From the Nolo eCommerce Center
It’s ironic that advertising can be so expensive while yielding such poor results.

The argument made by the proponents of advertising is almost pathetically simple-minded: If you can measure the benefits of advertising on your business, advertising works; if you can’t measure the beneficial effects, then your measurements aren’t good enough. Or you need more ads. Or you need a different type of ad. It’s much the same type of rationalization put forth by the proponents of making yourself rich by visualizing yourself as being prosperous. If you get rich immediately, you owe it all to the system (and presumably should give your visualization guru at least a 10% commission). If you’re still poor after six months, something is wrong with your picture. It reminds us of the man in Chicago who had marble statues of lions in front of his house to keep away elephants: “It works,” he said; “Ain’t no elephants in this neighborhood.”

Paradoxically, even though some small business owners are beginning to realize that advertising doesn’t work, many still advertise. Why? For a number of reasons: because they have been conditioned to believe that advertising works, because there are no other models to follow and because bankers expect to see “advertising costs” as part of a business proposal.

It’s important to realize that your judgment regarding advertising is likely to be severely skewed. You have been surrounded by ads all your life and you’ve heard countless times that advertising works. To look at advertising objectively may require you to re-examine some deeply-held beliefs.

According to Emagazine, advertising budgets have doubled since 1976 and grown by 50% in the last ten years. “Companies now spend about $162 billion each year to bombard us with print and broadcast ads; that works out to about $623 for every man, woman and child in the United States” (“Marketing Madness,” May/June 1996). Information Resources studied the effect of advertising and concluded, “There is no simple correspondence between advertising and higher sales….The relationship between high copy scores and increased sales is tenuous at best.” Or as George Orwell said, “Advertising is the rattling of a stick inside of a swill bucket.”

To illustrate how pervasive the “advertising works” belief system is, consider that if the sales of a particular product fall off dramatically, most people look for all sorts of explanations – without ever considering that the fall-off may be a result of counterproductive advertising.

Skeptics may claim that you simply can’t sell certain consumer products – beer, for example – without an endless array of mindless TV ads. We refer these skeptics to the Anchor Steam Brewing Company of San Francisco, which very profitably sold 103,000 barrels of excellent beer in 1995 without any ad campaign. They believe in slow and steady growth and maintain a loyal and satisfied client base.

Even apparent successes may not be what they seem. The California Raisin Advisory Board ran an ad campaign that produced the most recognized ad in the history of advertising. In the mid-1980s its advertising agency, Foote Cone and Belding, used the first popular national clay animation campaign. (Claymation is a trademark of the Will Vinton studios.) The annual budget was over $40 million. The dancing raisins and their song “I Heard It on the Grapevine” created such a popular image that sales from dolls, other toys, mugs and secondary products generated nearly $200 million in revenue and resulted in a Saturday children’s television program using the raisin characters. Raisin sales went up for the first two years of the campaign, largely because cold breakfast cereal marketers were so impressed with the popularity of the ad campaign that they increased the raisin content of their raisin cereals and joined in the advertising.

After four years, the dancing raisin campaign was discontinued. Sales were lower than before the ads started (Forbes, June 17, 1996). By the early 1990s, the California Raisin Advisory Board had been abolished.

What Does Advertising Do?

“What ‘work’ does advertising do and how well does it do it? Aside from comforting purchasers by assuring them they made the right choice, aside from comforting CEOs and employees that their work is important, and aside from certain unpredictable short-term increases in consumption, most advertising does not perform as advertised. Take away the tax deductions that corporations get for advertising, and most expenditures would dry up overnight.”Although elaborate proofs of advertising’s impotence are available, the simple fact is that you cannot put a meter on the relationship between increased advertising and increased sales. If you could, (ad) agencies would charge by how much they have increased sales, not by how much media space they have purchased.” - James B. Twitchell, Adcult USA
(Columbia University Press, 1996)

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