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View Full Version : Why in the world does BASF advertise on TV?


JRR
12-30-2003, 09:39 AM
You may not recognize the name of this chemical company, but if you watch TV, you'll recognize this:

"We don't make a lot of the products you buy. We make a lot of the products you buy better."

Dave Barry had a column a while back where he asked the same question I have - If you _don't_ make the products I buy, why are you spending millions of dollars to tell me about it!?

I suppose they're _really_ advertising to companies who make products (that could be made better), but the sheer volume of commercials they aired and the massive amounts of cash spent on advertising reminds me of the companies with high-end IT products and services (IBM, EDS, Cisco) that bought time during the _Super Bowl._ Yeah, the tens of millions of blue-collar workers tuned in will jump to the phone to learn more about your new Internet Routing Servers!

But seriously, when you have a very, very small target audience - a few thousand IT directors or research managers - wouldn't it make more sense to just send out salesmen to each one of them to show off your product, rather than spend millions to advertise in a medium where 99.9% of the audience has absolutely no use for what you're selling?

Perhaps I put too much faith in corporate executives, but I'd like to think that they don't make their purchasing decisions based off which vendor had a commercial with a talking cat.

Maybe they're just trying to get people to buy their stocks, although I'd rather invest in a company that had better things to do with its money...

JRR
12-30-2003, 09:41 AM
Incidentally, I went to BASF's website to try and find an answer, but only walked away with a reinforcement to my belief that Intellectual Property laws are the stupidest things on earth. Proof?

BASF has a trademark on: (http://basf.com/static/OpenMarket/Xcelerate/Preview_cid-977411649308_pubid-974237012828_c-Article.html)

We make things better.
We make things stronger.
We make things brighter.
We make things faster.
We make things safer.

The Six Million Dollar Man should sue.

micco
12-30-2003, 09:49 AM
I believe they're also marketing to investors. As more people try to manage their own portfolios, these companies like BASF and ADM try to get the word out about how great they are even though you've never heard of them and wouldn't/couldn't buy their product directly.

An Arky
12-30-2003, 09:56 AM
There are other examples, too. Anybody ever buy something directly from Archer Daniels Midland? Plus, anybody in the market for multi-million/billion dollar defense systems from Lockheed Martin, et al? And don't get me started with those association commercials (cheese, milk, pork, etc.). Seriously, what effect does this have on retail sales? If you ask me, I'd say that these companies and associations have humongous advertising budgets and they have to spend them or they won't get them next budget year. Sure, layoff half your workforce or move it to some sweatshop overseas, but don't touch that advertising budget!:mad:

An Arky
12-30-2003, 10:01 AM
On the defense contractor adverts, I would venture that they probably know that the Pentagon budget czar (or whomever) watches "CBS Sunday Morning", so that's where they advertise. Sure it's an audience of one, but that's the one who could decide to throw a few billion your way...I reckon that the potential Return on Advertising Investment (or whatever the suits call it) would be pretty dang high...

butler1850
12-30-2003, 10:17 AM
Micco has it right. It's for the investors. Although, if you were to buy the types of products that ADM or BASF make, you'd surely already know about them, there is a greater market out there in the investment world. It's called Brand Awareness, and does not only apply to consumer goods.

The same would be said for the defense contractors, and others.

As far as the pork/beef/dairy boards, it's all part of getting you to see alternatives to what you are already doing. e.g. "The New Pork", "Eggs are healthy again" and other campaigns attempt to show you uses for these products that you may be tempted to try.

A Curious Writer
12-30-2003, 10:35 AM
The beef/pork/etc. boards also probably do this b/c some farmers, i would imagine, pay to belong to the boards. And, they figure that they are thus helping their constituent members indirectly.

I once had some casette tapes that said BASF on them, back in the '80s I think it was, but that might just be an area they got out of after a while.

Bryan Ekers
12-30-2003, 11:06 AM
I should poiint out that BASF isn't making the commercials.



They make the comercials.... better.

troub
12-30-2003, 12:43 PM
Originally posted by A Curious Writer
I once had some casette tapes that said BASF on them, back in the '80s I think it was, but that might just be an area they got out of after a while.

I had a bunch of those too. I don't know how old this site is, but DID YOU KNOW???:
http://ourworld.cs.com/proaudiotapes/

Zsofia
12-30-2003, 12:46 PM
Well, advertising pork makes a certain amount of sense - "The Other White Meat" is definately (at least around here) a second-choice meat - we eat a lot of ham and bacon, but we don't eat pork chops or pork loin very often. So I can see how ads can help the nation's pig farmers. "What shall I cook for dinner? Oh, you know, we haven't had pork in a while."

And many of those "association" commercials do focus on the benefits of their product - remember the old Milk commercials, it does a body good? Although it seems they've gotten away from touting health benefits (or possibly I just don't see Saturday morning programming anymore). And touting things like eggs is a direct response to the "Eggs aren't healthy!" word.

