Marketing Strategies Case Study

Taguchi Method: Measuring Advertising Effectiveness

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Abstract:
Marketers invest on advertising, to share information on products, services and concepts, and also to induce responses. One of their main goals is to transform these responses into sales, which reflects the return on investment (ROI). But the measurement of ROI is seldom realised in advertising because of numerous factors in an ad campaign that required testing. The case study talks about James Kowalick (Kowalick), who has done pioneering work in removing this uncertainty in measuring the ROI or the effectiveness of an ad, by using Taguchi optimisation tool. With published success stories on optimising email, direct mail and newspaper inserts, both on-line and off-line marketing campaigns were found to be amenable to Taguchi optimisation. Kowalick used Taguchi optimisation, to test smaller ads and arrive at the optimal ad which is then used for a major roll-out, helping the companies to cut down their advertising expenditure and generate effective responses. In 2003, he launched Kowalick Direct, an advertising consulting firm in the US which commercialised the use of Taguchi method in ads. With clients ranging from software firms to furniture and mortgage companies, Kowalick is trying to popularise the Taguchi methodology by charging his clients only if he is able to double the response rates. By giving due emphasis to both creativity and market response, Taguchi optimisation is revolutionising the way advertising works, especially with more competitors offering similar services at competitive prices.

The case study can be used to teach the concepts of effective advertising, ROI in advertising, the traditional methods of A/B Split testing and multivariate testing in advertising, the evolution of Taguchi method in advertising; and the use of Taguchi optimisation tool in on-line and off-line media.

Pedagogical Objectives:

• To discuss how Taguchi can measuring the ROI ot the effectiveness of an ad
• To understand the concept of traditional methods in advertising.

Keywords : Advertising Effectiveness, Return on Investment, A/B Split Testing, Multivariate Testing, James Kowalick, Email Markating, Ad Spending in the US, Genesis of Taguchi Method, Marketing Strategies Case Study, TRIZ Optimisation, Success factors in an ad, Taguchi Optimisation in an email campaign, Taguchi Optimisation in direct mail, Landing Page Optimisation, Dell Employee Purchase Program