13.4 UNCERTAINTY IN ADVERTISING

In the preceding section we have presumed that the firm can foresee the result of a given expenditure on advertising and promotion. In fact, $1,000 spent this month may be very effective in influencing the level of sales, whereas a similar amount spent next

month may have virtually no impact. This outcome may be the result of differences in the qualitative aspects of the advertising campaign, a different media mix, autonomous changes in consumer tastes and preferences, or similar changes induced by concurrent advertising campaigns of rival firms.

The responsiveness of consumers to television advertisements has been linked to the weather. Research indicates that changes in the weather can reduce or boost consumer response to advertisements by 50 to 100 percent. Advertisements for Campbell’s soups are strategically placed prior to and during winter storms. When a storm is predicted, Campbell’s ads urge listeners to stock up on soup before the weather worsens. After the storm arrives, listeners are urged to stay inside and relax with a warm bowl of soup. Similarly, demand for breakfast cereal is more responsive to advertisements when there is cloudy weather, and demand for soda pop increases with wind velocity. (Don’t ask me why.) Of course the demand for many goods is seasonal, but this variation in advertising effectiveness is on a day-to-day basis. In the summer, suntan oil advertisements are more effective on hot days than on cloudy days. Thus weather predictions have begun to determine the timing of advertisements, with media service firms monitoring weather predictions across the country and then advising their clients when and where to place their advertisements for maximum impact on sales. 6