But, say, cotton? Especially since a cotton commercial isn't "Cotton underwear gives you fewer yeast infections!", it's "Mom, am I ever going to pass the driving test?" Or cheese, which isn't really an alternative to anything. These are the commercials I don't really get.

hyjyljyj
12-30-2003, 12:53 PM
Originally posted by JRR
...the sheer volume of commercials they aired and the massive amounts of cash spent on advertising reminds me of the companies with high-end IT products and services (IBM, EDS, Cisco) that bought time during the _Super Bowl._ Yeah, the tens of millions of blue-collar workers tuned in will jump to the phone to learn more about your new Internet Routing Servers! Certainly you're not suggesting that these are the only people who watch the Super Bowl...are you?

To be sure, at around one billion TV sets tuned in worldwide, there will be a large number of blue collar workers--as there would be in any sample size that large. But unless I'm mistaken, there is a highly significant number of professionals, executives, investors and others who like football and who enjoy the spectacle that is the Super Bowl. How can you tell?

Companies buy ads to market to them at over $2 million for 30 seconds.

Schnitte
12-30-2003, 01:34 PM
I remember seeing BASF-brand blank video and audio tapes in Germany (it's a German company) not too long ago, and I guess also blank CDs. But the company explicitly states on its website:

The fact is, we don't make many finished products. Virtually all of the 6,000-plus products that we manufacture are ingredients that enhance the finished products consumers buy daily

I agree with those who say it's for the investors. You don't have to buy BASF products to buy BASF shares. And of course public goodwill is something than can be worth a lot, even if you're not selling directly to the audience of the commercial.

Stover9
12-30-2003, 01:51 PM
I'm familiar with the commercials, but wtf does BASF even stand for? I can't even find it on their website (linked in above post). . .I'm deliriously tired though so sorry if I've missed it somewhere here.

JRR
12-30-2003, 02:32 PM
Originally posted by hyjyljyj
Certainly you're not suggesting that these are the only people who watch the Super Bowl...are you?

[...]

How can you tell?
There's no need to be so offended, hyjyljyj . My point is that these companies are strangely spending millions to advertise in a place where the vast, VAST majority of the viewers will have absolutely no interest in buying their products.

There's a reason you don't see ads for tampons during Monday Night Football, even though, yes, many women do watch it.

SmackFu
12-30-2003, 02:37 PM
Badische Anilin- & Soda-Fabrik. It's on their German website.

Cervaise
12-30-2003, 02:40 PM
Apropos of nothing: This exact question was the very first thing I asked on the SDMB, way back when it was still on AOL. I got the "it's for the investors" response then, too.

Ah, nostalgia...

Dr_Paprika
12-30-2003, 03:22 PM
Possibily for tax breaks involved in advertising. Possibly to boost company morale. Possibly to boost the ego of the BASF executive. Possibly to score SuperBowl tickets. Possibly to replace the old motto of "BASF: We make the Nazis better." Possibly because BASF does market some products directly -- tapes, film, storage media, maybe batteries. Possibly because there is benefit in branding non-direct sales (just ask Intel).

BobT
12-30-2003, 03:24 PM
I agree that this is all PR. One of the rotating signboards behind home plate at Dodger Stadium is an ad for Boeing. When I see it, I'm not motivated to go out and buy a jet.

glilly
12-30-2003, 03:59 PM
Cargill, Inc. has been advertising lately, and they have essentially no consumer products. But Cargill is privately owned. Therefore I think Cargill and other publicly traded companies think they are getting something out of the advertising.

The only other reason I can think of is to soften people up, for example, before they are thrown into a jury to decide how liable BASF is for injuries to a sweet old lady who spilled McDonalds coffee on herself made from a coffee pot made in part from BASF plastics.

IMO people tend to not have sympathy for corporations or organizations they are not familiar with, especially "chemical" companies. The commercials may be a familiarization tool so that people have some link to the company before being put on a jury.

glilly
12-30-2003, 04:19 PM
...getting something ELSE out of the advertising...


damnit.

An Arky
12-30-2003, 04:44 PM
Excuse me for not bowing to the Temple of The Market, but while of course companies rely on investors to finance them, they often throw the baby out with the bathwater just to impress those investors. When putting people out of work is a "good" thing, perhaps we've got to reexamine priorities a bit. Of course, I question whether investors actually demand that companies lay people off. I think basically they do it knowing that the jackals of finance will bark their approval by bumping up the stock a couple of points, further enriching the rich.

Flash-57
12-30-2003, 05:05 PM
Still, are new BASF investors THAT important to bother spending tens of millions of dollars on advertising "nothing"? As I recall from my economics classes, once the stock has been sold, the company gains very little from new investors buying that stock from old investors.

Sure, the price of the stock goes up slightly and the other investors make money--on paper. But, the company itself doesn't really get anything out of it.

Is it really just a scheme to inflate stock prices?

YWalker
12-30-2003, 05:48 PM
BASF advertising is what is called "pull marketing" - the idea is to try and "pull" product through the market to consumers. For example if I buy a jacket from company X they might have a label on there that says the insulation is from BASF - and that makes me feel good (in theory) because I have heard of BASF from TV.

