• There is a direct correlation between advertising spending, brand awareness, and market share (given that the brand’s distribution is equal to that of other brands in the category and consumers like the brand’s point of difference). In fact, James Gregory and the Corporate Branding Partnership (and others) have linked advertising spending with increases in sales, earnings, market share, and stock price.
• A brand’s perceived quality increases with increases in advertising impressions, regardless of message.
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3 comments
Aaron
September 15, 2007 at 12:14 pm
Don’t agree 100% as the inverse also holds true in many occasions.
Many retailers (Costco, Trader Joes, to name just two) don’t do much advertising at all. Others, (Kmart, Sears) do a lot more and their brands are not nearly as strong as the before mentioned.
Joel Rojo
September 15, 2007 at 4:05 pm
It’s not like I don’t believe you, but it sure would help to see some sources.
Ted Grigg
September 15, 2007 at 8:53 pm
I’ve seen these types of reports before and generally agree with their conclusions. The only problem is that irrefutable proof of this comes only with the scientific method.
What would have happened in the same markets if we have done nothing? The results might surprise us. External events and other activities that have little to do with advertising may affect sales for more than assumed by many marketers. What’s worse, these external influences are often unpredictable and difficult to identify.
We have actually run matched markets in the direct marketing arena withholding advertising in some markets (making them control markets) and compared them to sales in markets where there was advertising activity. Many times, the sales increases occur at nearly the same levels whether we advertise there or not.
When promoting to a three million name database of past customers for one of my clients, we would run a random select of all names and withhold mailing to a portion of the names as control segments. Often we saw little difference between those who got the mailings and those who did not.
We might get a 1.6% response on those mailed and a 1.2% on those not mailed. We then had to evaluate the cost for improving the response between those two numbers amounting to .4% response.
If the financials did not justify the mailings to certain segments, then we would cease mailing to them.
Branding should undergo the same rigors to validate budget increases, budget reductions or even budget elimination. Unfortunately, reliable measurement tools for doing this precisely are either not used, not supported or non-existent in most organizations.
So general awareness or positioning advertising has to find a more reliable way to evaluate it’s effectiveness when competing for dollars against other communications strategies such as PR, sales promotions and direct marketing.
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