MMH/5TH .

SEM/ADVERTISING & SALES PROMOTION/DSE-2AT/UNIT –V

Budgeting for the promotional programme- Implementation-

measurement of the organisation’s external communications with its
environment and control.

What is a Promotional Budget?

A promotional budget is a specified amount of money set aside to promote the

products or beliefs of a business or organization. Promotional budgets are created to
anticipate the essential costs associated with growing a business or maintaining a
brand name.

The budget is often set according to a percentage of sales or profits for an established
business, a percentage of startup costs or use of funds in the case of a startup, a
percentage of raised funds in the case of non-profit or a foundation, in order to
maintain an expected growth rate.
• A promotional budget refers to money earmarked for the marketing,
advertisement, or sales of a product or brand.
• The amount to budget to promote a new or existing product will depend on
business analytics, market research, and anticipated return on investment.
• Changes in the advertising landscape have moved promotional dollars away
from print advertising and toward web-based or social media campaigns.

How does Promotional Budgets Work

The advertising and marketing of a business represent costs that most businesses
have a tough time predicting, which is why a percentage method might be used. A
promotional budget could be increased in anticipation of new product lines are set
to release in the near future.

High promotional budgets can reduce profits during the period such assets are
expended. Companies may allow for such higher costs based on an assumption that
sales or awareness will increase among customers.

Promotional budgets usually include money put toward advertising across mediums
such as radio, television, Internet, and print. A company’s promotional budget can
include expenses for email campaigns, social media outreach, and outdoor signage.
The promotional budget might also go towards hiring outside experts and
consultants who develop the campaigns and place ads in the appropriate media and
locations. This can include contracting marketing intelligence firms to interpret data
that shows how dollars spent on marketing translate into new or recurring business
for the company.

The decision-making process at organizations continues to evolve when it comes to

allocating funds for promotional budgets. Budgeting strategies change as public
attention continues to shift away from older, traditional media such as print to focus
more on digital, online, and mobile media.

Based on a PwC report, 2019’s online advertising spend was $125.2 billion, almost
double the spend on television at $70.4 billion, with Google and Facebook having
a combined 70% digital ad spend market share.

The Changing Dynamics of Promotional Budgets

While the overall size of a company’s promotional budget might not have changed,
the way the money is divided up may have. For instance, money previously
dedicated to advertising through television might now include campaigns that reach
people on smart phones.

The shifts that occur with promotional budget trends can have a direct effect on
media industries that rely on those proceeds. A reduction in advertising dollars for
newspapers and other print media, as companies directed those assets instead toward
digital media and other outlets, contributed to a decline in the newspaper and
magazine industries.

Companies regularly measure the return on investment from their promotional

budgets. The results often have a significant impact on where companies continue
to put their funds. For example, a company will likely change its strategy if a
billboard campaign fails to attract attention at the same time social media marketing
messages increase sales. In many cases, the promotional budget at the company will
be adjusted to favor more investment in social media.

IMPLEMENTATION OF BUDGET FOR PROMOTIONAL PROGRAMME

Top-down and bottom-up approaches to budgeting describe whether directives for
budget creation come from upper management or allow for input from lower-level,
program-implementing employees. In developing a promotional budget, consider
the specific needs of the promotion and the anticipated return on investment. Each
approach has its merits and drawbacks, although in a business environment in which
colleagues work closely with one another, a bottom-up approach is likely to
encourage greater levels of collaboration.
Top-Down Advantages
Anytime management takes complete control over budget allocations, it streamlines
the business accounting process and ensures a company stays on firm financial track.
Budget maintenance is important to companies for which even small cost overruns
can be financially damaging. In the top-down approach to promotional budgeting,
upper management determines an appropriate financial allowance for the promotion,
and lower-level employees are expected to work with the budget to the best of their
ability.
Top-Down Disadvantages
Lower-level employees may see the top-down promotional budgeting approach as
akin to an unfunded mandate. The employees must develop and implement an
effective promotion for the company without any input about the resources needed
to do the job. This can cause frustration and animosity or a feeling that management
doesn’t understand what a successful campaign requires. Employees charged with
developing the promotion then are forced to tailor approaches to meet the budget
allocation, even if those approaches are less than ideal.
Bottom-Up Advantages
When management asks for input from lower-level employees about the financial
resources they need to develop an effective promotion, it creates a sense of teamwork
and cohesiveness, a vital element of business success. The budgeting process
becomes a collaborate effort rather than an us-versus-them approach. Bottom-up
promotional budgeting involves lower-level employees outlining their ideas for the
wisest uses of funds, explaining their reasoning and having a discussion with
management about available resources and expectations. Following this system,
employees are likely to feel their concerns are heard and respected. Even if they
don’t ultimately end up with an ideal budget, all parties understand each other's
outlook and expectations and can work together to make the most of the budget they
have.
Bottom-Up Disadvantages
Management can feel a loss of financial control by following a bottom-up approach
to promotional budgeting. Supervisors may fear that lower-level employees will pad
their budgets, incur unnecessary expenses or fail to utilize money wisely if they have
more input over and access to financial resources. Management also may surmise
that cost overruns will be greater with the bottom-up approach. Alternatively, the
approach can mean increased performance pressure on lower-level employees.
Management may argue that departments had their input on budgetary needs and,
therefore, that all promotions should be successful, which ultimately may not be the
case.