Same thing for ads for Andersen Windows - if I go to buy a new house it probably already has windows installed. But when the builder tells me they are Andersen, I know the name from TV and that makes me more likely to buy his house (again, in theory).

yabob
12-30-2003, 07:05 PM
We've been around this one before:

http://boards.academicpursuits.us/sdmb/showthread.php?s=&threadid=46879

ADM is another example, as I mentioned in that thread

Then we have AFLAC, and other sellers of corporate benefits or HR outsourcing - I don't believe that large a proportion of the audience is in a position to decide on such things, and hoping to get employees to request AFLAC insurance seems rather roundabout. And for some of them (not AFLAC), the main thrust of the ads is that they save the corporation money, not that they provide particularly wonderful benefits. I would guess that the average employee would rather HR services NOT be outsourced, as a rule.

Tyvek stucco wrap has been advertising on the radio lately.

The stock exchanges have been advertising. Why NASDAQ and the NYSE feel a need to do this, I don't know.


Still, are new BASF investors THAT important to bother spending tens of millions of dollars on advertising "nothing"? As I recall from my economics classes, once the stock has been sold, the company gains very little from new investors buying that stock from old investors.

Sure, the price of the stock goes up slightly and the other investors make money--on paper. But, the company itself doesn't really get anything out of it.
We've been around this before, too, but it's a different topic. Yes, corporations have quite legitimate reasons to be concerned about their stock prices, and will sometimes make detrimental decisions for the sole purpose of boosting them. Advertising in order to bolster their stock price isn't very hard to imagine.

spingears
12-30-2003, 09:14 PM
There is a lotta crapola advertised on TV for the potential future buyers who are now juveniles.

How many dopers are going to buy a HumVee for instance?

Just trying to create future demand and buyers.

Approx 50% of TV viewers aren't going to buy 'womens' stuff and v/v.

To answer the OP, if they didn't have reason to believe it was a good investment they wouldn't 'wste' mney on advertising.


________________
"Beware of the Cog"

Flash-57
12-31-2003, 02:36 AM
Originally posted by yabob
Advertising in order to bolster their stock price isn't very hard to imagine.

Couldn't that end up being a drain on the company? If they spend X million dollars to inflate the stock price through advertising, aren't they forcing themselves to spend X million next year, just to keep the price from dropping back? And, if they want it to go up more, they have to spend 2X million the next year.

Rattlehead02
12-31-2003, 03:21 AM
Originally posted by An Arky
I think basically they do it knowing that the jackals of finance will bark their approval by bumping up the stock a couple of points, further enriching the rich.

You do know that it's not only the rich who invest, right?

duffer
12-31-2003, 04:48 AM
If you live in America, yes, you have dealt with Con-Agra and ADM.

Not directly, but your cash has gone to them at some point. Where I live, the biggest buyers of wheat is the State Mill. The Mill proceses the wheat and waits for ADM and Con-Agra trucks to show up to ship it to bread/bagel/pasta/ etc, makers. Granted, you don't deal direct with these companies, but you do business with them. And wheat isn't the only commodity they deal in.

Outside the US, it's a lower chance, but still likley.

An Arky
12-31-2003, 04:58 AM
Originally posted by GildedLily
You do know that it's not only the rich who invest, right?

Absolutely. But stock going up a couple of points does little for the small investor, but for a large investor, it means much more. That's why I pointed out that it mainly enriched the rich.:)

Kiger
12-31-2003, 07:36 AM
The stock exchanges have been advertising. Why NASDAQ and the NYSE feel a need to do this, I don't know.


I can tell you why NASDAQ does since I used to work for them. It's all about name recognition. You should see how many logo shirts they gave us so we could advertise for them all the time. Remember the NFL NASDAQ Half-time Report? All that money for name recognition. Same deal with their $45,000,000 Times Square video wall. It seems to have backfired though, and I won't be surprised to hear in a few years, "NASDAQ? What's that?"

yabob
12-31-2003, 10:39 AM
Originally posted by Flash-57
Couldn't that end up being a drain on the company? If they spend X million dollars to inflate the stock price through advertising, aren't they forcing themselves to spend X million next year, just to keep the price from dropping back? And, if they want it to go up more, they have to spend 2X million the next year.
Well, they write it off just like any other expense, and the relationship isn't that simple. BASF seems rather profitable; $34 B revenues for the last 12 months, earnings before tax of $6 B, according to the yahoo financial pages. If their spending however many millions on "name recognition" ads has something to do with the multiple they trade at, they probably figure it's worth it, not that their multiple looks THAT high (current P/E is 26, a bit high given that their projected growth isn't that great - PEG ratio given as 1.88 - at a glance, they look a bit overpriced to me following a recent runup, though they are paying a decent dividend).

Quartz
12-31-2003, 11:09 AM
I recall Thales advertising widely on British radio shortly before the carrier contract was announced. They got part of the contract so it was evidently money well spent.

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