How Advertising Works
Also filed underPaid Media
Myth:If ads don't move this week's sales, they didn't work.
Evidence:Across 751 short-term and 402 long-term elasticities from 56 studies (1960-2008), the average short-term advertising elasticity is 0.12 - but the mean long-term elasticity is 0.24, double the short-term, through carryover.
Elasticities have declined over time and run higher for durables, early-lifecycle products, and when measured in GRPs rather than spend; prior meta-analytic means (0.22 / 0.41) were overstated.
Raj Sethuraman, Gerard J. Tellis & Richard A. Briesch, Journal of Marketing Research · 2011 · Academic
Channels: paid · brand
How Advertising Works
Myth:Outspending competitors on media weight lifts sales.
Evidence:Across 389 BehaviorScan split-cable TV experiments, increasing budget relative to competitors did not increase sales in general - changing brand, copy, or media strategy did. Standard recall and persuasion pretests did not predict which ads would move sales.
How Advertising Works
Myth:Ads only work when the copy states product facts.
Evidence:In an incentivized experiment with randomized exposure, content, and price, display ads shifted beliefs about price and quality even when the copy revealed neither - and those belief shifts causally drove search and purchase.
Budget Allocation
Myth:Performance marketing should get the majority of budget.
Evidence:Across hundreds of IPA case studies, roughly 60% brand / 40% activation maximises long-term profit growth in consumer categories.
The Validity Gap
Myth:TV's ROI estimates justify current spend levels.
Evidence:Estimating elasticities and ROI across 288 brands, Shapiro, Hitsch & Tuchman find ad elasticities far smaller than the published literature suggests, negative ROI at the margin for more than 80% of brands, and positive overall ROI for only about a third.
Penetration
Myth:Loyal heavy buyers are the growth engine.
Evidence:Brand growth comes overwhelmingly from increasing penetration among light and non-buyers, not from deepening loyalty.
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