Emerald Group Publishing Limited
How Advertising Works is an interesting compilation of studies and papers by different authors, and on the surface it has the appearance of a hotchpotch. However, on close scrutiny it actually resembles a patchwork quilt with each piece separate yet an integral part of the whole. It raises some fundamental questions about advertising which have been bothering practitioners (both clients and advertising agencies) as well as academicians since advertising became a trade. These questions take on a more serious tone in today’s day and age with higher levels of accountability, budget cuts, heightened levels of competition, lowering of consumer loyalty, etc. The first question pertains to the process and asks, “How does advertising work?” The second can be phrased – “How do we determine if the advertising campaign is working?” This relates to the goal setting, development of various elements of a campaign, measurement of outcomes and comparing these to the goals.
To start with, a few myths pertaining to process are questioned. For example, I recall from my days in an advertising agency comments such as “Let’s try to convert competitors’ customers into our customers”. This assumes that advertising works by conversion – changing users of one brand to another. One also heard statements such as – “Let’s try to influence consumers,” or “Let’s try to grab their attention and change their beliefs and values.” In other words, treat consumers as passive receivers of messages who fit into process‐oriented models such as awareness‐comprehension‐conviction‐action, AIDA etc. If we look at ourselves as consumers and receivers of advertising messages then it would not be very difficult to agree with the author that these assumptions are not entirely true.
John Philip Jones argues that the complicating factors are too many ads, shorter messages, enhanced emphasis on creativity and likeability, and shift from advertising towards promotion. It is difficult to arrange our “learn, feel, and do” aspect of behavior in a pure sequential manner. The answer may be linked to short‐term versus long‐term effects or presence versus presentation aspect of communication. The availability of scanner data, tracking studies, advanced analytical tools and basic research have helped us understand how we behave as consumers.
Using scanner data How Advertising Works discusses short‐term and long‐term effects of advertising before moving on to the effects of advertising on sales volume through either penetration (number of purchasers) versus buying rate (number of purchases). It seems that no brand grows exclusively through one strategy, and that size and usage patterns are key determining factors. For example, larger brands with high penetration are likely to grow through increasing buying rate while brands dominated by light users are likely to grow through penetration gains.
Clearly, sales volume is an outcome of behavior, but how is it related to advertising? The AIDA model implies two roles of advertising – informational and persuasive. In its informational role, the measures of awareness and recall become crucial, whereas in its persuasive role advertising is purported to sell something that does not exist. The reality is not so simple and we are then forced to look at alternative models or explanations such as a “repertoire of brands” explanation, and awareness‐trial‐reinforcement model. Even the role of repetitive advertising is questioned: “It is consistent with the fact that advertising by itself generally is not very effective in creating sales or in changing attitudes… The primarily reinforcement function of repetitive advertising is in line with the fairly steady sales levels of most brands in most markets. Advertising is not produced by evil people who are trying to manipulate consumers (or if it is, these people must be very ineffective). No one is more eager to cut advertising expenditure than advertisers themselves, who actually have to pay for the ads. Advertisers see advertising of established brands mainly as a price that has to be paid for staying in business; they dare not cut advertising for such brands and they are right” (pp. 77‐8).
So how does advertising really work? The first suggestion is that advertising works by “browbeating” – as in the American context – and seducing – as in the European context. Advertising researcher Ehrenberg suggests that advertising has three functions: (1) stimulate brand awareness, remind, prompt purchase and use of brand, lead to favorable attitudes; (2) reinforce these favorable attitudes as in the Awareness‐Trial‐Reinforcement model; and (3) play a defensive role to protect the Jones asserts, but to be effective the ad must have a creative edge and be substantial enough in comparison to competitors. It does not necessarily depend on repetition. Advertising is also said to work by encouraging consumers to use a brand more frequently, e.g. usage in new ways or situations, called “expansion advertising”. Three common forms of expansion advertising are: non‐comparison ads, product‐comparison ads, and situation comparison ads. With this extensive examination of the roles of advertising and how it works, the book then moves into the research aspect of advertising, both before and after.
The second part of this book starts with a statement that rings “oh, so true.” “Users of research should always remember that research should be employed as an aid to judgment, not as a substitute for it. Researchers, like most people, find it easier to apply a formula than to puzzle over difficult uncertainties. One of the troubles with market research is that it provides an alluring range of seemingly magical techniques‐attitudinal scales, continuous tracking indexes, simple and multivariate regressions – whose very elegance seems to provide scientific respectability. Such techniques are invariably useful, but useful solely to the thinking researcher who is continuously and energetically aware of their limitations” (pp. 107‐8). Having cautioned us, and rightfully so, about the perils of the research, the author goes on to suggest that based on the ARF’s research, likeability (a multidimensional construct encompassing ingenuity, meaningfulness, energy, rubs the wrong way, and warmth) is the single best predictor of sales effectiveness. Five hypotheses are then proposed linking liking to different aspects of advertising outcomes such as better exposure, brand personality attributes, surrogate for cognitive processing, liking for the brand, gratitude response etc. These could form the impetus for future research.
