What I've learned about Advertising

[Hans_Lemurson]

Advertising your products to improve the Brand Rating of your goods is essential to compete in markets and get the most money out of retail. However, this is a field that seems to be somewhat poorly understood, so I've done some experiments to determine how things work and answer my own questions about Advertising.

What I know from the Manual:

• Brand Rating is the sum of Brand Awareness and Brand Loyalty. It is capped at 100, and contributes about 20%-50% of the total Product Rating (depending on the product, city, and economic state.)
• Advertising creates Brand Awareness. Sales of good quality products create Brand Loyalty. Bad quality products can reduce (or even cause negative!) Brand Loyalty.
• An Advertising Unit connected to some other unit will start to create Brand Awareness for the product in that unit, at the cost of money from the Advert budget.
• A Media Firm's ratings points determine how much of the city's population can be "reached" by advertising through them.

This information is helpful, but...not quite enough.

Questions

1. Does connecting an Advertising Unit to the same product multiple times increase its effect?
   Yes! An advertising unit spends its money per-connection!. An Ad Unit with $500k funding, connected to 4 Product Units (doesn't matter what type, purchase, sales, inventory...) will spend $2 million/month on advertising.
2. Is Brand Awareness created just through money spent, or are there other factors involved?
   I can't be sure that there are no other factors, but it seems that the gains in Brand Awareness are directly proportional to the amount of money spent. Double the budget, double the gains. More Ad Unit connections = More money spent = More Brand Awareness. There's no upper limit except to how many connections can be made between Advertising Units and Product Units within the confines of a 3x3 floorplan. The best I've been able to do is 14 connections from units at $500k funding, creating an advertising Budget of a whopping 7 million/month. But boy did I get my money's worth! I Maxed-out the Brand Awareness for that product in just one month! So it seems that money spent is the only really important factor. Time spent doesn't seem to play a large part except the physical limit of how quickly you can dump money into Brand Awareness.
3. Is Brand Awareness directly proportional to money spent?
   Yup! When I set up a store with twice as many Ad-Connections to Cigarettes as Cigars, the Cigarettes gained Brand Awareness twice as fast as the Cigars did. Reversing the test produced similar results. Brand Awareness seems to just be literally the amount of money you throw at it.
4. How much does it take to reach 100 Brand Awareness?
   $10 per person? I did my tests in cities of about 500,000 people, and it seemed to take a total expenditure of $5 million per product to reach 100 Awareness in that product. I don't know what factors influence this, but I bet it has something to do with the CPM ratings of Media Firms.
5. Do different products gain Brand Awareness at different rates?
   Not that I could tell from the testing I've done. Brand Awareness growth seems to be the same across different products and different quality levels. Haven't tested this thoroughly, but no effects were obvious. Brand Loyalty though is affected by external factors.
6. How fast does Brand Awareness rise?
   Brand Awareness increases in "pulses" that seem to happen 3 times each month: on the 1st, 11th, and 21st day. Its decay seems to happen at any time, but I haven't studied Awareness Loss yet. Each pulse spends 1/3 of the monthly advertising budget. Cutting funding part way through a month means you don't spend any further money at the next Ad Pulse. If you hit 100 Awareness mid-month, you can end your ad campaign early for no extra cost.
7. What does a Media Firm's "Rating Points" mean?
   They seem to be an upper limit on the Brand Awareness that can be produced by Advertising with that firm. If a Newspaper has 52 rating points, then once your Brand Awareness exceeds 52, you will see no further gains from any Ad Pulses. (you can go above 52 if the Awareness started low and then the gains from the Ad-pulse overshot the mark, but it halts thereafter). There also seems to be an impact in how quickly Awareness rises when using that firm. With the same Ad-Spending, a firm with more Rating Points seemed to produce larger gains in Awareness.
8. How does advertising at multiple Media Firms change things?
   The Brand Awareness Limit seems to be the sum of the Rating Points of all Media Firms you're advertising at (capped at 100, of course). Advertising at a Radio and a TV station each of whom have 50 Rating Points will allow you to go all the way to 100 Awareness. The speed at which you gain Awareness seems to be based on the average of all the Media Firms you're advertising with. In general it seems to be best to just use the Top 2 Firms in your city. Raises the ceiling to 100 without dropping the effectiveness of your $$$. Advertising with more than 2 firms seems to work just fine though, so I've tended to just use a TV/Radio/Newspaper combo and just not worried about it.
9. What effect does the CPM rating have on Ad costs and Awareness Gain?
   No clue. A Firm with 60 Rating Points and a CPM of $2.50 seems to give more Awareness for the same cost as a Firm with 40 Rating Points, but an allegedly cheaper CPM of $2.00. The lower CPM price didn't seem to make my money go any further.
10. What effect does the Range Brand Strategy have?
    It seems to halve your advertising costs compared to individually advertising all the products in the class. If raising the Brand Awareness of Cola to 100 costs $12 million, then raising the Brand Awareness of the whole Beverage class (with 4 products in it) will cost about 12*4/2 = $24 million. For smaller classes, it costs less. Advertising the whole Tobacco Products class seemed to cost the same as advertising Cigars by themselves.
11. Half Price? What's the catch?
    Not sure. I guess you're paying to advertise the whole swathe of products regardless of how many of them you're selling, and you have to be worried about low quality products driving Loyalty down, but there's no other downside that's showed up in my tests so far. Maybe Brand Loyalty increases more slowly? Maybe Brand Awareness decays faster? No idea.
12. How fast does Brand Awareness decay?
    Not sure. Seems to drop about 1-2 point per month. Not too bad. It looks like a Range Brand strategy has a slower decay rate than product-specific, but I'll need to do more tests to confirm.
13. How fast does brand Loyalty grow?
    Slowly, maybe 0.5-1 points per month? Like the manual says, it's affected by both the Sales Volume and the Overall Rating of the product. Cigarettes were more popular than Cigars in the city I was testing in (I used them because I could ensure identical quality), and their Loyalty also seemed to grow faster. When I jacked up their prices to take full advantage of their Brand Rating, then they gained loyalty more slowly than the Cigars did.

