Gardenburger Exercise

Objectives

• Gain experience in using media allocation methods as described on the media planning/media selection section of AdPrin.com
• Improve ability to present complex analyses so as to persuade managers.
• Apply principles from the course.

Problem

Gardenburger is planning to spend $14 million in a five-week blitz of which $1.5 is for the Seinfeld commercial (total for year = about $20 million).

Read the account (Wall Street Journal, April 1998) of this situation. Assume that you work for an independent ad agency that was asked to review the media plan. Recommend what you would do in this situation. They are particularly interested in what the total ad budget should be, how it should be allocated across media, and also whether they should go ahead with the Seinfeld commercial. Back up your recommendations with analyses, and describe the process that you used.

Proposed ad budget from each team

All groups should simultaneously post proposed budget on the board.

Previous advertising

Estimate of total expenditures should be posted on the board.

What did you do?

• Amount spent in past
• Reasons to differ*
• Effects of reasons to differ*

*Individual estimates first then combine (Use the Delphi program on AdPrin.com)

Typical practice

• Present your proposal for total expenditures
• How should you do this?
  • Structured judgment & combine
  • Look up estimates of A/S ratios
    http://www.outburstadvertising.com/resources/adtosales.pdf
• Tailor to Gardenburger
  • Individual analyses
  • Use trimmed mean

Elasticity method

Present your proposed budget from elasticity.

Find estimates of elasticity?
Empirical studies: Sethuraman and Tellis (1991), Tellis (2010)

Show how you adjusted the estimate.

Title - Gardenburgers - 0:29

Watch the commercial.
Is it persuasive? Do an Adprin Audit and consider this in your adjustment.
Propose total ad expenditure using the elasticity method.
Present your proposed budget from the elasticity method.
Apply Wright's Rule (elasticity x gross margin).

*Sethuraman and Tellis (1991), Tellis (2009)

Decomposition method

• Please post your estimae on the board.
• Provide source/method for each estimate.
• Watch the TV commercial above produced by a major advertising firm for the last Seinfeld show.
• What are your recommendations?
• Should you air the commercial?
• Show how you analyzed this.
• Would you have recommended changes in the commercial?
• What alternative channels would you suggest other than TV?