ads while bathing in ads otherwise?