HOW ADVERTISING WORKS

JOMC 170

04HowAdvWorks.ppt

Readings• How Advertising Works: A Planning Model

Revisited – By: Vaughn, Richard. Journal of Advertising Research,

Feb/Mar86, Vol. 26 Issue 1, p57.

• How Advertising Works: What Do We Really Know?– By: Vakratsas, Demetrios; Ambler, Tim. Journal of

Marketing, Jan99, Vol. 63 Issue 1, p26-43.

• Advertising's Role in Capitalist Markets: What Do We Know and Where Do We Go from Here? – By: Tellis, Gerard J.. Journal of Advertising Research,

Jun2005, Vol. 45 Issue 2, p162-170.

How Advertising Works:A Planning Model Revisited

• Classic model used by Foote, Cone & Belding.

• First proposed in 1980.

• Notes that context determines effects.

FCB Grid (Richard Vaughn, 1980)

THINK FEEL

HIGHINVOLVEMENT

LOWINVOLVEMENT

2

3 4

1

FCB GridQuadrant 1: THINK / HIGH INVOLVEMENT

• INFORMATIVE (economic)• Classical hierarchy-of-effects:• Awareness

Knowledge Liking Preference Conviction

Purchase• Learn Feel Do.

FCB GridQuadrant 2: FEEL / HIGH INVOLVEMENT

• AFFECTIVE (psychological)• Products fulfilling self-esteem,

subconscious, ego-related impulses.

• Requires perhaps more emotional communication.

• Feel Learn Do.

FCB GridQuadrant 3: THINK / LOW INVOLVEMENT

• HABITUAL (responsive)• Routine consumer behavior.• Learning occurs most often after

exploratory trial purchase.• Learning by doing.• Do Learn Feel.

FCB GridQuadrant 4: FEEL / LOW INVOLVEMENT

• SATISFACTION (social)• Personal taste• “Life’s little pleasures”• Peer-oriented items.• Do Feel Learn.

FCB GridTHINK FEEL

HIGHINVOLVEMENT

LOWINVOLVEMENT

2

3 4

1

FCB GridTHINK FEEL

HIGHINVOLVEMENT

LOWINVOLVEMENT

INFORMATIVE

(economic)

Learn Feel Do2

3 4

FCB GridTHINK FEEL

HIGHINVOLVEMENT

LOWINVOLVEMENT

AFFECTIVE

(Psychological)

Feel Learn Do1

3 4

FCB GridTHINK FEEL

HIGHINVOLVEMENT

LOWINVOLVEMENT

HABITUAL

(Responsive)

Do Learn Feel

21

4

FCB GridTHINK FEEL

HIGHINVOLVEMENT

LOWINVOLVEMENT

SATISFACTION

(Social)

Do Feel Learn

21

3

FCB GridTHINK FEEL

HIGHINVOLVEMENT

LOWINVOLVEMENT

SATISFACTION

(Social)

Do Feel Learn

INFORMATIVE

(economic)

Learn Feel Do

AFFECTIVE

(Psychological)

Feel Learn Do

HABITUAL

(Responsive)

Do Learn Feel

FCB Grid

• “We may not now, or ever, know definitively how advertising works.”

• “But we do know it works in some definable ways well enough to make more effective advertising.”

How Advertising Works:What Do We Really Know?

• Reviews 250+ articles / books

• 7 types of models & findings– Example: FCB Grid would be an integrative

model ([C][A][E])

• 5 generalizations about how advertising works

• Directions for future research

Generalization 1

• Experience (E), affect (A), and cognition (C) are the three intermediate advertising effects, and the omission of any one can lead to overestimation of the effect of the others

Demonstrated in the evolution of models from simple (C) to more complex ([C][A][E]).

Generalization 2

• Short-term advertising elasticities are small and decrease during the product life cycle.

Lower than promotionsWeaker than product usage (E) effectsGreater for new brands

Generalization 3

• In mature, frequently purchased packaged goods markets, returns to advertising diminish fast. A small frequency, therefore (1-3 per purchase cycle), is sufficient for advertising an established brand.

Diminishing returnsFirst exposure is most influential.

Generalization 4

• The concept of a space of intermediate effects is supported, but a hierarchy (sequence) is not.

Significance of intermediate effects (C, A, and E) depends on context.

Hierarchy framework does not allow for interactions between effects.

Generalization 5

• Cognitive bias interferes with affect measurement.

Affect can be more important than cognition.

Cognitive bias understates the role of affect and misreports reality.

Advertising's Role in Capitalist Markets: What Do We Know and

Where Do We Go from Here?

• 9 misconceptions about advertising.

• Advertising is essential for free markets.

• Where do we go from here?

Misconception 1: Advertising is a powerful force in shaping consumer preferences.

• Some advertisements are.• Potential is there.• Most advertising is lost in the noise (or

worse, adds to the noise).• Even success is quickly imitated.

This is the nature of a free, competitive market.

Misconception 2: Even if advertising does not work immediately, repetition will ensure

its ultimate effectiveness.

• Consumers haven’t seen it, they need more time, etc.

• “Escalation of commitment”

If advertising doesn’t work in a reasonably short time it is unlikely to ever work.

Misconception 3:Advertisements take time to wearin.

• “Wearin” = improvement of effectiveness during first few weeks.

• “Wearout” = decline in effectiveness as campaign ages.

“Wearin” is short or nonexistent and “wearout” starts right away.

Misconception 4: The effects of advertising last for years and even decades.

• We remember old ads.

• Old research used inappropriate data.

Effects of advertising are rather fleeting.

Misconception 5: Even if advertising seems ineffective, stopping would be dangerous.

• Argue that suspension could be disastrous.

• Or that competitors’ ads would be more effective.

Argument is not tested.

Misconception 6:Weight (or intensity or frequency) is critical.

• The most expensive item in the ad budget is the advertising buy expressed as weight.

Big changes in weight may not result in even small changes in effectiveness.

Changes in target segments, media, message, and especially creative content result in biggest change in effects.

Ad response is highest for product improvement or new products.

Misconception 7:Advertising is highly profitable.

• Spurious correlation between advertising intensity and market share.

Because of the competitive activity, much advertising cancels out.

Beware over-advertising: adding to costs more than to profits.

Misconception 8: Logic or argument is the most effective advertising appeal.

• Consumers like to think of themselves as rational decision makers who make good if not wise decisions.

Emotional ads are more interesting, more easily remembered, more prone to lead to action, and less likely to arouse consumers’ defenses.

Misconception 9: Advertising is amoral in its practice, corrupts people’s values, or is

unnecessary for free markets.

As a relatively weak market force (see misconceptions 1-8), advertising probably has little effect on values.

Essential for free markets: the means by which an innovative firm can communicate its brands competitive superiority to consumers.

Where do We Go from Here?

• advertising's effect on mental processes,

• advertising's effect on sales or market share,

• advertising versus sales promotion,

• advertising and pricing,

• advertising and brand equity.

Effects on mental processes

• Multiple routes to persuasionELM (central vs. peripheral processing)

• Power of emotional appeals.

• Consistency of cues enhances persuasion.

• Difficult translating/integrating lab results to the field.

Effect on sales / market share

• Move away from aggregate data.

• Focus on content, message, cues, and creativity rather than message weight.

sales vs promotion

• Misses two key points:

1. How to use both jointly.

2. Discount price may be competitive price.

Advertising and pricing

• Advertising may

1. Increase price competition.

2. Lower prices.

3. Increase consumers’ price elasticity.

Advertising and brand equity

• How and when does this process work?