Advertising Mechanisms

Advertising has a crucial role to play in the development of a brand. It also accounts for bulk of the marketing investment in the brand, and with continued fragmentation of media, the returns are deteriorating. These factors underscore the need to understand how advertising works to strengthen and grow a brand, and how to use it effectively.

There has been considerable progress in advertising theory and research since John Wanamaker lamented the uncertainty of advertising returns. At the same time, however, markets have become more complex, and 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?

Reflect for a moment on an advertisement from the past that you vividly remember. I, for instance, can recall an ad that I saw as a 14-year-old in the early 1970s. Referred to as the Hilltop ad (“I'd like to buy the world a Coke and keep it company”), images and lyrics of this ad, which goes as far back as 40 years, remain etched in my memory. Like a number of other remarkable advertisements, the ad highlights two key points.

Firstly, advertising’s impact is long-lasting. It goes into the memory and supports sales by sustaining consumers’ interest in the brand and enhancing brand perceptions. At the time it is aired, as it builds associations, advertising has a small yet significant impact on sales. And though this impact declines over time, it is recurring – day after day, month after month, and even year after year.

Secondly, as far as advertising goes, quality matters a great deal 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 literally 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.

Six frequently repeated themes — salience, persuasion, likeability, symbolism, relationship, emotion — form the basis for many of the theories on advertising. While none of these themes in isolation are able to fully explain how advertising works, collectively they do provide an understanding of the fundamental mechanisms of advertising.

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What they SHOULD TEACH at Business Schools

What they SHOULD TEACH at Business Schools

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