CONTENTS

Economic Impacts of National Generic Dairy Advertising

The Impact of Generic Fluid Milk Advertising on Whole, Lowfat, and Skim Milk Demand

Generic Advertising Wearout: The Case of the NYC Fluid Milk Campaign

Manager's Viewpoint

Editor's Notes

Director’s Corner

Selected Reading

Next Meeting

NEC-63 2002 Next Meeting Date xx-yy, 2002 Albuquerque, New Mexico Allocation Issues in Check-off Programs

Generic Advertising Wearout:
The Case of the New York City Fluid Milk Campaign

by Carlos Reberte
Harry M. Kaiser
John E. Lenz
Olan Forker

In a forthcoming NICPRE research bulletin, we examine the issue of advertising wearout in the New York City market. Between 1986 and 1992, New York dairy farmers made annual investments in the range of $2.1 to $4.2 million in generic fluid milk advertising in this market. As this is the largest fluid milk market in New York, dairy farmers are interested in ensuring that the money they invest in their advertising program in this market produces an effective campaign. For most of the 1986-92 period, new commercials, with or without a shift in the general advertising message, were deployed annually. Given the substantial production costs required to produce new advertisements, dairy farmers and their program managers are, understandably, interested in research aimed at determining whether annual “re-tooling” to lessen advertising wearout is necessary or desirable.

Building on a study conducted by Kinnucan, Chang, and Venkateswaran, we estimated a time-varying parameter model which allows, but does not require, advertising to exhibit varying effectiveness over time. Based on creative content, we grouped the commercials that ran in New York City during the 1986-92 period into two campaigns. The first campaign focussed on milk’s nutritional benefits, while the second was aimed at increasing fluid milk consumption by adults.

The results of our model indicated that the impact of generic advertising on fluid milk sales in New York city evolved over each campaign following a bell-shaped pattern. Our results also indicated that the first campaign was effective for twice as long as the second campaign and that it had a higher peak and a higher average advertising elasticity. By accounting for the dynamic nature of advertising responses, program managers and boards of directors can enhance their strategic planning in the areas of campaign duration, copy replacement, and expenditure allocations over time.