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Hello Marketing Chroniclers. This is a special edition of the newsletter when I send out ad-hoc essays that go deeper into a specific topic relevant to our profession.

This week I’m diving into advertising theory — how advertising affects consumers, brand, and business.

Enjoy 🧠

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How Advertising Affects Consumers, Brands, and Business

The Cannes Lions Festival of Creativity has just wrapped up last week.

LinkedIn is filled with agencies celebrating their Lions, brand leaders sharing their session decks, and influencers talking about what most inspired them.

I love this time of year because we get to see what our industry is deeming to be exceptional. Sure, winning a Lion doesn’t necessarily mean that the campaign was effective (that’s what the Effies are for, though Lions are increasingly raising the bar on effectiveness, as well) — but it does mean that your advertising agencies are pushing the boundaries of innovation and creativity.

It’s a fantastic source of inspiration and puts the hardworking people behind the world of marketing communications on a well-deserved pedestal for 5 days in the south of France.

Now, if we take a step back and evaluate how these amazing advertising campaigns actually work in the minds of consumers, their effects on brand metrics, and their impacts on the business, we can begin deconstructing the building blocks of effective advertising — one that wins both awards and market share.

What Are “Brands”

The Ehrenberg-Bass Institute (EBI) has been studying marketing science for decades. In its body of work, at lot of empirical evidence has been observed uncovering the role that advertising can play in the success of a business.

Contrary to what most people think, advertising doesn’t actually have large effects on driving sales.

You heard that right. Advertising plays a far bigger role than driving conversions, despite the past decade of performance marketing and digital KPIs making us believe otherwise.

Instead, advertising is highly effective at protecting market share (more on that later). And ultimately, market share is won by businesses that have strong brands.

Many scholars and practitioners have attempted to define what “brand” means, and there is no shortage of great answers:

• “A brand is the expression of the business in the marketplace.” Paola Norambuena

• “What distinguishes a brand from an unbranded commodity counterpart and gives it its equity is the sum total of consumers’ perceptions and feelings about the product’s attributes, about how it performs, about the brand name, and about the company associated with producing it.” Al Achenbaum

• “Customer-based brand equity is defined as the differential effect of brand knowledge on consumer response to the marketing of the brand. A brand is said to have positive customer-based brand equity when consumers react more favorably to an element of the marketing mix for the brand than they do to the same marketing mix element when it is attributed to a fictitiously named or unnamed version of the product or service.” Kevin Keller

What these all have in common is that a brand isn’t a physical thing that you can hold — it’s a mental construct. It’s a combination of associations, feelings, occasions, that occupy a small corner of someone’s mind.

Therefore, the act of “building brand” is about building brand memory associations — if you’re Old Spice: for men, body wash, red bottle, smell nice, etc.

Sounds ephemeral and too intangible for the world of business — which sadly has proven to be, given the lack of brand building investment in most firms. But businesses sell to people, and people live with entirely distinctive worlds in their minds.

Meaning, if we are to convince people to buy our brand, we must find a way to tap into these inner worlds comprised of mental structures.

Therefore, businesses need to take brand building seriously if they are to have a chance at growing their bottom line.

Ads Must Be Noticed AND Recognized

The activity of “building brand” is quite a broad one — it involves aligning all elements of the marketing mix (product, place, price, promotion) with one’s brand positioning.

Brand positioning is effectively the 1 or 2 things you want people to remember about you. It is derived from delivering what customers really want, in a relatively better way than your competition, in a credible way (also known as the 3Cs).

But for the purposes of this article, I will focus solely on promotion (or, oftentimes referred to as advertising).

A campaign is a series of advertising “market interventions” that are consistently executed across various mediums in such a way that they refresh viewers’ memories about your brand in relation to a specific category entry point.

Category entry points (CEPs) are the thoughts, situations, needs, occasions, or contexts that make people enter a product or service category. They are the conditions under which a purchase might occur. Brands that come to mind across more CEPs are more likely to be chosen, especially in low-involvement categories.

Therefore, for an ad campaign to be effective it must be emotive enough to be remembered in a sea of never-ending marketing messages, AND it must be correctly attributed to your brand.

If you do a good enough job creating a super memorable campaign that no ones recognizes it’s for your brand — you’ve just wasted your money, because some might even attribute it to your competitors!

If you do a good enough job creating a piece of communications that is easily attributed to your brand, but not memorable at all (aka, boring ads) — you’ve also just wasted your money, because nobody will remember what you said.

Watch the following ad — if you hadn’t read the title of the video, would you be able to attribute it to the right brand?

In other words, an effective creative execution is one that gets noticed AND gets attributed to the right brand.

Sales vs Advertising

Most brands use advertising to tell consumers about new things — new features, new products, events, etc. While advertising can certainly do that, it is in fact far better at reinforcing existing loyalties and memories by reminding consumers what they already know about.

In other words, advertising helps established brands stay relevant, just as much as it helps new products find consumers.

Brands will also advertise for other reasons, like appeasing distributors, to motivate the sales force, or to show employees that something is happening. These aren’t trivial pursuits, yet they are often relegated to the broad bucket of “corporate relations”.

But since most brands use advertising to try to get consumers to buy their product, let’s dive deeper into this segment of the ad industry.

What makes marketing communications different than a sales person’s job is that the former is 1-to-many, whereas the latter is 1-to-1.

