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Saturday, March 15, 2003

Don't Get Juiced on These Numbers, Guys-Even when advertising works, as it seems to do in this piece on generic orange juice advertising, it might not be profitable
The department spent about $22 million annually on generic orange juice advertising during that period, according to the report. After adjusting for inflation, each dollar in spending led to the sale of an additional 0.62 gallons.
If I'm doing the math correctly, it costs the orange industry about $1.50/gallon to get that extra supply. Given that you can get generic OJ for about $2.50/gallon, I'd be suprised if the industry had a $1.50/gallon marginal profit. If they're making less than $1.50/gallon, the advertising's not worth it. It might even justify some officials jobs, creating a even larger hidden cost.

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