Measuring & Evaluating external communications

All communications activities should be measured and evaluated to confirm that
they achieve communications objectives. As Peter Drucker famously said, “what
gets measured gets done.” Measurement and evaluation should be a consideration
throughout a communications activity and should not wait until an activity has
concluded.
Advertising is not an exact science. There’s no precise way to measure the success
or effectiveness of an ad campaign. You can’t, for example, determine how many
sales dollars are generated by each advertising dollar you spend, but there are
methods that will give you a rough idea of whether your ads are hitting the mark.
Done effectively, measurement leads to iterative improvements to communication.
Evaluation can guide future activities and strategy development. Measurement also
presents opportunities for continuous improvement and helps organizations develop
an understanding of the impact of communications activities. In turn, an evaluation
demonstrates the tremendous return on investment that good communication can
provide.
To assess the effectiveness of your advertising campaign, you can monitor sales,
new customers, requests for information, phone inquiries, retail store traffic, website
traffic, or click-through rates. Use these tactics to gauge the power of your ads:
There are different tests and several techniques in each of the test to evaluate
advertising effectiveness. Test depends on the aspects to be evaluated. Based on
Philip Kotler’s views, let us first discuss classification of tests (various ways or
approaches) to evaluate advertising effectiveness.
Pre-test and Post Test:
Pre-test implies testing advertising message before it is sent to specific media. Post
test implies testing impact of advertising message after it is published in any of the
media.
Communication and Sales Effect Test:
Communication test measures communicability (ability to communicate) of the
message. Whereas sales-effect test measures advertising impact on sales volume.
3. Laboratory and Field Test:
Clearly, a laboratory test is conducted in a controlled environment in a limited scale.
Respondents are invited in a laboratory to state their response. Quite opposite, a field
test is conducted in original setting, artificial climate is not created. It is similar as
conducting survey to measure what customers think about company’s
advertisement.
4. Experimental and Survey Test:
Experimental test involves testing advertising effect by conducting test by
manipulating independent variable (i.e., advertising efforts) and measuring the effect
of the manipulation on other dependent variables like sales, profits, consumer
satisfaction, etc. Experimental test may be laboratory or field test. Survey test
involved knowing consumers’ view’s through a survey method.
5. Message and Media Effect Test:
While message test involves measuring clarity, contents, believability, action ability,
etc., of the message, the media test measures effectiveness/ suitability of one or more
media.

