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Generic advertising is all about information -- information about a specific commodity and its underlying attributes. If a product is not differentiable and information is needed, why do producers tend to promote their commodities collectively? Currently, there are 17 active national generic promotion programs for agricultural goods and an additional 35 or more operating under federal market orders (AMS-USDA, 2005).
While checkoff programs are diverse and the goals dependent on the situations for each commodity, there are several common functions found across the generic advertising programs. Checkoff programs are all about the dissemination of information, and in the last decade, many of these commodity programs have been challenged, not on the equity, but on the constitutionality of the programs relating to speech. Figure 1 reflects the functions common to all checkoff programs, as well as group action versus individual interest. All generic advertising programs are intended to either enhance or lessen the erosion in the demand for a commodity.
While most models used to measure the effectiveness of commodity checkoff programs are tied to the uniqueness of the respective commodity analyzed, they all include some measure of demand, frequently at the retail level.
The literature on economic benefits of commodity checkoff programs is growing and increasingly technical. In nearly every one of these studies, econometric models are used to predict demand with and without the generic advertising efforts, which yields the change in demand attributable to generic advertising. Checkoff programs have gone through a period of considerable uncertainty in recent years primarily because of conflicting legal rulings related to an increasing number of court challenges to the checkoff system. If you would like us to design a simple but effective ad for you, please add 50% to the ad price.
Upgrade to high-resolution versions of our design layouts suitable for commercial printing. Includes download access to 11 file formats for Mac and PC including Microsoft Word & Publisher. Consumers already have a reasonable amount of information about most foods, fibers, and other goods they buy along with some history of use. For cooperative goods, generic advertising may potentially enhance total demand but should not change the underlying market shares among producers or suppliers.
Such products lend themselves more to the promotion of the commodity itself (generic advertising) than to the promotion of a specific form or particular attributes of the commodity (brand advertising).
Also, there are many additional state programs designed to promote agricultural commodities. As indicated in Figure 1, all checkoff programs must: (1) entail an administrative structure, (2) have a precise message and focus, (3) show economic benefits, and (4) exhibit fairness and equity in setting the program focus and resulting distribution of benefits.
Nearly all commodity checkoff programs are funded through a unit or value assessment on producers and first handlers (top box of Figure 1). Advertising messages of the various checkoff organizations are as diverse as the commodities they represent and are closely tied to the attributes of the product, the target audience, and the media used (the right box in Figure 1). Moving clockwise around Figure 1, the box at the bottom relates to the economic impact of the generic advertising. Referencing back to Figure 1, the top, right, and bottom boxes reflect the collective efforts by a commodity sector to achieve demand changes through an administrative structure that designs and delivers the generic message. Some have argued that mandatory assessments for speech purposes violate the individual's right to freedom of speech under the 1st Amendment to the Constitution. Demand is influenced by many factors, including checkoff program advertising and promotion activities. Demand depends on prices, purchasing power, buyer characteristics, product attributes, market conditions, information, and many other factors.
In other words, generic advertising may increase total demand, but should not result in one firm or group of firms gaining market share over another.
Every commodity checkoff group struggles with the measurement of benefits and performance of their generic advertising programs and how to best communicate those benefits back to those who are "paying the bills." Economic modeling continues to be the instrument of choice for gaining insight into the economic impact from generic promotion programs.
Once the generic-advertising-induced change in demand is estimated, the associated gains or losses in revenues, profit, or "economic surplus" (the "benefits") are expressed relative to the advertising effort (the "costs") and reported as benefit-cost ratios. Now that a final legal ruling on the constitutionality of the beef checkoff has been handed down by the Supreme Court, many of the legal uncertainties may have been removed. Commodity checkoff programs provide a marketing tool for producers to have a voice to inform potential buyers about the attributes and uses of their commodity. We are planning a press run of 1000 copies, many of which will be distributed in San Francisco locations in advance of the event. We'll work with you to create a simple but effective ad to include one logo or graphic plus text. So even without any additional generic advertising, most checkoff commodities would still be consumed at some level. For some goods, consumers may be willing to search out the attributes they desire in a product before making a purchase.


