Knowing which half of your advertising campaign is wasted
One of the most widely held beliefs about advertising is based on one remark made approximately one hundred years ago, by a famous merchant named John Wanamaker (1838-1922). He is credited with the saying: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half”.
When you enter in Google Search the words “advertising”, “half”, and “waste,” you will get more than 67 million results which lead us to the conclusion that this statement, unfortunately, holds true even in present times. Should we ask ourselves, then, if we are witnessing a marketing performance measurement issue, or just a lack of understanding of how advertising affects the buying decision process?
Firstly, in order to know whether your company’s ad investments pay off, you have to know how to measure their effects correctly. Advertising effectiveness always has to be evaluated both on the short term, and on the long term, since the main thing advertising does is that it affects the brand which is being advertised – it builds brand knowledge (brand awareness and brand image) which, in turn, influences purchase behavior, as explained by Emma K. Macdonald and Byron M. Sharp in their article, Brand Awareness Effects on Consumer Decision Making for a Common, Repeat Purchase Product.
Therefore, the focus should be put on Advertising → Brand → Sales and not, as most marketing people still seem to think: Advertising -> Sales. In spite of this, the most common, and a lot of the times the only way marketers measure “effectiveness” is by means of ad recall, ad liking and ad-induced purchase intent.
Secondly, there is a general misconception that advertising is about information processing, i.e. about transferring messages from sender to receiver. In fact, it works mainly through creating, altering and strengthening brand associations and brand relationships. Kevin Lane Keller, a leading marketing scholar on brands argued that “the challenge for marketers in building strong brands is ensuring that customers have the right type of experiences with products and services and their accompanying marketing programs so that the desired thoughts, feelings, images, beliefs, perceptions, opinions and so on become linked to the brand.”
Thirdly, and more importantly, there should be a clear understanding of marketing performance measurement principles and tools. Sadly, according to The Fournaise Marketing Group “90% of marketers are not trained in Marketing Performance & Marketing ROI and 80% struggle with being able to properly demonstrate to their Top Management the business effectiveness of their Marketing spending, campaigns and activities”.
Since John Wanamaker coined the often repeated phrase mentioned in the beginning of this article, we figured out a great deal about how advertising actually works and, with the help of the performance management discipline, we can at least have an educated guess on which half of the advertising budget is wasted.
- Macdonald, E., K., Byron M., S., (2000), Brand Awareness Effects on Consumer Decision Making for a Common, Repeat Purchase Product: A Replication
- Keller, K. L. (2008). Strategic brand management: Building, measuring, and managing brand equity. Upper Saddle River, NJ: Pearson/Prentice Hall
- 90% of marketers are not trained in marketing performance & marketing ROI (2014), The Fournaise Marketing Group