Mostly, a company is interested to measure advertisement’s communication effect

and sales effect. Therefore, it is worthwhile to discuss communication and sales
effect test.
Communication and Sales Effect Test:
Among several tests, the communication test and the sales effect test are more
relevant because success of advertising campaign depends on how far advertising
has influenced knowledge, attitudes and preference of the target customers. In the
same way, a sales volume is the ultimate aim of all marketing efforts (including
advertising). Advertising must increase sales. Therefore, evaluation of advertising
effectiveness, in most cases, consists of evaluating communication test and sales
effect test.
Methods for Communication Effect Test:
Communication effect test seeks to determine whether advertisement is capable to
communicate effectively.
Following methods are used:
1. Direct Rating Test:
In this method, consumers are asked to rate/rank alternative advertisements. They
are exposed to different ads and are requested to rate them. Consumers can consider
various criteria to rate the advertisement, like message contents, message clarity,
coordination, and overall impression.
2. Recall Test:
It measures the retention value of ad message. The consumers are asked to listen
and/or view the particular advertisement. They are then asked to recall the same. The
amount of contents and message they recall determines effectiveness of
advertisement.
3. Portfolio Test:
Here, the consumers are asked to view and/or listen to a portfolio of advertisements.
They are given as much time as they need. They are then asked to recall all the ads
and their contents. Their recall level indicates an advertisement’s ability to affect
consumers’ knowledge and arouse interest.
4. Laboratory Test:
The test is conducted in laboratory. Necessary equipment’s are used to measure
consumers’ physical reactions in terms of heartbeat, blood pressure, perspiration,
etc., to an ad.
Methods Sales Effect Test:
While the communication effect test measures communicating ability of the ad, the
sales affect test measures ad’s ability to influence sales. Ad must affect sales
positively. In fact, advertising’s sales effect is difficult to test because sales are
influenced by many factors besides advertising, including product’s features, price,
availability, and competition.
Following methods are used to Evaluate Advertising Effectiveness:
Methods of Copy Testing:
All copy testing procedures fall in the major types given below. All theme
approaches may be used for the pre-testing of advertisements.
In addition, the methods at (iii), (iv) and (vi) may be used as post-tests.
(i) Consumer-jury survey;
(ii) Coupon-return analysis;
(iii) Recognition test;
(iv) Recall or impact test;
(v) Sales area test;
(vi) Psychological analysis;
(vii) Controlled experiment.
Each test has its limitations but all of them have been demonstrated to be valid
measures of relative interest taken by readers in various advertisements.
(i) Consumer- Jury Survey:
This test is designed to learn, from a typical group of prospective customers, their
preference for one advertisement over another or for several advertisements out of a
group. Advertisements which have not yet been published are mocked up on separate
sheets, and these are presented to the consumer-jury either in personal interviews or
group interviews.
The juror is instructed to rank the advertisements in terms of his likes and dislikes.
His verdict shows the relative action provoking power of the advertisements.
Advertising themes or snatches of copy may also be judged in personal interviews
with a consumer-jury. The alternative wordings under consideration are printed on
separate cards. These are placed in the hands of the respondent, two at a time. The
respondent reads each of these and selects the one he considers most effective in
terms of his personal reaction.
Another variation is the gift test in which the respondent is asked to choose one brand
from a variety of brands as described in different advertisements. In the projective
technique, the respondent is shown a picture of consumer using or buying the brand
and is asked to select, from a variety of statements, the most applicable one for
describing the situation.
In the product use test, the respondent is given two “types” of a product to use and
evaluate. The two “types” are actually the same product, each accompanied by a
different copy theme.
The major value of this test is its separation of the stronger from the weaker
advertisements, the sheep from the goats.
(ii) Coupon-Return Analysis:
Various themes, advertisements or elements are measured on the basis of the number
of enquiries received in response to an offer contained in the advertisement.
The devices used are:
(a) An open coupon offer of a standard premium; or
(b) A “hidden offer”; or
(c) The use of the split-run technique.
The open coupon offer is generally a free sample of the product. The giving of the
sample is considered a more accurate gauge of the selling power of the advertising
copy than an unrelated premium.
In the hidden offer technique, a premium offer is buried in the copy, usually near the
end of the advertisement. This device is directed to those persons who are
sufficiently attracted by the advertisement to read it completely.
It also eliminates the “coupon bounds” who glance through media for free or
inexpensive offers. But one must be cautious in using this method because of the
comparatively small number of returns received as a result of hiding the offer in this
way.
The split-run technique consists of running different advertisements in separate
sections of a magazine or newspaper so that a different advertisement appears in
each half or third or fourth of the entire issue.
By means of coupon returns or other means, it is determined which advertisement
pulls best. When publications do not permit split-runs, the different advertisements
must be run at other times on as nearly a comparable basis as possible.
(iii) Recognition Test:
It determines the readership of advertisements in the publications and is conducted
by personal interviews with readers and magazines or newspapers. The interviewers
locate the readers of the particular issue of the publication in question. They then go
through the publication, page by page, with the respondent indicating those
advertising elements which he or she recognises as having read.
The scores developed by the recognition method indicate the proportion of qualified
readers of a publication who claim to have “seen” (noted), “read some” or “read
most” of the elements of individual advertisements.
The above describes the method used for post-testing. In a pre-test, a portfolio of
advertisements is used. The respondent is asked to go through the portfolio, then it
is taken away, and the respondent is asked; “What advertisements do you remember
seeing?” The recognition test may thus be combined with the recall or impact test
which has been described below.
(iv) Recall or Impact Test:
The recognition test measures the stopping power of the advertisement but does not
tell us what the reader understood or retained of the advertisement. The recall or
impact test is designed to measure the positive impressions of the advertisements. In
response to the question asked by the interviewer, the reader reveals the accuracy
and depth of his impressions by his answers.
A portfolio containing test advertisements or one test advertisement among several
control advertisements is placed in the hands of the respondents who are asked to
read the advertisements, taking as much or as little time as they want. All
interviewing is done immediately after the respondent has finished reading the
advertisements.
The performance of one advertisement is evaluated against all others. The
respondent is asked a series of unaided or aided recall questions to determine which
advertisements are remembered and which features stand out.
Another approach is to place a dummy magazine with a family and then call back a
week later to pick up the magazine and interview readers on their recall of
advertisements in the magazine.
(v) Sales Area Test:
This measures the effectiveness of an advertisement by determining the resulting
amount of sales. Trial campaigns employing different themes or copy presentation
techniques are run in a group of local markets, and sales are then measured by store
audits.
This test, however, is not employed extensively because of the difficulty of
controlling the many variables likely to distort the results, such as differences
between markets, competitive activities, sales efforts, seasonal demand, and media.
(vi) Psychological Analysis:
The whole process of advertising is psychological in character. It is natural,
therefore, that certain psychological procedures should be adapted for copy testing.
Four psychological testing techniques are most commonly used:
(a) Tests of readability and comprehension;
(b) Tests of believability
(c) Attitude tests; and
(d) Triple associates tests (theme penetration). The interviews are carried out in
depth among a small target group of people.
(a) Tests of Readability and Comprehension:
These are made by means of a series of penetrating questions and by other techniques
devised by psychologists to determine, in advance of publication, the ease of
readability and comprehension of the proposed copy.
(b) Tests of Believability:
An advertising message must have a high degree of credibility for readers.
Measurements of credibility may employ a scale technique, in which various
statements or product claims are rated by consumers. Another method is to ask
respondents which parts of an advertisement they find hard to believe after they have
been exposed to it.
(c) Attitude Tests:
Various types of attitude tests have been developed by psychologists and applied to
copy testing. Typical consumers are exposed to sample advertising messages, either
printed or oral. The attitudes produced by these various messages are then
determined by means of a series of penetrating questions.
Psychological reactions, such as age, involvement, the type of person who would
use the product, and the personality of the product reflected by the advertisement
that is tested, are obtained. The researcher looks especially for elements in the
advertising which arouse psychological hostility.
(d) Triple Associates Tests:
This ties in advertising with recall by seeking to learn the extent of the consumers’
association with the product, brand name and copy theme. The test is useful only
when the advertising features a specific theme or slogan, which the reader may
remember. This procedure is sometimes known as “theme penetration.”
(vii) Controlled Experiments:
They are similar to the sales area test in general character but are conducted on a
much smaller scale. One method is to make use of display material or signboards at
the point of sale. Different advertisements may be placed in different groups of
stores, and the effectiveness of each may be measured by the resulting sales.
A variation of this method is to attempt to sell the product from door to door. The
percentage of successful sales is the basis for measuring the value of each theme.
Yet another method is to distribute to consumers handbills with coupons, offering a
cash discount. Each handbill represents a different advertisement for the product.
The coupon redemption will indicate the sales effectiveness of the different
advertisements.
In selecting the respondents for these tests, care should be taken to see to it that they
bear on the target audience and that various types among them are adequately
covered. Unless the sample is properly controlled, the results may be quite
erroneous.

