Transcript 04HowAdvWorks

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
HIGH
INVOLVEMENT
LOW
INVOLVEMENT
FEEL
1
2
3
4
FCB Grid
Quadrant 1:
THINK / HIGH INVOLVEMENT
• INFORMATIVE (economic)
• Classical hierarchy-of-effects:
• Awareness
Knowledge
Liking
Preference
Conviction
Purchase
• Learn Feel Do.
FCB Grid
Quadrant 2:
FEEL / HIGH INVOLVEMENT
• AFFECTIVE (psychological)
• Products fulfilling self-esteem,
subconscious, ego-related
impulses.
• Requires perhaps more emotional
communication.
• Feel Learn  Do.
FCB Grid
Quadrant 3:
THINK / LOW INVOLVEMENT
• HABITUAL (responsive)
• Routine consumer behavior.
• Learning occurs most often after
exploratory trial purchase.
• Learning by doing.
• Do  Learn  Feel.
FCB Grid
•
•
•
•
•
Quadrant 4:
FEEL / LOW INVOLVEMENT
SATISFACTION (social)
Personal taste
“Life’s little pleasures”
Peer-oriented items.
Do  Feel Learn.
FCB Grid
THINK
HIGH
INVOLVEMENT
LOW
INVOLVEMENT
FEEL
1
2
3
4
FCB Grid
THINK
INFORMATIVE
HIGH
INVOLVEMENT
(economic)
Learn Feel Do
LOW
INVOLVEMENT
3
FEEL
2
4
FCB Grid
THINK
HIGH
INVOLVEMENT
LOW
INVOLVEMENT
1
3
FEEL
AFFECTIVE
(Psychological)
Feel  Learn Do
4
FCB Grid
THINK
HIGH
INVOLVEMENT
LOW
INVOLVEMENT
1
HABITUAL
(Responsive)
Do  Learn Feel
FEEL
2
4
FCB Grid
THINK
HIGH
INVOLVEMENT
LOW
INVOLVEMENT
1
3
FEEL
2
SATISFACTION
(Social)
Do  Feel  Learn
FCB Grid
THINK
FEEL
INFORMATIVE
AFFECTIVE
(economic)
(Psychological)
Learn Feel Do
Feel  Learn Do
HABITUAL
SATISFACTION
(Responsive)
(Social)
Do  Learn Feel
Do  Feel  Learn
HIGH
INVOLVEMENT
LOW
INVOLVEMENT
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 promotions
Weaker than product usage (E) effects
Greater 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 returns
First 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?
Effects on mental processes
• Multiple routes to persuasion
ELM (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.
Versus sales promotion
• Misses two key points:
1. How to use both jointly.
2. Discount price may be competitive
price.
Advertising and pricing
•
1.
2.
3.
Advertising may
Increase price competition.
Lower prices.
Increase consumers’ price elasticity.
Advertising and brand equity
• How and when does this process work?