Conclusions:
Overall, it seems that Advertising is simply a matter of Money. Once you throw enough money at a city's Media Firms, your product will achieve 100 Brand Awareness. This can be stretched out over a long period of time, or concentrated into one blast. I'm personally in favor of speed, since the high Product Rating from the Brand Awareness will speed up entry into the market.

Brand Awareness seems to have a fixed cost, and is just another price you pay to enter a new market. Just as you need to buy land and build retail stores in order to sell to a city, so to you need to dump a bunch of money on advertising in order to actually succeed in selling the products. It's sort of like R&D costs, but you have to pay it for each new city you wish to enter.

The Retail Floor design I used in testing and the one I think I'm going to stick with is to put 3 Advertising Units down the middle of a floor, and maximally connect these to the purchase and sales triplets on either side like so:

In this way, with 14 total Product<->Advert connections, you can deliver up to $3.5 million/month to two products, or $7 million/month to just one product (if you use the same one on both sides) and it only costs you 1/3 of your floorspace. When you drop the Ad budget down to a low "maintenance" level to preserve your Awareness rating, the rest of the store can easily pay for that upkeep.

You can even build some special "Marketing Firms" whose sole job is to bring products up to 100 Brand Awareness as quickly as possible before clearing it out and moving on to the next product. It's just a matter of how quickly you want to spray out money through your Advertising Firehose.

[Brutus]

Excellent and very insightful post!

[MagnusA]

Oh, I thought Advertisement had to be connected to Sales units only! But instead they can work with any unit type? Like Purchase, Manufacturing, Inventory, etc, as long as the are processing the desired Product?

[Brutus]

Oh, I thought Advertisement had to be connected to Sales units only! But instead they can work with any unit type? Like Purchase, Manufacturing, Inventory, etc, as long as the are processing the desired Product?

I'm pretty sure that's how it works yes. I know for sure it works on purchasing units as I've done so many of times to 'tweak' or 'boost' advertisement spending for a specific product.

[jth92]

From the manual, an advertising unit can be linked to anything with a product. Units that capture a product are inventory unit, purchasing unit, sales unit, private labeling unit, manufacturing unit, crop growing unit, livestock processing unit, mining uni, logging unit, and oil-extracting unit. Basically, it can be connected to both sales units and whatever else that can be connected to a sales unit (minus obviously the advertising unit itself). The difference between connecting to a sales unit vs a purchasing unit is if you don't produce the product you are building brand awareness for someone else's product. This is where you would connect a purchasing unit to a private labeling unit and connect the advertising unit to both the private labeling unit and the sales unit to spend $1M for that product vs the limit of $500k. If you produce the product yourself, you can connect to the purchasing unit directly.

[jth92]

Another think to be aware of is the effect of a CMO (Chief Marketing Officer). Advertising units do not gain experience over time having a fixed level of 1 throughout the course of a game. However, hiring a CMO with expertise in Marketing will increase the "efficiency" by a % based on the increments of 20 points. Though there is a typo in the manual, in the game the expertise is in Marketing but in the manual, it refers to expertise in Advertising.

The excerpt from the manual, "Advertising. If a person has an advertising expertise, advertising conducted by the person generates higher brand awareness. The result doubles when a person’s advertising expertise level is 100."

Assuming this effect is linear, hiring a CMO with advertising expertise of 60 will result in advertising units having brand awareness output of 160% with the spend spending (e.g. 20% per 20 points). Effectively, this means hiring a CMO means you can reduce your collective advertising budgets by 10%, 20%, 30%, 40%, and 50% respectively corresponding to expertise values of 20, 40, 60, 80, and 100 (though I've never seen any game with persons having expertise of 100).

Note: The advertising units will still report Level 1, but the "efficiency" bonus still occurs.