The exact result of a given advertising expenditure is extremely difficult to

predict because:
(a) The reaction of consumer-buyers to the advertising effort cannot be known in
advance;
(b) The reactions of competitors cannot be accurately anticipated, and
(c) Fortuitous events that may influence the results of the advertising efforts cannot
always be predicted.
Consider the hypothetical case of a retailer who contracts to spend Rs. 500 with a
local newspaper for a special sales event. The ad is run, and the crowds are greater
than their early estimates. What caused the success of the sale? The advertisement?
The low prices that were quoted during the sale? Was it because the products
themselves were superior?
Or did it have something to do with the fact that, on the day of the sale, there were
no competing sales of a comparable nature anywhere in the city? Or, indeed, did it
have something to do with the beautiful weather that prevailed during the sale? Alas,
the success of the sale was doubtless due to all these things, and the exact role of any
one of the elements is virtually impossible to isolate.
The problem is one familiar to all social scientists, namely, the inability to establish
in advance the precise cause-and-effect relationships when a multitude of variables
impinge upon a particular event.
It is entirely possible that even with poor advertising support, a sale may prove to be
a success because everything else falls into its proper place. It is likewise possible
that an effective advertising effort may be limited in its performance by offsetting
factors that work counter to it. Critics of mass advertising techniques would clearly
have less to criticize if it were possible to predict accurately the results of a given
advertising expenditure; but the complexity to the environment in which the
promotional expenditure is usually incurred largely precludes accurate forecasting.
But to concede that it is virtually impossible to predict the effects of an advertising
effort is not to say that we cannot measure the effects of particular advertising effort.
One of the activities with which advertising executives are concerned is the
assessment of the effectiveness of the advertising effort. The management needs
answers to such questions as- “Was the advertising campaign really successful in
attaining our objectives?” “Were our TV commercials as good as those of
competitors?” “Will the magazine advertisements, which we have designed, make
consumers aware of our new products?”
Tests of effectiveness are needed to determine whether proposed advertisements
should be used, and if they will be, how they might be improved, and whether
ongoing campaigns should be stopped, continued or changed.
In accomplishing these purposes, marketers use pre-tests and post-tests. They
conduct pre-tests before exposing target consumers to the advertisements, and post-
tests after consumers have been exposed to them.
Advertisers are interested in knowing what they are getting for their advertising
rupees. That is why they test the proposed advertisements with a pre-test and
measure the actual results with a post-test.
In the past, pre-testing of advertising messages was handled mainly by advertising
agencies. But advertisers have been taking an increasingly active role in the pre-
testing process. There may be pre-test both before an advertisement has been
designed and executed, after it is ready for public distribution, or at both points.
During pre-testing, there is often research on three vital questions:
(i) Do consumers feel that the advertisement communicates something desirable
about the product?
(ii) Does the message have an exclusive appeal that differentiates the product from
that of the competitors?
(iii) Is the advertisement believable?
Although advertisers spend money on pre-testing, they also post- test their
promotional campaigns.
There are at least three distinct reasons for measuring advertising results.
These Are:
(i) The need to produce more effective advertising;
(ii) The need to prove to the management that a higher budget will benefit the firm;
(iii) The need to determine the level of expenditure that is most promising.
Most research focuses on the communication effect rather than on the sales effect.
The short-term effect of advertising on sales is, no doubt, slight and unimportant,
whereas, in the long run, its effect on brands and companies may be of great
importance. For this reason, advertisers ate particularly concerned with their impact
on consumer awareness and attitudes.
The main goals of most advertising are to capture the attention of a potential buyer
and promote brand awareness.
Awareness builds a favourable for at least a curious attitude toward the product,
which leads to experimentation “I will try it once and see how it is.” If the trial is
satisfactory, the consumer may stick with the product.
There are many critical and unresolved issues in determining how to test the
communication effects of advertising.
These are:
(a) Exposure Conditions– Should advertising be tested under realistic conditions (an
actual on-the-air commercial) or under more controlled laboratory conditions?
(b) Execution– It is often expensive and time-consuming to pre-test a finished
advertisement. Does pre-testing a preliminary execution produce accurate and useful
data?
(c) Quality vs. Quantity Data– Quantitative data are easiest and most precise
measurement. But qualitative data from in-depth interviews may provide
information that short answer questions never can (a strong negative attitude exists
regarding the use of humour in life insurance advertisements).
Many types of advertising tests are used. In TV, commercials testing, a sample of
people are invited to a studio to view a programme, with commercials included. The
audience is then surveyed about the commercials.
Print advertisements are tested through “dummy” magazine tests and portfolio tests.
In the former, a magazine with test advertising in it is sent to a sample of readers,
who are later surveyed. In the latter, about 10 to 12 advertisements are placed in a
booklet that is shown to respondents; one of these is the test advertisement. The
readers are asked to examine and comment on all advertisements in the booklet.
It is much more difficult to assess the sales effect of advertising than the
communications effect. Nevertheless, many firms try to measure the effectiveness
of advertising in terms of its sales results.
The practice is almost always misleading, although there are some exceptions. For
example, direct-mail advertising for magazine subscriptions can require (for
example, Span) that coupons be returned by interested customers.
In this situation, the management may count the number of coupons returned. If the
objective is to achieve a specific number of coupon returns, the effectiveness of the
campaign can be measured. Similarly, of a TV commercial, the sale results may be
measured if the commercial message says something like- “Call 25691 to purchase.”
In most advertising situations, it is far more difficult, if not impossible, to establish
the exact relationship between advertising activity and sales.
The curve in Fig. 15.2 suggests that some sales will occur even though there is no
advertising. Up to Rs. X in spending, advertising appears to have a little impact,
probably because it is not yet adequate enough to cross the threshold and enter the
consumer’s awareness.
Beyond Rs. Y, there is little or no increase in sales (perhaps even a decline), because
the market is saturated, or because some consumers are irritated by increased
exposure.
Advertising does not occur in a vacuum. It is only one of the variables that affect the
sales results. There are many other variables, both in the marketing process and in
other aspects of business operations.
It seems clear that, with few exceptions, the circumstances under which all other
variables can be kept constant, so that the precise effect of advertising on sales can
be measured, are almost non-existent.
Added to this is the fact that an advertising campaign is itself made up of a variety
of factors, such as media, messages, colours, page or time-of-day locations, the size
of the headline, and the appeals used. Thus, even if the advertising variable is
isolated, this would still not answer questions about the effectiveness of the
individual components of the advertising campaign.
Sales Effectiveness Measurement:
For those advertising managers who firmly believe that advertising must be
evaluated by determining its impact on sales, some measures of sales response to
advertising must be devised. Because of the many influences on sales in addition to
that of advertising, the total sales of a product from the period in which the
advertising was run are not a valid measure of advertising effectiveness.
The only exception is in those rare cases where the management believes that
advertising is the sole, at least the most important influence, on sales. However,
where advertising objectives are stated in terms of sales, it is desirable to measure
the effect of the advertising campaign on sales.
(a) Historical Sales:
Some insights into the effectiveness of past advertising may be obtained by
measuring the relationship between advertising and product (or brand or company)
sales over several time periods. For example, a multiple regression analysis of
advertising expenditures and sales would show how sales changes have
corresponded to changes in advertising expenditures.
This technique estimates the contribution advertising has made to “explaining,” in a
correlational rather than a causal sense, the variations in sales over the time periods
covered in the study.
The data required for this approach are period advertising expenditure, which may
be obtained from company budgeting records, and product sales measured by such
techniques as store audits, warehouse shipments, or other sales records maintained
by a company.
Of course, a historical sales analysis is only a post-test measure of advertising
effectiveness, and is not applicable to pretesting.
(b) Experimental Control:
To establish more clearly a causal relationship between advertising and sales, it is
essential to have experimental control, which is considered to be quite expensive
when related to other advertising effectiveness measures; yet it is possible to isolate
advertising contribution to sales.
Moreover, this can be done as a pre-test to aid advertising in choosing between
alternative creative designs, media schedules, expenditure levels, or some
combination of these advertising decision areas.
One experimental approach to measuring the sales effectiveness of advertising is
test marketing:
(i) Before-After with Control Group Design:
This classic design uses several test and control cities as given below. The normal
level of sales is calculated for both types of cities prior to the campaign, and then the
campaign is presented to the test cities and not the control cities. The level of sales
is then calculated for both the control and test cities.
The effect of the advertising campaign is calculated by subtracting the amount from
the differences between post- and pre-campaign sales in test cities.

