AD 000$
Ad spending in thousands of dollars for five years adjusted for inflation using
U.S. Department of Labor Consumer Price Index. Advertising includes media, direct
mail, point-of-purchase, production, ad department operations, research and other direct
costs as reported in government filing.
SIC SHARE
This company's share of inflation adjusted ad spending and net sales among all firms in
the same industry as defined by its 4-digit SIC (Standard Industrial Classification.)
Share of advertising is a measure of competitiveness and a determinant of market
share; share of sales measures the company's relative strength within its industry.
SALES
Net sales in thousands of dollars adjusted for inflation by the CPI. Net sales is
defined in each company's annual report and is sales after discounts and allowances.
AVG CHG
Mean average annual percentage change of inflation adjusted ad spending, share of
spending, sales and share of sales over five years. An important measure of real
growth.
RELATIVE AD EFFECTIVENESS
The ad-to-sales ratio of all companies combined in the same SIC divided by this
company's ad-to-sales ratio. If a company is spending less to get a greater share of
sales, the effectiveness ratio is greater than one. If it is spending more to get a
smaller share of sales, its ratio is less than one.
WHAT IF SCENARIOS
Shows what sales and share of sales would be if the company (1) cuts its ad budget, (2)
makes no budget change, or (3) increases its budget assuming no change in spending trends
or effectiveness of competitors in the same industry.
MANAGEMENT BY OBJECTIVE
Shows what a company's ad budget should be to product a 5%, 10%, and 15% increase
in sales given trends within the SIC and the company's ad effectiveness. ROR% shows
the expected rate of return on ad spending if the company achieves a 5%, 10%, and 15%
increase in sales and invests in advertising required to achieve these sales objectives.
These are theoretical values based on present profit margins, industry trends, and
cost structures. However, companies with high RORs may
find increased ad spending to be a sound investment.
RELATIVE AD PROFIT
This company's gross margin (sales minus cost of goods minus ad spending) divided
by the gross margin for the industry, then multiplied by total industry ad spending
divided by this company's ad spending. A ratio greater than one indicates that a
company is spending less on advertising relative to its profitability than the industry as
a whole. A ratio less than one indicates above average spending. A negative
ratio indicates an unprofitable firm.
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