Large companies typically spend 2% of their revenues on advertising.
The automotive, pharmaceutical, and retail sectors are among the highest-spending industries on advertising. This is because they are driven by the frequent launch of new products and the need to differentiate against competitors. Total U.S. spending for the top 200 advertisers reached a record $142.5 billion last year. Procter & Gamble topped the list, spending $4.3 billion on advertising throughout 2015.
So why invest in advertising? Byron Sharp, a professor of marketing science at the Ehrenburg-Bass Institute, argues that brands have to be “mentally available.” They must be easy for the buyer to notice, recognize, and think about when they are ready to buy. With more channels for reaching the consumer than ever before, the advertising battlefield has become far more than a fight for highest share of voice. Sharp says that high awareness levels, brand recall, and brand recognition are no longer enough. The key to achieving greater mental availability is brand distinctiveness through a mass marketing strategy.
Advertising is expensive, and companies are often frustrated by their return on investment on their advertising spend. They either don’t know what it is or it is lower than what they had anticipated.
Brand awareness has to be the starting point of any measurement of success, and increases in brand awareness among the target audience can be measured by comparing changes to awareness post-campaign. Another important analysis is call to action, which can be measured through the likes of click-throughs from digital ads. However, these measures of awareness and call to action don’t always translate into higher brand penetration. Data of this kind are often insufficient in providing insight on how to optimize promotional spend.
In our view, the following four critical success factors for measuring advertising effectiveness should also be kept in mind:
Most importantly, an ad needs to get noticed. Ads often occupy a crowded website or sit in a dense magazine. Most are placed where the target audience is subject to distractions. These can be from other brands vying for their attention or some other interruption. If an ad doesn’t break through this noise, it has failed. Bright colors, bold statements, and stark simplicity can help achieve this goal.
To Sharp’s point, the ad needs to be distinct in driving recall so that the brand is mentally available at a later point––namely at the time of purchase. It is no good if people only remember the slogan, featured celebrity, or controversial theme if they don’t recall the brand behind it. In other words, the attention captured by the ad needs to drive lasting brand impact.
It is vital that an ad resonates with the target audience on the three Cs: It needs to be clear, credible, and compelling. An ad that is confusing, complex, or not believable is quickly dismissed.
Powerful ads are more unique in terms of delivery (the message, format, or creative) and brand distinctiveness. Ads have to appeal to the target customer by promising something better––such as superior performance or lower cost––compared to what the individual has currently. Often ads that invoke an emotional response (e.g., by appealing to pain points or feelings) resonate more strongly.
Where appropriate, an ad should prompt a call to action, such as a desire to learn more. However, ad sponsors should be realistic about the call-to-action expectations of their ads as not all individuals are interested, ready, or willing to make a purchase at the time of seeing the ad. Assessing the extent to which the ad positively impacts interest in the brand, product, or service could be enough in determining successful campaign resonance.
An ad campaign must align with the identity of the brand. All ads should display consistent brand elements to ensure that they support the ultimate goal of building the brand. The message in the ad, the colors, and the creative should all be “on brand.” If the brand portrays a serious, authoritative position in the market, it would not be advisable to characterize the brand as a jester in its advertising as this would cause brand confusion and a diluted brand position. The consistent presentation of brand features contributes toward an impactful campaign.
Advertising plays an important role in influencing perceptions of favorability toward a brand. Ads need to create appeal so that the brand is higher in the consideration set. This is particularly important for ads promoting products and services because without strong brand attribution, the ad could end up driving higher consideration of competitors with similar offerings.
Successful ads appeal to emotions such as excitement, fear, confusion, pride, and self-fulfillment. Addressing relevant emotions is an effective tool to better connect with the target audience and therefore drive higher brand favorability.
Advertising is a huge investment for all companies, but it is a necessary investment. It is the means by which new customers are drawn to a brand, without which the interest in the brand will wane. Measures of awareness and call to action are important, but they only go so far in indicating the success of the ads.
Voice of the customer feedback is essential on the four critical success factors of campaign impact, resonance, brand fit, and brand favorability. With sizable budgets required for advertising, a small upfront investment in independent market research is a small price to pay to optimize ad effectiveness and ROI.