The difference between the post and pre-campaign sales in test cities is a function of
advertising plus all the other factors. The post pre-campaign differences in sales in
the control cities is a function of all the other factors.
By subtracting the sales differences in control cities from those in test cities, a
tolerably accurate estimate of the effect of advertising is obtained, provided that the
test and control cities are reasonably comparable.
(ii) Multivariable Experimental Designs:
While the experimental design above yields a reasonably accurate estimate of the
effect of the advertising campaign on sales, it does not generate explanations for the
success or failure of the campaign. Multivariate designs produce these explanations,
and are therefore used by some very large advertisers because of their superior
diagnostic value. Fig. 15.4 presents a classic multivariate design.

The power of this factorial design is explained by G. H. Brown, former Fords

Director of Marketing Research. For any single medium, eight geographic areas
have been exposed, and eight have not been exposed. Thus, it is possible to observe
how each medium behaves alone and in all possible combinations with other media.
If identical dollar expenditures (at national rates) are established for each medium,
area 1 will receive no advertising expenditures; areas 2, 3, 5. And 9 will receive
advertising at the same dollar rates; areas 4, 6, 7, 10, 11. And 13 will receive
advertising at twice this dollar rate; areas 8, 12, 14, and 15 at three times the dollar
rate; and area 16 at four times this dollar expenditure.
This type of factorial design is capable of measuring the effectiveness of all
combinations of media used, as well as four different levels of advertising
expenditures. For these reasons, it is a very efficient design. However, the
complexity and cost involved make it impractical for all but very large advertisers.
Indirect Measures:
Because the measurement of the direct effect of advertising on broad company goals,
such as increased profits or sales, is so difficult, most firms rely heavily on indirect
measures. These measures involve such factors as customer awareness or attitudes,
or customer recall of advertising messages or portions thereof.
The assumption is that a favourable or improved awareness, attitude and/or recall
will lead in some way to the attainment of greater sales and profits, or whatever is
the primary object of the marketing and corporate strategy.
This assumption, in turn, rests on assumptions about human behaviour that are by
no means firmly established or universally accepted. It seems obvious that making
a housewife aware of a brand will not necessarily bring about a purchase. Moreover,
even if she does buy the brand, it may not be due to the advertisement. It may, in
fact, have nothing to do with the advertisement.
Despite the uncertainties about the relationship between the intermediate effects of
advertising and the ultimate results, there appears to be hardly any alternative to the
use of indirect measures.
Among the types of measures commonly used are:
(i) Exposure to Advertisement:
In case of print media, for example, estimates are made of the readership of
individual advertisements by interviewing members of the audience of the magazine
or newspapers in which the advertisement has appeared.
In order to be effective, advertisements must gain exposure. The management is
concerned about the number of target consumers who see or hear the organization’s
messages. Without exposure, advertising is doomed to failure.
Marketers may obtain an idea of the exposure generated by a medium by examining
its circulation or audience data, which reveal the number of print copies sold, the
number of persons passing the billboards or riding in transit facilities, the number of
persons living in a tele-viewing or radio-listening area, and the number of persons
tuned into various TV and radio stations at various points of time.
The media cross-classify circulation and audience data by such variables as the age,
occupation, income, and areas of residence of the audience or reader population. As
a result of the examination of such data, advertisers can determine the approximate
number of target consumers that are exposed to advertising messages.
Another means of gauging exposure is through readership or listener surveys. Here,
interviewers ask consumers if they have read, viewed or listened to advertisements.
Readership tests provide a useful supplement to the circulation data, since the
circulation data do not indicate how many target consumers actually read the
advertisements.
(ii) Attention or Recall of Advertising Message Content:
A widely used measure of advertising results is the recall of the message content
among a specified group or groups of prospective customers. Recall is usually
measured within 24 hours.
Advertisements cannot be effective unless they attain the attention of target
consumers. One means of testing the attention- getting ability of one or more
advertisements is to ask consumers to indicate the extent to which they recognize or
recall each one.
Researchers may conduct such inquiries in a laboratory setting. Here, consumers
read, near or listen to the advertisement, and then evaluate it in a per-test. Another
method is to ask consumers for indications of recognition or recall after the
advertisement has been run (a post- test). These measures assume that consumers
have attended to that which they can recognize or recall.
Various mechanical devices in the Western world provide indices of attention. The
eye camera, for instance, measures the paths taken by the eyes as a subject views an
advertisement. This device indicates which parts of the advertisement he or she reads
and how much time is devoted to each part.
Another method is to measure the size of the subject’s pupils when exposed to
advertising. The puplis tend to dilate when something pleasant or interesting is
perceived, constrict when something unpleasant or uninteresting is seen or heard,
and remain unchanged when the response is neutral.
Thus, a change in size is indicative of attention. An analysis of inquiries for messages
presented in advertisements provides a measure of attention.
(iii) Product or Brand Awareness:
