Advertising Rules Of Thumb

There are several important rules of thumb in advertising. Try to budget between 8 and 12% of revenues on advertising and other marketing activities.  (This obviously varies significantly by company and industry.  An average company spends approximately 6% of sales on advertising alone.  Advertising expenditures for computer and office equipment are as low as .09% versus 16.8% for toys, dolls, and games. [Source: Paul A. Scipione, “Too Much or Too Little? Public Perceptions of Advertising Expenditures” Journal of Advertising Research 24, 6 December 1984/January 1985: 23-26.] Industrial companies tend to spend less on advertising (1% to 5% typically) than consumer products companies.)

You should spend more on advertising and marketing if the following conditions exist:
•    You are building a new brand
•    You are launching a new product or service
•    Your product offering is large and complex
•    You charge premium prices
•    You sell products and services in a “low involvement” category (typically low priced items for which there is little risk of failure)
•    You are selling commodity products (advertising will be the primary differentiator)
•    Spend approximately $1 on proactive publicity for every $10 you spend on advertising.  (PR budgets are 1% of a company’s revenues on average. )  It will multiply the effectiveness of your advertising. (Advertising in trade magazines also gives you a relationship with the publications, alerts you to editorial opportunities, and sometimes will impact your brand’s presence in articles.)
•    Production costs are usually 10% of the media buy.
•    Know what your brand’s “share of voice” is – or the amount of advertising (or consumer communication) dollars your company spends compared to competitors for a given product category. It is a good rough measure, despite its flaws that include:
•    its focus on traditional advertising spending only
•    competitors are usually in different portfolios of businesses and it is difficult to break the spending out for the same categories across all competitors
•    Ads produce better results if they highlight or dramatize the brand’s unique compelling benefit.
•    The most effective ads combine a subtle emotional appeal with a practical benefit.
•    The more an ad can get people to identify with one of its characters, the more powerful its effect will be.
•    If the ad is designed so that people overhear something rather than being told about it, they will be less rigorous and defensive in their analysis of the message.
•    If a significant portion of your product’s sales result from repeat purchases, it may be more important for your advertising to reinforce the purchase than to persuade people to purchase your product for the first time.
•    Carrying a particular brand voice and visual style (and mnemonic device) from one ad campaign to another increases the effectiveness of the new ad campaign.
•    Scents have the greatest ability to evoke memories. Music has the second greatest ability to do so. Both are mnemonic devices.
•    Repeatedly featuring a product’s packaging in advertising makes its more noticeable at point-of-purchase (and therefore, more likely to be purchased).
•    15-second commercials are seldom effective as it is difficult for them to break through the clutter and they are far too short to tell a story.  They are best used as reminder commercials (reinforcing messages from previous longer commercials).

The following factors have been shown to increase advertising effectiveness:

•    Differentiating brand message
•    Product demonstration (use, result and benefit)
•    Total time viewed
•    The following factors have been shown to decrease advertising effectiveness:
•    Detailed component or ingredient information
•    Multiple propositions
•    For manufacturers, advertising can affect sales in two ways; it persuades the end consumer to purchase your brand and it persuades the intermediary (retailer) to carry your brand, increasing the brand’s accessibility.
•    Persuasive ads diminish in their effectiveness over time. This argues for front-loading GRPs (gross ratings points) to maximize the effect.
•    “There is a strong correlation between how much a company spends on advertising and its share of market.”
•    Brand familiarity and popularity increase with increased advertising.
•    Advertising affects purchase decisions by affecting the order in which alternatives are evoked (top-of-mind awareness) and the desirability of a particular alternative (positioning).  The former is the most important effect.  It puts an alternative in people’s consideration sets.
•    Over 70% of the impact of advertising on market share results from increasing brand awareness (versus creating or building brand image).
•    As the number of messages in an advertisement increase, two things happen: demand increases and recall decreases.  The ratio of these effects varies by media and for high and low-involvement categories.
•    It is extraordinarily difficult to try to change the consumer’s mind about your brand. You would do best not to try. If you must, link the change in perception to something that consumers currently believe about your brand.
•    “Themes and slogans that reinforce the current brand image generate awareness faster than those that support a new positioning.”
•    In general, the more unique the message, the more successful its communication.
•    Highly recalled messages tend to be the result of “well-funded long-standing advertising campaigns.”
•    The more often a brand repeats a claim, the more likely people are to believe that the claim is true, especially if there is no evidence to the contrary.
•    For low involvement categories (in which the alternatives are often virtually identical), advertising can tip the balance in the favor of the advertised brand. For these categories, it is particularly important that the ads break through the clutter and focus on one simple message.
•    For high involvement categories, advertising plays less of a role overall. Typically, its role is to put the brand in the consideration set, not to influence the final buying decision.
•    People actively seek out information in high involvement categories. Print media, more information, and longer copy work well with this audience.
•    It is acceptable, and even preferable, to include a “call to action” in brand advertising. (An impact on short-term sales results will help you justify the expenditure.)

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