Advertising Effectiveness
Basically advertising effectiveness depends upon user’s response towards an ad and on their attitude towards advertising. Advertising's effectiveness lies in its capability to help stimulate or maintain sales (Eachambadi 1994; Mantrala, Sinha, and Zoltners 1992; Naik, Mantrala, and Sawyer Sethi 1998; Vidale and Wolfe 1957). Thus, advertising is frequently used as an independent variable in explaining changes in sales (Lilien 1994). In the theoretical literature there are two dominant views of the role of advertising, namely the “information” and the “market power” views.
Theoretical background of advertising effectiveness
The information view, exemplified by Stigler (1961), is that non-price advertising provides information about the existence of a brand or about its quality. This leads to increased consumer awareness of the attributes of available brands, reducing search costs and expanded consideration sets, which, in turn, results in more elastic demand.
The market power view of advertising is that it creates the perceived degree of differentiation among brands. This will increase brand “loyalty” which, in turn, will reduce demand elasticity, increase markups of price over marginal cost, increase barriers to entry and reduce consumer welfare (see, e.g., Bain, 1956; Comanor and Wilson, 1979). However, it is controversial whether advertising actually creates barriers to entry, because this depends on how effectively new brands can use advertising to induce trial by consumers who are loyal to other brands (see Schmalensee, 1983, 1986; Shapiro, 1982; Shum, 2002).
The effect of the advertising on consumers rests on the theory of message repetition. It can be classified into three main effects: a current effect on behavior, a carryover effect on behaviour and a non-behavioural effect on attitude and memory (Pechmann and Stewart 1988; Sawyer 1981; Sawyer and Ward 1976).
Evaluating Advertising Effectiveness
There is no single measure of advertising effectiveness as it is affected by a number of factors. In general there are two approaches used: communication effect research and Sales effect research. Researchers have tried to estimate the effects of advertising on brand sales using field data (Leone and Schultz 1980; Vakratsas and Ambler 1996). Deeper analysis of these studies finds that the effects of advertising are significantly greater than zero but do vary by market and product characteristics (Assmus, Farley, and Lehmann 1984; Sethuraman and Tellis 1991). Abraham and Lodish (1990) believe that advertising effectiveness has to be captured by the additional sales of a product over and above those that would have happened in absence of any advertising or promotion. Although advertising managers have long believed that advertising's impact on sales can persist longer than the current period (Clarke 1976), the tendency to assume that advertising's effect on sales is short-term is yet prevalent. They further argue that the longer uses of advertising are better than less and shorter uses of it irrespective of the nature of contribution of advertisement to sales. The inability of measures to differentiate the impact of advertisement between its short term and long term effects have resulted in wastage of advertising expenditure (Abraham and Lodish, 1990).
As per the views of Rossiter and Percy (1987), Behaviour and communication effect are the primary basis for advertising segmentation and target audience definition, even for the new product or new brands
Media Impact on Advertising
Advertising obviously depends on both the quality of the product being advertised and the quality of the ad itself. But the third and equally important factor is the medium in which the ad appears. The medium itself is most often viewed as a vehicle that provides exposure, or “eyeballs,” for an ad. Any consideration of the quality of the medium itself as something that might affect reactions to an ad, if considered at all, is typically based on subjective judgments of alternative, and otherwise c