The marketers who rely heavily on advertising often appraise its effectiveness by
measuring the customer’s awareness of a product or brand. This type of measure is
subject to much of the same criticism as is applicable to sales measures, that is, the
awareness is affected by many factors other than advertising. But, for new products,
changes in awareness can often be attributed to the influence of advertising.
(iv) Comprehension:
Consumers utilize advertisements as a means of obtaining information. They cannot
be informed, however, unless they comprehend the message. Various tests of
comprehension are available.
Marketers use recall tests as indicators of comprehension. The implication is that
consumers recall what they comprehend. Another measure of this variable is to ask
subjects how much they comprehend a message they have recently heard or viewed.
One may employ a somewhat imprecise test of the comprehension of a newspaper
and radio advertisement.
One may, from time to time, ask individuals he considers to be typical target
consumers such questions as- “What did you think of my new commercial ?” and,
“Did it get the message across ?” The answers to such questions provide valuable
insights into advertising decision making.
(v) Attitude Change:
Since advertising is usually intended to influence the state of the mind of the
audience toward a product, service, or organization, the results are frequently
measured in terms of expressed attitudes among groups exposed to advertising
communication.
Various types of attitude measures are used, ranging from questions about
willingness to buy or the likelihood of buying, to the measurement of the extent to
which specific attributes (for example, “modern”) are associated with a product.
An assessment of attitude change calls for the measurement of attitudes toward the
product or organization in question, both before and after the appearance of the
advertisement.
The researcher may conduct this in a laboratory setting (a pretest) or in conjunction
with the appearance of the actual advertising effort (a post-test).
Attitude scales are useful means of gauging attitudes.
A typical scale contains questions such as:

The measuring instrument normally contains 15 to 20 scales, such as the three set
forth above. Scaling techniques of this sort (called the semantic differentials) provide
a useful means of measuring attitudes in a short period of time.
Other ways of gauging attitudes are analyses of recall and inquiries. The assumption
underlying these methods is that consumers remember or inquire about matters
toward which they hold favourable attitudes. In addition, some researchers utilize
the pupil dilation test in evaluating this variable.
(vi) Action:
Finally, an important advertising objective is to stimulate action or behaviour. The
intention-to-buy measuring instruments can provide measures of proposed actions.
These instruments include such points as the following regarding the product
under consideration:
(a) I already own it.
(b) I hope to buy it within the next year or sooner.
(c) I will probably buy it sometime in the future.
(d) I have no idea whether I shall even buy it.
(e) I am sure I will never buy it.
An analysis of these responses yields measures of consumer buying intentions and
are indicative of expected future purchasing activities.
One type of action that advertisers attempt to induce is buying behaviour. The
assumption is that if an increase in sales follows a decrease in advertising
expenditure, the changes in sales levels are good indicators of the effectiveness of
advertising.
Logic suggests that measurements of sales are preferable to other measurements.
After all, are not most advertisements used to increase or maintain sales, either
directly or indirectly?
Some problems arise in the use of sales tests. Sales, depend upon a number of factors,
not only on advertisements factors that may seriously disrupt the test. Sales increases
may be the result of a decrease in the rival’s advertising expenditure, an increase in
his prices, a decrease in the strength of the organization, a more aggressive personal
selling effort by company personnel.
An increase in income, improvements in the weather and many other factors. In
short, external factors may easily contaminate the results.
Another problem is the difficulty of measuring the impact of advertising upon sales
over a period of time. A housewife may read an advertisement for a new brand of
refrigerator and, as a result, be impressed by the product. Yet she may not buy the
brand until two years later, when she sees it in a store.
Or, the advertisement of a soft drink producer may stimulate a purchase which makes
the consumer loyal to the brand; yet the sales may be spread out over the next ten or
twenty years. Most sales tests do not take measurements over so long a period. Even
if they did, other factors probably would contaminate the results.
Some advertisers utilize sales tests, despite their limitations. The marketers whose
advertisements solicit mail orders, for instance, frequently employ this technique.
Another type of action test consists of tabulating the number of coupons that
consumers redeem. The coupons are placed in advertisements and consumers are
asked to take them to retail outlets and purchase the brand at a discount. If a large
number of consumers redeem their coupons, the advertiser assumes that the message
was powerful in generating action.
The purpose of some advertising is to generate inquiries. Thus, a good measure of
effectiveness is to tabulate their number. Similarly, retailers may count the number
of consumers who visit their outlets, both before and after the appearance of the
advertisements in question.
Finally, lottery tests provide measures of action. The researcher presents a sample
of consumers with a list of brands and asks- “Which of these do’ you want to receive
if you turn out to be the winner of our lottery?” Then the researcher exposes the
subjects to one or more advertising messages.
Following the exposure, the researcher again asks the subjects which brand they
would prefer if they win the lottery. Those advertisements featuring brands that are
mentioned by more consumers in the “after” than in the ‘before” measurement are
deemed to be more effective in attaining their objective.

