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1 February 2014

Does advertising work?

Tag(s): Marketing
In my book The 20 Ps of Marketing, which was published this week in North America, from time to time I refer to the work of academics writing on Marketing. One such is Professor Tim Ambler on whom I said

“Another leading Marketing academic is Professor Tim Ambler of the London Business School who also passes my test of a good Marketing academic because he enjoyed a distinguished business career at IDV, part of Grand Metropolitan, predecessor of Diageo, where he founded and fostered many of the famous drinks brands in its portfolio. I was also interviewed by Tim when he was Joint Managing Director of IDV but I didn’t get the job!”

As a courtesy I sent Tim a copy of the book and he wrote back

“Many thanks for the copy of your book which I have just finished after reading it cover to cover.  It really is excellent.  Well done.
 
Clearly turning you down for the IDV job was another of my many mistakes.
 
I hope sales go well for you.”
 
One area I would have loved to debate with Tim is the question “Does advertising work?” Here’s what I say in the book.

Does advertising work?

For many people this question is loaded. They don’t believe advertising works on them even if it works on other people. But this is disingenuous. All of these people will have bought something in their lives as a result of advertising. It may have been a classified advert in the newspapers to which they responded. Or they looked in an estate agent’s window, saw a property they liked the look of and, after inspection and due diligence, they made an offer for it. Or they may have been in the market for a new car or television and read the appropriate magazines; test drove or looked at some sample before making their selection. All of these are examples of effective advertising in action, of help to the customer in making his decision to buy.

Advertising is a highly effective means of providing useful information and at its best enables effective Markets to operate by providing information, encouraging competition, announcing innovation and stimulating demand. But still there is suspicion that it is manipulative and misleading. Many people also see advertising particularly, though not exclusively, filmed advertising, as a source of entertainment, independent of the reason it exists. For a long time in the 1960s and ‘70s it used to be said that advertising was the best thing on television. The public loved adverts about Martians who laughed at old-fashioned humans for being behind the times in the way they prepared mashed potatoes but ironically Smash is no longer with us as a Product while the folk memory of its advertising remains strong. People love the Guinness horses, they chortle at Hamlet cigars and a host of other long running campaigns when the fact is that they were never in the market to buy such Products.

 Vance Packard wrote of “The Hidden Persuaders” in the 1950s and ever since there has been healthy scepticism about advertising. Advertising does work but in a variety of ways and not all the time on all the people. If we only approach this from the economic point of view I think it would be possible to draw a direct correlation between advertising and prosperity, in other words, societies are prosperous in direct proportion to the levels of advertising they are exposed to. This is not necessarily directly causative as a relationship but still of interest.

It has been famously said, “Half the money I spend on advertising is wasted; the problem is I don’t know which half” This has been attributed to everyone from Henry Procter of Procter & Gamble to William Lever of Unilever but was actually coined by John Wanamaker, a department store magnate in the later part of the 19th Century who also became US Postmaster General. I will return to this question in Chapter 12 on Productivity, as it is a key metric in that context. But it is also a question of effectiveness. As someone who has spent a career in marketing I am often asked what I think of a particular campaign. I rarely give an answer, as it is technically impossible to judge unless one knows the detail of the brief. What was the target audience? What was the objective of the campaign? Unless one knows the answer to these and other questions it is not possible to judge accurately the strength of an advertisement. Having said that I must admit that there are many adverts I see that are simply mystifying. Perhaps if I were to see the brief I would find it was a poor brief, badly written, not adequately thought through. In such a case bad advertising is inevitable. It is the same as the principle of computer software - garbage in, garbage out.

 As further evidence that advertising works we only have to examine the reaction of whole industries when their freedom to advertise is at risk of restriction by regulators. In the past the tobacco industry was the forerunner and its lobbyists always argued that advertising does not increase the size of the market but was a zero sum game in which advertisers competed for market share. This ingenuous argument was rightly never accepted and is blown up by the evidence. One particularly disturbing story was in Japan where there had long been an unwritten convention among domestic producers that advertisers would not appeal to women. Thus penetration of cigarette smoking among women was very low by international comparisons. Then as a result of political pressure an American firm gained access to the market. It was not party to this convention and did not recognize it. It launched a number of brands specifically aimed at women. Within a short time a large number of young women had acquired this pernicious habit and we can assume that many of them will have died prematurely.

I find this subject particularly difficult. As a founder member of the CBI Market Strategy Group the then Director General Sir John Banham sought my views on tobacco advertising. I said that while I personally detested the habit - I have the zeal of the reformed addict having smoked for ten years from the age of 15 - nevertheless I felt that if it is legal to sell a Product it should be legal to advertise it. I’m not sure that I would say the same today having learnt even more about the dangers of smoking, and at the very least there must be strong limitations on what is allowed. One policy that might work would be for tobacco manufacturers to be forced to spend an equivalent amount of money to their total marketing budget on the counter campaign.

There are now several other industries that come under pressure to restrict their advertising from the drinks industry to producers of children’s food. The drinks industry tries to regulate itself and recites the same mantra that advertising simply moves the pieces around the board. However, a former colleague of mine who has enjoyed a successful career since in the drinks industry, privately admitted to me what in any case must be obvious, that so-called alco-pops have been specially developed to appeal to the young and are then advertised to that community. We will return to the subject of ethics in our concluding chapter but suffice it to say that advertisers have a very considerable responsibility.

This extract is taken from Chapter 4 on Promotion in which I go on to describe how advertising works. If anyone reading this is a university academic who might like to use this as course material they can request a free inspection copy by emailing kpinfo@koganpage.com

The rest of you will have to pay hard-earned money to buy it. There are links on the home page of this website to Kogan Page, both UK and USA.

Copyright David C Pearson 2014 All rights reserved



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