The book then very adroitly delves into the technical aspects of research before an advertising campaign is run. Apart from the obvious topics such as qualitative research in the context of advertising and perceptual mapping How Advertising Works details some interesting research techniques, e.g. the brain wave measures of media involvement. The key assertion is that “the television man, the passive media audience, is a more active but clumsy, experienced‐oriented participant in life, whereas the print man, the active media audience, is a more selective, less active, and mature information‐ or message‐oriented participant in life.” (p 150). Clearly, it is impossible to conclude which is better.
How Advertising Works then explores the usage of consumer preference as a predictor of sales. The quantitative pre‐testing of TV advertising encompasses details of Advertising Research System (ARS). It is interesting to note that ARS produces similar outcomes for both emotional and rational copy approaches. Jones acknowledges that quantitative testing including ARS has “enormous potential for reducing uncertainties of advertising decision making” (p. 169). As regards the level of creative finish used for pretesting, five types of prototypes have been posited to be highly predictive‐animatics, photomatics, rough live action, “stealomatics”, and hybrid forms (based on some discussion of proprietary research techniques/methodology such as MSW’s AD*VANTAGE/ACT advertising testing system). This is followed by discussions of electronic media audience measurement systems such as Nielsen Media Research, Arbitron, Willhight Research, Strategic Radio Research, and Radio’s All Dimension Audience Research (RADAR). The problem with their audience estimates is that the results depend on the data collection method, sampling type, field procedure, and measurement instrument.
The question about the effect of advertising on consumer purchasing falls in the domain of post testing which starts with a brief discussion of STARCH and STAS (Short Term Advertising Strength). The book succinctly details the nuances involved in retail research (i.e. Nielsen and Information Research Inc.) and complimentary panel data, tracking studies, and single source research. It is suggested that although retail research is important, it should be supplemented with consumer panel data. Tracking studies add the time dimension and allow the researcher to examine trends, causal relations between communication related measures, behavior, attitude, and image. Single source research allows one to link sales with advertising. Specifically, How Advertising Works describes how Short‐term Advertising Strength (STAS) can be used to isolate the effect of advertising on purchase. STAS has been defined as a ratio of brandshare in the households that have received advertising for an identified brand during the seven days before they buy it and the brand share in the households that have received no such advertising. The seven‐day measure captures the recency effect and the shopping cycle. Along with STAS the key principles behind modeling (econometric or statistical) and its usage in advertising campaign evaluation are also discussed. It is suggested that, using tracking data and modeling techniques, it is possible to separate the short‐term effects of advertising from a more commonly believed long‐term effect. For example, in the short‐run advertising works through creation of “new” news that usually revolves around differentiation and service. On the other hand, the long‐term effects are subtle such as enhancement of belief in a brand’s benefits, strengthening loyalty, and consequently generating sales. What about awards? We all love the feeling of getting recognized and rewarded. Based on empirical study Gunn suggests that, “Commercial with award‐winning qualities are 2.5 times as likely to be associated with business success as are average commercials.” (p. 276).
Towards the end the book Jones delves into some nagging question faced by marketers, advertising professionals, and policy makers. The first issue addressed is “how much advertising is good enough?” Using STAS Jones asserts that the first ad produces the maximum amount of increase in sales, and the increase in sales due to subsequent ads is at best marginal, i.e. the notion of diminishing returns seem to be prevalent in the case of the advertising‐sales relationship. The notion of threshold level is not empirically supported. However, it is suggested that “it is economical and desirable to run advertising continuously so long as a schedule reaches a reasonable majority of the target group at least once in any week...” (p. 294). This assertion is based on the rationale that “when a brand is not advertised, it is vulnerable to the short term influences of the promotions and advertising for all other brands in the category” (p. 294).
As regards the relationship between the reduction in advertising and its effects, the book supports the conventional wisdom. In the words of George Brost, Toyota’s Head of Marketing, this means that “you need to spend when the chips are down, … you can lose a lot if you let the momentum get away from you.” (p. 298). Marketers have a higher chance of gaining share through increase in advertising during market recession. Cutting advertising does not increase short term‐term profits, let alone long‐term profits. However, the effect of advertising on costs, margins and prices is not so clear. The level of competition plays a more important role, e.g. in a competitive market the sellers are likely to face a more elastic demand and their margins are likely to be lower. Manufacturers tend to gain by advertising because it leads to increase in retail penetration, dealer support and an outward shift of demand curve. However, retailers do not seem to benefit much because the weight of brand advertising is negatively related with retailer margins. This is because manufacturer’s advertising increases competition among retailers.
At the consumer level, advertising does not always result in the lowest price; however, the consumers gain through increased competition, choices, and introduction of innovative products. At a macro level, most consumer goods markets in an economically mature market exhibit little or no growth. In these markets one also finds clusters of heavily advertised brands where advertising of competing brands seems to be countervailing each other’s efforts.
So finally, we are back to the question of “How does advertising work?” and its related issues briefly discussed earlier, but hopefully with a better understanding. The encouraging part is that someone who has worked in advertising industry for almost a lifetime raises these questions. The book provides valuable insights into integration of research into the advertising process that is seeped in in‐depth knowledge and experience. This compilation of studies and papers are skillfully woven for maximum impact without becoming pontificational in tone or becoming a scattergram.