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Draft TV Commercials

Question 1

What do we know?

budget is fixed

budget must be spent on drafts or on airingquality of commercials is uncertain

What can we assume?

any number of drafts can be commissioned

the quality of different drafts is independent (in probability)

What could the results look like?

graph of profit as a function of number of drafts

graph of retained impressions as a function of number of drafts

optimal number of drafts

marginal value of one draft more or less

What informationcan be brought to bear?

distribution of retained impressions for other commercialsWhat can we ask the client?

how variable is the quality of draft commercials?

how accurately can a trial audience determine the ultimate quality of a

commercial (retained impressions)?

does variability in commercial quality vary by product category?

Similarsituations or problems?

sampling from populations with variability

optimal stopping problems

Question 2

Problem statements: In what ways could?

we maximize retained impressions

we maximize profit

we identify a robust strategy.

Question 3

Decisions

number of draft commercials

Objectives

total retained impressions

retained impressions per dollar spent

profit

Constraints

budget

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Question 4

Question 5

Ways to simplify

ignore details of advertising campaign (e.g., media split, frequency of

airings, and so on)

Question 6

Modules

quality of ad chosen from multiple drafts

retained impressions

Question 7

Key relationships

actual and perceived ad quality differ by a random error

Question 8

Parameters

variance of commercial quality

error in perceptions of commercial quality

percentage difference between next day recall and retained impressions

Distribution of

Ad Quality

Retained Impressions/

Dollar

Number of

Drafts

Budget

Cost/Draft Ad

Retained

Impressions