2 Responses to The Seismic Shift in Targeted Advertising and Media

  1. Craig says:

    That is pretty compelling data, especially the scatterplot of recall by engagement. This has clear implications for ROI in terms of ad placement. However, the overall success of an optimal ‘yield management’ strategy really depends on how one specifies the time horizon for the investment. A firm that is trying to optimize on a shorter time scale (QoQ) will likely have greater variance with respect to earnings. A discount carrier that is indiscriminate in its pricing will sacrifice short term gains to develop a loyal customer base that will help it weather the storm in low traffic environments. For example – a crude plot of Southwest vs. Delta vs. US Airways stock prices over the past five years. In boom periods the yield management strategy works very well, but in a recessionary environment, not so much.

    • beardrs says:

      Hi Craig — Thanks for raising questions about the post. One of the important points not specifically addressed in the post is the impact of advertising on brand equity. In my experience, I’ve seen cases where advertising drove an improvement in equity scores, did not drive any change in consumption or share growth in the short term, but still had a longer term business impact. In some cases, it’s likely that advertising and media plans drive brand equity, and brand equity is a leading indicator for longer term volume and share growth. Clearly, any application of yield management would need to quantify these relationships to ensure that Marketers aren’t making erroneous short term decisions–e.g. reducing or eliminating advertising in the short term due to no positive business impact, even when there’s likely to be a longer term business impact.

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