When advertising of a generic product by any specific producer increases total demand for that commodity, the gains from one producer's advertising may be partially captured by other producers who do not share in the cost of the advertising.
Similar programs are also in operation for many nonagricultural goods ranging from tourism to propane. Most, if not all, checkoff programs have logos and strap-lines like those at the beginning of this article that convey the intended messages. To determine the effectiveness of a checkoff program requires the development of criteria for judging performance and methods and data for measuring the impact on demand usually involving some form of statistical analyses.
These legal challenges based on the freedom-of-speech premise have worked their way through the court system for many years. Most of the factors that affect demand, however, are completely outside the control of the industry.
Generic advertising and promotion efforts, usually measured with checkoff expenditures, enter these models as a variable expected to enhance demand over some time period.
For example, generic promotions of flowers should not favor one type of retail sales outlet such as florists over another outlet like supermarkets.
The issue of measuring the benefits to checkoff programs is considered in more detail in the article by Williams and Capps in this issue of Choices.
New challenges will likely arise, however, and may well relate to the overall effectiveness and efficiency of the programs and the equity questions.
Evaluating the economic impacts associated with advertising efforts of the Florida Department of Citrus. Estimated impact of FPO's generic promotions of fresh-cut flowers: Analysis through Phase VI. Report to Congress on the National Dairy Promotion and Research Program and the National Fluid Milk Processor Promotion Program. Articles may be reproduced or electronically distributed as long as attribution to Choices and the American Agricultural Economics Association is maintained.
We are expecting several hundred participants who will receive the program and refer to it throughout the weekend. Alive with Possibilities." We have all heard and seen these and similar promotional messages over the years on television, over the radio, and in magazines. For example, some amount of milk would still be purchased if all "Got Milk" commercials were stopped!
Alternatively, they may be willing to experiment with goods to gain a greater understanding of the products attributes (Forker & Ward, 1993.) These search and experience categories provide considerable insight into how receptive and responsive potential consumers may be to an advertising message. These producers get a "free-ride" in terms of increased demand from the promotional efforts by individuals or small groups of producers. Common characteristics among most of these programs include efforts to maintain product identity through the supply chain from producer to consumer and the need to provide information to existing and potential consumers continually.
Many commodity groups have turned to econometric modeling as the instrument for determining if their generic advertising messages have had a numerical and statistically significant impact on demand. If a producer feels that his or her share of the gains is not proportional, an equity problem potentially exists and that producer may oppose the program.
A recent Supreme Court ruling on the beef checkoff program basically concluded that the program is government speech and, hence, not subject to the 1st Amendment argument.
Consequently, declining demand does not mean a promotion program has failed because so many factors can work against the best efforts of the industry to promote its products.
Major brands of commodities like Florida orange juice (Tropicana, Minute Maid, and Florida's Natural) would not be expected to lose or gain shares from the generic advertising of Florida oranges or orange juice.
Those types of challenges are more readily addressed with the types of economic models usually used for measuring advertising responses than has been the case for the legal challenges related to constitutionality. Prepared for the Advertising Review Committee in Association with the Florida Department of Citrus and Florida Citrus Mutual. Many of the participants will be visitors from out of town who will be looking for places to dine, shop and play, and many more will be locals who may frequent your business over and over again.
Often labeled generic advertising, these messages are government-sanctioned but producer-funded efforts to enhance the demand for farm commodities.
The purpose of advertising, of course, is to generate additional purchases of the product being advertised. A number of these generic advertising programs require mandatory participation by all producers of the commodity through an assessment on those producing and supplying the product and are subject to close government oversight. While the day-to-day administrative structures are similar to those of many Boards of Directors, they differ in that either state or federal governments closely monitor the policies and administrative activities.
