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Does Advertising Even Work?

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In these days of budget cuts and profit woes, even the most hardened of advertisers are wondering about whether to invest in advertising. Hesitancy stems not only from leaner profits making advertising expenditures less viable, but lack of insight into whether advertising really works, and if so, when and why.

Why We Don't Know if Advertising Works

Insight into whether advertising works is difficult, in part because it's so hard to run controlled studies that allow one to tell that it's advertising that is really having any presumed impact (or lack thereof) on sales. It could just as well be a host of other factors, including your product's price, distribution, the economy, your competitor's products and their marketing actions.

However, two recent studies examining the impact of advertising creative content on sales are beginning to shed some interesting insight into this complex picture. One of the studies is recently published in the Journal of Marketing Research (the other is forthcoming in the same prestigious academic journal).

Both studies were conducted under highly controlled market conditions, and both suggest a relatively new insight-- the ability of advertising to impact consumer behavior and sales depends both on market conditions and ad creative content.

Advertising Content in Old vs. New Markets

One study tested consumer response to real ads in 23 markets to a toll-free referral service. The ads were shown in either "old" markets (markets where the service had been in existence for some time) or "new" markets (markets where the service was new to the area). Data included the number of referrals generated by the service.

The authors coded ads for their content-some ads used emotional appeals like warmth, pride guilt and fear appeals. Others used more rationally based content, focusing for example on comparative appeals, and use of a large number of message arguments supporting why the referral service was good.

The results were that emotion-based ads were more effective at generating referrals (e.g., influencing consumer behavior) in older markets. In younger markets, however, fact-based ads were more effective.

New Markets = Lack of Knowledge = Receptivity to Rational Messages

Why? One likely reason is that when ads are shown in new markets, the product is unfamiliar to consumers. Lack of knowledge of the product or service motivates them to find out what it is all about. Rationally focused ads not only tell them what the service is, but why it is good and why it warrants their business. Emotional ads don't work because the consumers are primarily interested in what the service is, not how it makes them feel. Plus, emotionally focused ads don't often provide a hard reason to buy-something that is necessary when products are new to markets.

Old Markets = Lack of Motivation = Receptivity to Emotional Ads

In older markets however, the opposite is true. Emotional ads are more likely to influence consumer behavior than are rationally based ads.

The reason is that consumers are unmotivated to listen to ads about the service because they've already gotten used to it. The don't pay that much attention to the ads and because of that, they don't focus on any rational arguments they contain. Emotional ads however, are attention getting and make the already familiar consumer think about how use of the product or service can make them feel or look great. Their focus is less on the product and more on themselves.

The upshot of the study is that ad content should be tailored to fit the age of specific markets, with different ads for markets of different ages. These results are particularly relevant for products that require a local infrastructure and thus involve rollouts over extended periods of time, e.g. digital subscriber lines (DSL), cellular phone services, and airlines.

Advertising Effectiveness for Frequently Purchased Products in Mature Categories

A second study examined what types of ads for brands purchased in mature product categories like soup, snack chips, and beverages showed increases in sales with increased media spending.

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Debbie MacInnis is the Charles L. and Ramona I. Hilliard Professor of Business Administration and a professor of marketing at USC's Marshall School of Business. She is co-author of a recent book on brand admiration, which blends years of best-practice thinking from academia with the real-world practice of marketing.

LinkedIn: Debbie MacInnis


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