This has major implications on the type of messaging that each is comprised of:

• 1-to-1: it’s far more expensive, it can be far more persuasive, and it can easily last 15 to 30 minutes.

• 1-to-many: is far cheaper on a per capita basis, it is not tailored to any one individual, and it typically has less than 30 seconds to convey a message.

Therefore, an ad plays a very different role in a business than a sales person does. It works without forcing people to consider and change their opinions — it’s more of a “soft sell”, oftentimes with few or no claims of product superiority. It works by building mental availability.

Since the brands people buy depend heavily on which ones that they notice, mental availability has been defined by the Ehrenberg-Bass Institute as the probability that a buyer will notice, recognize, and/or think of your brand in a buying situation.

And that, folks, is the key role of advertising.

What Can Advertising Actually Do

Have you ever purchased a product, and suddenly all you see in your day to day is that product everywhere?

This is known as the Baader-Meinhof phenomenon (or the “frequency illusion”): when something you’ve recently noticed, learned, or experienced suddenly seems to appear everywhere. In the case of buying a new car, you suddenly begin to notice that same car model constantly on the road, even though its actual frequency hasn't changed.

Consistent advertising is really good at refreshing existing memories — and really bad at building new ones. But if done well, with a 360-approach to media and exceptional creative, it can become relatively better at forming new memories. Take the following example:

The iPod Launch

Back in 2003, when Apple was going to market with its newest product, the iPod, they launched a spectacular campaign that formed new memories in the minds of consumers by:

• Tying it back to Apple’s brand positioning of being human, creative, and simple.

• Highlighting a new distinctive brand asset, the white earbuds, that could now be spotted everywhere you went in the city.

• The creative was simple and versatile, with several silhouettes representing the various types of consumers Apple had — enabling the media distribution of the campaign to be more frequent without boring their audience (or as Sarah Carter has recently coined, “disguised repetition”).

• Had an iconic soundtrack that stuck in the minds of consumers (“Jet’s “Are You Gonna Be My Girl”)

• And it had a memorable tagline that simply captured the core benefit of the innovation: “1,000 songs in your pocket.”

The results spoke for themselves (which, as with any technological innovation, eventually had a decline, but in this case it was largely replaced by iPhone sales, and not the competition!):

But as mentioned above, refreshing brand memories is a necessary evil in business. Take Starbucks, for example: in its early days they largely avoided advertising by focusing instead on opening up stores in key locations around the US to capture the growing demand for espresso-based coffee. But eventually, as they became a mature brand, they started to advertise heavily to protect market share.

So, does the largely defensive nature of advertising mean it doesn’t generate sales? Well, as EBI has said before: preventing a sale from being lost is generating a sale that would otherwise not have happened.

This may be mistakenly interpreted by some as advertising’s failure to generate sales, but there are 3 key reasons why its effects on revenues are more subtle, and incredibly difficult to measure:

1. Advertising effects are spread thinly over time. It often takes a long time for communications to reach all consumers in a market, and each small individual reaction takes a while to materialize because most consumers are “out of market” at any given time (refer to the 95-5 rule).

2. There’s a lot of noise in the market. And by noise, I mean all the other factors that impact a consumer’s decision to make a purchase — such as weather, competitor advertising, promotions, life stages, etc. Separating these variables to accurately measure the true impact of advertising is a near impossible task.

3. Advertising isn’t turned on and off neatly. Although a media buy has a beginning and an end, store signage, consumer public usage of one’s product, old magazines or social posts, word-of-mouth, and more are effectively “always-on”, further muddling the impacts of any given marketing intervention.

In a recent study conducted by Tracksuit in partnership with TikTok, they’ve attempted to draw a tighter connection between brand awareness and conversions (or, a brand’s mental structures’ recall and its eventual purchase). Though more studies like this need to be done in the market to continue to empirically validate these sorts of results, the insights were quite revealing: the more people were aware of your brand, the more they converted in the bottom of the funnel (where the x-axis is conversion rate impressions, and the y-axis is the prompted awareness rate).

Consumers Must Be Reminded We Exist

Because most buyers of any brand are light category buyers — meaning weeks and months might go by in between purchases — shoppers need to be reminded of our brands constantly if we are to have a chance to be purchased when they do enter the category to buy.

Consumers have a lot of other things in their minds — putting food on the table, delivering a project a work, paying their bills, preparing dinner, raising their kids, etc. —, which means they don’t really think about brands nearly as much as marketers do.

And this is why advertising is so important for any brand to have a chance at growing and staying relevant: if you don’t create market interventions to remind consumers that you exist, they will not remember you at the time of purchase.

It’s that simple.

Most people don’t buy the best option in the market — they buy the option they remember best.

More of PPA:

• 🤝 Follow me on LinkedIn

• 🗣 For speaking engagements, you can reach me at [email protected]

• 💌 In case you missed it: Odds Are, You’re Wrong — Information vs formation, metrics that matter, how to advertise a bidet, and escapism

PPA 

Pedro Porto Alegre is a seasoned marketing strategist with in-depth experience building brand and communications strategies for top-tier B2C and B2B organizations across Canada. His repertoire extends from crafting and executing integrated multi-media brand marketing campaigns to the commercialization of performance-driven innovations for multimillion-dollar and nascent brands alike.