Much research has examined the extent, if any, to which advertising affects sales. This research has been conducted in several contexts, including at firms (Anheuser-Busch, Campbell Soup), at marketing research firms (IRI), and by academics. There are several conclusions that can be drawn, and these are outlined in a book by Gerard Tellis (1998, Advertising and Sales Promotion Strategy, Addison-Wesley). But note that many of these conclusions are based on mature product categories. In this way, advertising may not be as effective as other aspects of the marketing mix.
General findings from advertising studies include the following:
- Decreases in the level of advertising do not lead to an immediate decrease in sales. An increase in the level of advertising by itself does not lead to an increase in sales.
- On average, half of all ongoing ad campaigns are ineffective.
- Changes in the creative, medium, target segment or product itself sometimes lead to change in sales, even though increases in the level of advertising alone do not.
- When advertising is effective, it is effective either early on or never.
- When advertising does affect sales, its impact is not large and is much smaller than that of price. In fact, research shows that the elasticity of sales to advertising is .1, while the elasticity of sales to price is 2.5.
Comparative advertising occurs when two or more specifically named or recognizable brands of the same product category are compared, and the comparison is made in terms of one or more specific product attributes or benefits. We see these ads all the time. For example, AT&T might compare their phone service to Sprint's by listing various features and making a comparison. Coke and Pepsi make comparisons, directly or indirectly, in their ads as well. Legally, these comparisons can only be made if the claims can be supported by research evidence. But is comparative advertising a good idea?
Research indicates that such ads may be effective if aimed at expert consumers (who can evaluate the claims), and if well-known brands are used. But if consumers are not expert, or if they are not highly involved in the product category, such advertisements may backfire. Customers may not remember which brand is being advertised and which is the comparison brand. In this case, its likely that the ads will increase consumers awareness and preference for the competing brand. Finally, these ads may be viewed as less credible and less informative, especially if consumers like the brand but see it demonstrated in a negative context.
Thus, comparative advertising is quite complex. Indeed, political campaigns are filled with these types of ads, but its easy to see how quickly there can be a backlash, so you need to be very careful when employing a comparative advertisement.