The effectiveness of a newly developed television ad on its sales.

The effectiveness of a newly developed television ad on its sales.

Regressing Sales on Ads yields βˆ=350. The firm would like to use this number to project the change in Sales when increasing weekly television ads to 20.

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According to these results, what is the expected change in Sales when Ads increase from 5 to 20?

When Ads is 5, Sales_i= α+350(5) +U_i S1,Sales_i =α+ 1750 +U_i

When Ads is 20, Sales_i= α+350(20) +U_i S2, Sales_i =α+ 7000 +U_i

Expected change = S2 – S1

= (α+ 7000 +U_i) – (α+ 1750 +U_i)

= 5250

Why should we be skeptical of our result from Part A?

When people are exposed to television commercials repetitively, then the effectiveness of the message is reduced. Time limits the message’s exposure, especially for consumers who linearly watch television. Also, the cost of a 30-second spot on local television during local programming or an assigned local spot during daytime or prime-time viewing may be expensive. For television advertising to be effective, companies must pay for the production aspects of the content first. To produce a TV ad, one might be forced to hire a script writer if no one can do the work internally. One might need a spokesperson and actors to be on the spot. Film editors are needed to put together the various takes which are filmed. Then one might need to work with an advertising agency to get this talent put together before you get started.

Even if your local TV station has internal production capabilities, it may cost a lot of money just to get started.

What can you do to find an estimate of the effect of increasing Ads from 5 to 20 that is more credible?

According to what I learned in a marketing management class, I think using word of mouth can be effective. Word-of-mouth advertising can be an effective form. It has the desired qualities of strong credibility, high audience attention levels, and friendly audience reception. It features an open-ended conversation with questions and answers about the product, psychological incentives to purchase, memorability, efficiency, and frequency. Word-of-mouth advertising passes product information to many other potential buyers (and may even include promotional trial demonstrations and free sampling) at little or no cost to the business. A small business should build an advertising program that results in word-of-mouth advertising whenever possible.

Satisfied customers are your best advertisements.

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References

https://www.bizfilings.com/toolkit/research-topics/marketing/advertising-pr/effective- advertising-makes-people-remember-your-name

Advertising & PR (2021). Effective Advertising Makes People Remember Your Name. Retrieved on 18 April 2021 from https://www.bizfilings.com/toolkit/research-topics/marketing/advertising- pr/effective-advertising-makes-people-remember-your-name

Your firm is attempting to learn the effectiveness of a newly developed television ad on its sales.

The effectiveness of a newly developed television ad on its sales.

To do this, it has randomly run the ad between 0 and 5 times during one week across many television markets in the United States. It then recorded product sales for the following month for each market. To conduct the analysis, analysts at the firm have assumed the following data-generating process:

Salesi=α+βAdsi+Ui

Regressing Sales on Ads yields βˆ=350. The firm would like to use this number to project the change in Sales when increasing weekly television ads to 20.

1. According to these results, what is the expected change in Sales when Ads increase from 5 to 20?
2. Why should we be skeptical of our result from Part A?
3. What can you do to find an estimate of the effect of increasing Ads from 5 to 20 that is more credible?