Most of these models account for the effects of advertising on demand in terms of the dollars spent over an appropriate time interval. Equity concerns may relate to the distribution of benefits among producers and the distribution of benefits up and down the vertical market system for the commodity. More details on this and other legal issues related to checkoff programs are highlighted in the article by Crespi and McEowen in this issue of Choices.


The evaluation task is to measure the effects of generic efforts in an environment where many demand drivers are changing demand all at the same time. If a generic message enhances or reduces one brand share or outlet share relative to others, then a major equity problem occurs, as suggested in Figure 1 (left box). As opposed to advertising for specific brands of a product by particular producers, generic advertising is generally a cooperative effort of a large group of producers (suppliers) to promote the demand for the homogeneous (similar) product. How advertising affects consumer purchasing, however, depends on the type of advertising to which the consumer is exposed. The government's role is essential when individual producers are required to pay assessments based on state or federal enabling legislative authority. They frequently include delayed demand responses and measure both short-term and long-term impacts.
Time will tell if the beef checkoff ruling is the end of the legal challenges to commodity checkoff programs. Economists most often turn to statistical models to estimate and isolate the specific effects of different demand drivers and their impacts on the commodity market.
The program is no longer brand (or other segmentation) neutral and support for the program may well eventually decline because of the underlying inequity.
These advertising messages are funded through an institutional structure known as commodity checkoff programs. Brands and brand advertising messages are intended to direct consumers to a specific product identified within a particular commodity category.
Clearly, the authority to impose assessments on producers in an industry must be accompanied by direct governmental oversight. These models usually show numerical measures of the advertising impacts on demand and calculate benefit-cost ratios at different levels in the distribution system.
Evaluations of these programs are particularly important when addressing equity concerns since it is at the evaluation stage where the benefits and the distribution of the benefits are measured. Many of the major checkoff programs have developed statistical models that show the demand effects attributable to their generic advertising activities. Determining this advertising response is the single most important step in the evaluation process. Furthermore, if a firm is sufficiently large to effectively promote its own brand and capture the gains, that firm will argue that their contribution to generic promotions could more effectively be used to promote its own brand.
To the extent that brands have common attributes and are substitutable, brand messages may increase the total demand for a commodity. Administrative structures range from very large Boards such as found with the beef checkoff to Boards made up of a few elected or appointed Directors. Some models first measure demand changes at the retail level and then attempt to determine how gains are distributed through the vertical market system back to producers.
In fact, checkoff programs established under federal authority are required to periodically measure the economic impact of their programs using appropriate statistical procedures.
Of course, getting to that response level requires an understanding of the checkoff programs, data collection, and careful analysis.
In an industry driven by a few major brands, generic promotion programs usually play less prominent roles than brand advertising.
Brand messages are intended to highlight differences among product forms making up the commodity group rather than their similarities.
In every case, the Directors have the authority to set policies, govern the administrative staff, and set the focus and intensity of the various advertising and promotion programs. The measurement of the distribution of gains through the supply chain is a contentious issue and is considered in more detail in the article by Wohlgenant in this issue of Choices. With these things in place, individuals responsible for doing the evaluation can usually draw inferences about changes in demand attributable to the checkoff efforts and those attributable to other factors.
In general, the level of concentration and the competitive structure within a commodity sector are major factors determining the usefulness of generic advertising. Yet, as long as a program is mandatory, actions by a commodity checkoff Board may be subject to governmental veto.
Shifts in demand may lead to higher prices in the short run and, hence, greater revenues for the industry.
A few commodity checkoff programs, particularly almonds, provide advertising credits to major brand suppliers who can demonstrate that their own advertising programs enhance demand.
Depending on the characteristics of production, storage, and trade flows, supplies may also change. Then any checkoff gains are expressed recognizing both shifts in demand and any changes in supply.



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