The Ultimate Ad Spend

The Booze Allen Hamilton Strategy + Business website is posting an article titled "The Advertising Saturation Point" (registration required) by Evan Hirsh and Mark Schweizer. In it, the authors report the results of a study in which they applied a statistical model to predicting the optimum amount car companies should spend on advertising. Running the model against historical data, they found that companies sooner or later gravitate toward a spend based on three factors: 1) market share, 2) the number of different product models ("name plates") supported, and 3) the number of new models introduced in a given year.

How much are four words worth?

The authors suggest that a similar approach might be applied to other products -- that advertising spend is like price. Incremental dollars on either side of the optimum point result in bad outcomes -- and over time force a change in management behavior (if not management itself).

What about "creative" factors like copywriting or visual imagery? The authors found that these were mostly a wash. My opinion: that makes sense given that, over time, most companies will buy as much bad copy as good. But what about companies consistently known for great copy? Wouldn't that make their ads more economically efficient? The authors believe that BMW has been able to out-perform its below-optimum ad spend because of a classic tagline: "The Ultimate Driving Machine." So, how much are four words worth?