Companies like PepsiCo and Anheuser-Busch spend millions of dollars each year for one night of advertising. On Super Bowl Sunday in 2011, 30 seconds of air time costs roughly $3 million; this does not include the figures associated with producing the ads, which could cost hundreds of thousands of dollars, or more.
The amount of money spent on television advertising make many people scratch their heads. Is it worth it to these companies to spend this enormous sum on, in most cases, less than one minute of advertising? The easy answer is, there is no easy answer. If a company has created a memorable ad, they can count on the spots being played repeatedly online, with the best (and the worst) being highlighted through nationwide news and entertainment sources. But even with repeated viewings, do the advertising spots equal sales? According to Randle D. Raggio, assistant professor of marketing at the University of Richmond, over six million Snickers bars would have to be sold to pay for one Super Bowl ad. That’s a lot of candy bars, but a well established brand with a solid reputation can have some confidence that the advertising buy is going to pay off.
The amount of money spent on television advertising make many people scratch their heads. Is it worth it to these companies to spend this enormous sum on, in most cases, less than one minute of advertising? The easy answer is, there is no easy answer. If a company has created a memorable ad, they can count on the spots being played repeatedly online, with the best (and the worst) being highlighted through nationwide news and entertainment sources. But even with repeated viewings, do the advertising spots equal sales? According to Randle D. Raggio, assistant professor of marketing at the University of Richmond, over six million Snickers bars would have to be sold to pay for one Super Bowl ad. That’s a lot of candy bars, but a well established brand with a solid reputation can have some confidence that the advertising buy is going to pay off.
Most companies purchase advertising spots through local television or radio channels, or take out ad space in trade publications and, increasingly, Internet news sources. Naturally, these cost far less than the $3 million Super Bowl price tag, but advertising money that cannot be backed up is not well spent. Take, for instance, the fictitious Lloyd’s Brick Barn in Sioux City, Iowa. Lloyd’s has been in business for 36 years, selling bricks and brick related products. Lloyd and his wife run the main store and have three branches in central Iowa, each with a team of half a dozen sales reps and brick technicians. The company is breaking even, maybe even turning a small profit, but Lloyd decides to hire a marketing consultant who works up an ad campaign that is spread throughout the state. Before Lloyd can blink, his stores are being bombarded with calls from one end of the state to the other. The great response is overwhelming and Lloyd’s employees are unprepared to handle the influx of new customers. In the end, Lloyd only sees a slight increase in sales, as most customers are frustrated or turned away by the stores when their needs cannot be met.
A company has to not only have the capital for a successful ad campaign, but also has to be prepared for the business the campaign can create. This is why it is absolutely vital that a business of any size has employees who can work with the new customers that marketing dollars bring in. No doubt, a company like Volkswagen Group can handle the aftermath of a successful ad campaign, but can yours?
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