Increase in advertising spent does not lead to increase in sales
I am taking advanced market analysis for my masters of marketing course this term. For this subject, I had to do a presentation on a particular course reading. The reading that my team mate, Shirley and I had chosen is Advertising experiments at the campbell soup company by Joseph Eastlack & Ambar Rao.
The findings for this experiment taken up by Campbell soup was that advertising budget levels with the existing creative executions, generally had little or no impact on the sales of their well established brands (what about non-established brands??). However, changes in copy strategy, media selection, media mix and targetting often produced an increased in sales. The marketing implication is that increase in advertising spending would not lead to an increase in sales. It is the advertising copy, media selection and timing that makes the difference.
These results are also further supported by research at other firms (Anheuser-Busch), marketing research firms (IRI), and by academics. These general findings are:
- Decreases in the level of advertising do not lead to an immediate decrease in sales. An increase in the level of advertising by itself does not lead to an increase in sales.
- On average, half of all ongoing ad campaigns are ineffective.
- Changes in the creative, medium, target segment or product itself sometimes lead to change in sales, even though increases in the level of advertising alone do not.
- When advertising is effective, it is effective either early on or never.
- When advertising does affect sales, its impact is not large and is much smaller than that of price. In fact, research shows that the elasticity of sales to advertising is .1, while the elasticity of sales to price is –2.5.
Many of these findings are based on research from mature product categories. Advertising may be more effective in other new or less mature categories. One of the reason that I can think of is that in new or less mature markets; there are less saturation or customers exposure to their product’s advertisements. Therefore, consumers would be more receptive to these advertisements of new/less mature products than advertisements of mature products where there are too much saturation of their advertisements.