Advertising Mechanisms

Advertising plays a crucial role in the development of a brand, accounting for a large portion of the marketing investment in the brand. However, with the continued fragmentation of media, the returns on investment have been deteriorating. These factors emphasize the importance of understanding how advertising works to effectively strengthen and grow a brand.

Since John Wanamaker lamented the uncertainty of advertising returns, considerable progress has been made in advertising theory and research. However, with markets becoming increasingly complex, it has not become any easier to predict the efficacy of a commercial.

Gauging from the advertising elasticity of demand, we do know that the short-term impact of most advertisements on sales of established brands is far too small to pay for advertising. Only ads that convey a powerful new message can immediately impact sales. Furthermore, as pointed out by Gordon Brown (Brown 1991), core perceptions and assessments such as “good overall” or “favourite brand” are difficult to immediately improve through advertising. Improvement in such perceptions usually occurs after the consumer has bought the brand.

Why then do brands like Coca-Cola or Pepsi that do not have any powerful new message to convey, persistently advertise?

Exhibit 12.4  Coca-Cola Hilltop ad – “I’d like to buy the world a Coke and keep it company”.

Take a moment to reflect on an advertisement from the past that you vividly remember. For me, the Hilltop ad (“I’d like to buy the world a Coke and keep it company”, Exhibit 12.4) from the early 1970s, with its memorable lyrics and images, is one that remains etched in my memory even after 50 years. This and other remarkable advertisements highlight two key points. Firstly, advertising has a long-lasting impact on consumers, as it builds brand associations and enhances perceptions, sustaining their interest in the brand over time. While its impact on sales may decline over time, it remains recurring and significant. Secondly, the quality of advertising matters much more than quantity.

Central to our understanding of advertising therefore, is this question: What is it that makes some advertisements work better than others?

There are hundreds of theories on advertising, many hypotheses too, but relatively few facts. The theories attempt to explain how the consumer processes or interprets advertising, and the implications on advertising development and advertising analytics.

The basis for most of the theories on advertising can be traced to six frequently repeated themes — salience, persuasion, likeability, symbolism, relationship, emotion. While none of these in isolation can fully explain how advertising works, collectively they do provide an understanding of the fundamental mechanisms of advertising.