TV advertising doesn’t work for mature packaged goods category

Deutsche Bank Study Cites Wasted Brand Spending May 24, 2004

The whole article can be found at AdAge here

It seems that it is premium content so they ask you to pay a few $s to read it; but its an interesting article so well worth it.

(Update: Just found the whole article posted on a free to read site . Thank you The Marketing Organisation of New Zealand)

Here are a few choice quotes from the article

CINCINNATI (AdAge.com) -- TV advertising doesn't work for most mature package-goods brands, and the industry's increase in ad spending over the past three years has accelerated waste, concludes a sure-to-be-controversial Deutsche Bank report.

The study, released on the eve of the TV buying upfront, examined 23 household, personal-care, food and beverage brands using customized marketing-mix analysis from Information Resources Inc. It found only 18% generated a positive return on investment (ROI) in the short term (a year or less) from TV advertising. Less than half (45%) saw their TV investment pay off long term.

"I think the marketing line is going to be the next cost bucket all these companies look at," said analyst Andrew Shore, who authored the report. "For the past 50 years, the media industry has been extracting a sort of value-added tax from [package-goods] companies. And right now I think they're in the early throes of this revolution saying ... 'It's not working anymore.' "

Mr. Shore attributed most package-good brands getting poor returns in large part to the rising cost of TV combined with declining and fragmented viewership and lack of adequate measurement systems, such as commercial ratings.

Indeed, that was the theme of a speech by Procter & Gamble Co. Global Marketing Officer Jim Stengel to the American Association of Advertising Agencies Media

David Poltrack, executive vice president of research and planning for Viacom's CBS, said the Deutsche Bank findings are similar to those of "How Advertising Works" studies of the 1980s and early 1990s that the TV industry commissioned with IRI, noting that TV ROIs are lower for mature brands and declining categories.