Measuring Advertising Effectiveness

The intelligence with which planning is conducted can be greatly enhanced if the
planner can measure the results of what has already been done. This is as true of
advertising as it is of any other activity. The essence of measuring advertising
effectiveness is to determine what influence, if any, the advertisement has had on
the thinking and actions of the people who make or influence buying decisions.
Unfortunately, no generally applicable technique for achieving this purpose with
assured accuracy has yet been developed.
There would appear to be rather general agreement, though, that attempts to measure
advertising effectiveness must be individual to the firm and must begin with a clear
understanding of the purposes each advertisement or program is designed to achieve.
Methods may then be developed to determine the extent to which each purpose has
been accomplished.
For example, if a program was designed to stimulate demand, the flow of orders
before and after its initiation could be determined, along with the cost of selling the
additional volume. Admittedly, this approach has a few holes in it, the worst being
that frequently the influence of advertising cannot be separated from that of other
activities going on concurrently.
However, if no other activity was in progress to which a given increase in sales could
be attributed, the advertising program would appear to be its principal cause.
If the purpose of advertising is to identify new customers, the extent to which it does
so can be measured at least in part by the number and kind of inquiries it generated.
An inquiry usually contains internal evidence of the stimulus which triggered it.
If inquiries obtained by advertising are followed up and result in sales, the cost of
the inquiry and the subsequent cost of making the sales can be computed. This makes
possible the calculation of an advertising cost per dollar of sales associated with the
advertising.
If an advertising program was intended to create an image or dispel a prejudice, an
attitude survey conducted before and after the initiation of the program may reveal
the extent to which its purpose has been accomplished. Whether or not the purpose,
or the extent of its achievement, is worth the cost is much more difficult to determine.
However, management must have decided that the purpose was worth at least the
amount budgeted for it. Consequently, the cost of complete or partial achievement
can be computed and compared with the expenditure originally approved.
Measuring the effect of advertising designed to disseminate information can be done
by thorough before-and-after surveys of what sample members of the target audience
know about the subject matter presented. The cost and value considerations are the
same as those which apply to an image or attitude objective.
While this discussion barely scratches the surface of the subject, its intent is merely
to indicate that it is possible to devise methods with which the results of much
industrial advertising can be measured with an acceptable degree of accuracy. The
cost of measuring performance may, of course, exceed the value of the information
it provides. In such cases, one can reasonably question whether or not advertising
itself is worth its cost.
Measuring Advertising Effectiveness (Evaluation, Issues & Guidelines)
Advertising planning and development is a complex process which requires
multitude of decisions. Different people participate directly or indirectly at each
stage of the ad development process and hold stake in performance of the ad.
Advertiser, as a spender, holds the prime stake and seeks desired effects of
advertising on the target audience.
Advertising agencies are concerned for its image as a developer of creative ads.
Media houses and other facilitating organizations also like to be a part of the success
stories of the brand as they largely depend on advertising revenues. Though
immediate customers/audiences and society at large are not the direct participants in
decision making process, their concerns for ad performance are of equal importance.
Customers hold stake for having access to information at the right time and of right
type and it has no misleading element in it. Society, at large, is concerned for the
allocation of its scarce resources and the effects of advertising on the wellbeing of
the society.
Where both the advertiser and the agency hold their stakes. The focus here will be
on various aspects of evaluating advertising performance and determining its
effectiveness in terms of advertising purpose.
Evaluating Ad Effectiveness:
Advertising effectiveness refer to the changes that advertising causes in the mental
or physical state or activities of the recipient of an ad. The continuous process of
advertising requires a time-to-time measurement of advertising performance, more
accurately called as advertising effects, and its comparison with the standard.
Ad effectiveness is determined by the extent to which advertising performance meets
the standard. Here, advertising objectives constitute the standard or criteria for
evaluating ad effectiveness. The market environment, the competition level, nature
of the product and service, the selling methods being used, the performance of
channel of distribution and other situational conditions could interfere with the
advertising performance in a given period of time. For evaluating ad effectiveness,
these factors are, therefore, kept constant.
Advertising outcomes are slow, and occur over a long period of time, and it is
possible that the factors otherwise kept constant at the time of advertising exposure
might change in between and influence advertising performance. Hence, there is
always a probability of exactly determining advertising effectiveness. At times there
are controversies about the effects of advertising and they make the people skeptical
raising doubts like, does advertising really work?
Issues in Evaluation of Advertising Effectiveness:
There are issues which need concern at the time of evaluating ad performance and
determining its effectiveness. One of them concerns with the parameters of
advertising performance which could either relate to change in sales or some
communication variable commonly referred to as sales effects or communication
effects.
It depends upon advertising objective in a given situation that what would be the
parameter of advertising performance and how it is to be measured. However, there
is always a possibility of some disagreement particularly due to the fact that
advertising objectives differ at different points of time, or differ for different target
groups.
Also, the testing techniques to measure performance parameters are many in number
and the choice of one best technique at times becomes difficult.
Advertising agencies are significant participants in advertising process and have
their own reservations for the system of ad evaluation. Agencies usually hold the
opinion that applying measures to evaluate ad performance may interfere with their
creativity whereas the norm is that the more creative the ad, more likely it is to be
successful.
Also, due to the ambiguousness of testing procedures and of advertising itself, there
is always the possibility of lack of true measurement of creativity and effectiveness.
Therefore, agencies want to be creative without any limiting guidelines from the
advertiser.
Advertisers, being the major stakeholder in running an advertising programme on
the hand, are always in the favour of evaluating ad effectiveness so much so that
agency’s remuneration is at times being linked to the ad performance itself. So, there
is a scope for conflict between the agency and the advertiser.
Lagged effects of advertising, and possibility of disagreements relating to
advertising performance brings certain ambiguities that circumvent the evaluation
task. There is always the need to justify the time and money spent for this purpose.
Where time is the critical factor in terms of availing the new opportunities, money
can be spent elsewhere to earn better returns on capital.
But due to the lack of a proper evaluation exercise, the poor advertising programme
is a cause of more harm and is likely to have more damaging effects for product
performance in the market. In view of huge investments involved there is always a
need to avoid the situations of over spending which results into waste expenditure.
The under spending situation is of equally more concern as advertising will fail to
achieve its purpose for the lack of sufficient funds. Thus, within the given budget
allocations the evaluation of an ad performance enables the advertisers to find out
the sufficiency level of expenditure to achieve the advertising purpose.
The various aspects of evaluating ad effectiveness to bring more clarity in this
regard. There are four W’s related to evaluation of ad effectiveness and subsequent
discussions will provide required explanations to each one of them-
1. What to measure?
2. When to measure?
3. Where to measure?
4. Which method to use for measurements?
Summarized View on Measuring of Ad Effectiveness:
A summarized view on various aspects of decisions concerning evaluation of ad
effectiveness are given below.
The following points can be noted in this regard:
1. Measuring ad effects whether for print or broadcast ad, as each form has its own
requirements for measurement techniques to be used.
2. Measuring whether there are sales effects or communication effects. Sales effects
can adequately be measured only in few of the situations; measurement of
communication effects is complex.
3. Advertising objectives provide the measurement criteria.
4. Measurement of ad effects takes place either before and/or after the launch of an
ad.
5. Pre-tests occur in pre-launch period at number of point during development of the
ad.
6. Pre-tests are of diagnostic nature which involves partial testing of ads for its
various elements such as headlines, illustration, concept, layout and so on.
7. There are number of pre-tests, which can be conducted in lab setting or in the
field.
8. Post-tests occur in post-launch period and the purpose is to determine the
accomplishment of the objectives sought. They serve as input to next situation
analysis.
9. Post-tests are the field tests.
10. Data collection methods for various testing techniques can either be based on
self- reports or on observation approach.
11. Excepting for few testing techniques, methods for data collection can either be
self-report or observation type.
Guidelines for Testing Ad Effectiveness:
There is no best way to test ad effectiveness. Different techniques have been
developed to test different advertising variables (input, output or process variables)
pertaining to different aspects (media, message, budget) of effectiveness. For
example, pre-testing techniques are well suited for measuring message variables but
are generally not as appropriate for measuring media scheduling and budgeting
variables.
Similarly, different forms of advertising call for different testing techniques.
Television and radio ads are required to be measured through techniques different
from those used in testing radio ads.
In 1982, twenty one of the largest US ad agencies issued PACT (Positioning
Advertising copy Testing) report which viewed advertising as performing on several
levels. In order to succeed, an advertisement must have an effect so that it is received
(reception), understood (comprehension) and make an impression (response). These
are the communication issues which a copy testing should address depending upon
the objectives of the specific advertising being tested.
Also, in PACT report agencies agree that it is useful to obtain response to various
executional elements such as story elements, illustration, music, characters, etc.
which can provide insight about the strengths and weaknesses of the advertising and
why it performed as it did. Through PACT report agencies, endorsed a set of
principles aimed at ‘improving the research used in preparing and testing ads,
providing a better creative product for clients, and controlling the cost of TV
commercials.’
This set of nine principles, called PACT (Positioning Advertising Copy-Testing)
defines copy testing as research ‘which is undertaken when a decision is to be made
about whether advertising should run in the market place. Whether this stage utilizes
a single test or a combination of tests, its purpose is to aid in the judgment of specific
advertising executions/Copy-testing, therefore, implies that funds will be allocated
to research on consumer reactions to the advertising before the final campaign is
launched.
The Nine Principles of Good Copy Testing are:
1. A good copy-testing system provides measurements which are relevant to the
objectives of the advertising.
2. A good copy-testing system is one which requires agreement about how the results
will be used in advance of each specific test.
3. A good copy-testing system provides multiple measures because single
measurements are generally inadequate to assess the performance of an
advertisement.
4. A good copy-testing system is based on a model of human response to
communications—the reception of a stimulus, the comprehension of the stimulus
and the response to the stimulus.
5. A good copy-testing system allows for consideration of whether the advertising
stimulus should be exposed more than once.
6. A good copy-testing system recognizes that the more finished a piece of copy is,
the more soundly it can be evaluated, requiring as a minimum that alternative
executions be tested in the same degree of finish.
7. A good copy-testing system provides controls to avoid the biasing effects of the
exposure context.
8. A good copy-testing system is one that takes into account basic considerations of
the sample definition.
9. A good copy-testing system is one that can demonstrate reliability and validity.
Thus, adherence to PACT principle tends to provide appropriate testing of ad in the
pre launch period with the purpose to refine the process of ad development. Yet, the
effectiveness of an ad is subject to its performance and its evaluation.
In this Regard the General Criteria are to:
1. Establish communication objectives.
2. Make use of consumer response models.
3. Use multiple measures, and
4. Understand and implement proper research.