The long-term impact of advertising on sales. Advertising activities and the impact of advertising on sales effectiveness Brand knowledge

Everyone knows that contextual advertising helps increase sales. In the end, contextual advertising almost always helps to attract additional traffic from visitors to the site and some of these visitors become customers.

In 2011, Google conducted a study of contextual advertising and search results, which showed that 89% of site traffic comes from contextual advertising. However, it's important to understand that Google's research focuses on visits, not sales. It is logical to assume that the more visits, the more sales, and, accordingly, a decrease in the number of visits leads to a decrease in the number of sales.

However, not all visitors are equally interested in purchasing the product. The following research conducted by Google shows the true value of contextual advertising.

But before we move on to the study, let us draw your attention to the plate below. Here is a good example of e-commerce in search results.

About 80% of the screen is taken up by ads, including promotions from numerous competitors.
Let's face it, it's not that easy to compete in such conditions. Several sellers often sell the same thing, often at different prices. Thus, if you want to tell the consumer about your product in Yandex or Google results, contextual advertising becomes almost a necessity.

Experiment

What were the results of the experiment?

Both traffic and sales increased

Using contextual advertising website traffic increased by 17%.

And this is not surprising.
The surprising thing is that with the use of contextual advertising, sales increased by as much as 136%.

This data refers to total visitors and sales, not just those generated through contextual advertising. It can be assumed that the increase in the number of buyers was achieved through other channels, sites, and not only through contextual advertising.

Buyers often visit a website several times before purchasing.
They may learn about you from contextual advertising and visit the site, but not buy for the first time.
They might come back later from organic search and sign up for an email newsletter, then come back to buy via email.

Buyers brought in through PPC advertising are more valuable than those brought to your site from search or other sources.

This statement is substantiated by research, which found that customers who came from contextual advertising or contacted an organization's advertising campaign at some point prior to purchase made a purchase on average 21% more expensive..

It is obvious that with the help of contextual advertising it was possible to increase the cost of orders.

Results after turning off Contextual Advertising

Interestingly, the number of site visitors did not change even after the advertising campaign was suspended.
There could be many reasons for this: perhaps people found the site from other sources. Those searching by brand likely arrived at the site through organic search. Seasonality could also play a role.

The number of visitors remained steady, which would suggest that the number of sales remained unchanged. But that's not true.

Sales fell after contextual advertising was suspended.

The ratio of online orders to customers per visitor (conversion rate) decreased by 23% due to the switching off of contextual advertising, although the number of visitors remained the same.

If the number of visitors remained the same, regardless of the source, then why did sales fall? Shouldn't we assume that traffic will decrease when content advertising stops, and if this is not the case, then what makes sales stable?

The reason for the decline in sales comes down to conversion. If you look closely at the graph above, you will notice that the overall conversion rate on the website was very low at less than 1%.

Conclusion

What did we learn from this experiment?

• In e-commerce, paid placements dominate the search results, so contextual advertising is very important.
• Contextual advertising can increase not only the number of site visitors, but, more importantly, increase the number of sales.
• Visitors who come through contextual advertising are more valuable in terms of profit from sales.

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Advertising activities are information dissemination activities carried out with the aim of promoting products on the market. Advertising is distributed in a certain form and using special media, addressed to a specific target group of people and aimed at attracting attention to the advertised product, creating or maintaining interest in it and its promotion. On the market.

Advertising activities have an informational, persuasive or persuasive nature and are aimed at influencing consumer behavior or the opinion of a wide group of consumers. Advertising is one of the marketing tools and can be used in combination with techniques such as individual selling tactics, sales promotion or business relationships.

Advertising activities are carried out by a specialized service of the manufacturer and independent advertising agencies. The main means of advertising are: advertisements, information materials, press releases, information letters, catalogues, promotional films, trademarks, corporate styles, exhibitions.

The conduct of various advertising studies is primarily due to the fact that decisions in the field of advertising activities are made under conditions of risk and uncertainty. Managers and advertising developers always face questions like: “Have the target markets and target audience been chosen correctly? Do we understand our clients' needs correctly? Are the people watching media advertising the right people for whom they are intended? Did advertising have any impact on the volume of product sales?” Answers to these and other similar questions are often sought by conducting appropriate marketing research. In order to determine the effectiveness of a company's marketing policy, marketing managers have a whole range of different tools. In addition, there are various directions in the field of determining the effectiveness of advertising activities.

Research into the popularity of individual advertising media (advertising media) for different target audiences. Based on a study of the degree of popularity of individual radio and television programs in the media. The effectiveness of advertising strongly depends on the effectiveness of advertising, and the popularity among the population of certain means of presenting advertising information. Any even the most perfect advertising campaign will have low effectiveness if the means of presenting advertising information have low productivity.

When studying the effectiveness of a company's advertising policy as a whole, the degree of awareness of the company and its products is studied based on the results of advertising activities over a certain period of time. The effectiveness of the advertising policy pursued in an organization is an important marker for determining the effectiveness of all commercial activities of the company. An effective advertising policy is the driving force in promoting a company’s products on the market and the key to the sustainable development of an organization.

A study of the effectiveness of individual advertising campaigns based on special experiments is carried out as follows. A control area is established where the advertising campaign is not carried out, and an experimental area in which the advertising campaign is carried out. A comparative assessment for different target audiences is carried out in the direction of studying the degree of familiarity of consumers with the advertised product and the desire to buy it. An important tool in determining the effectiveness of a company's advertising policy.

One way or another, all advertising is designed to change people’s behavior and increase people’s motivation to purchase the products advertised by the company. Determining the effectiveness of this criterion is an important part in determining the overall effectiveness of an organization's advertising policy.

This research method is used mainly when using several media in advertising policy. Studies of the synergistic effect are provided to determine the effectiveness of the interaction of information delivery from various sources. These studies are primarily aimed at increasing the efficiency of advertising activities, reducing the risk of its implementation, and better use of financial resources.

It is customary to distinguish two types of advertising effectiveness: communication and final (based on sales results). Marketing research is largely aimed at determining the communication effectiveness of advertising, which is much easier to determine compared to the final effectiveness. Research on communication effectiveness is carried out both at the planning stage of an advertising campaign and after it has been carried out. To assess the reasons that determine the effectiveness of advertising, the following four criteria are usually used, characterizing certain areas of research into the effectiveness of advertising, namely: recognition, the ability to remember advertising, the level of motivation, and the impact on purchasing behavior. Of course, such a classification is to a certain extent arbitrary. For example, the recognition rate is closely related to the memorability rate. Therefore, when conducting research on the effectiveness of advertising, it is sometimes difficult to obtain pure estimates for these indicators separately. In addition, it should be remembered that the criteria considered are only intermediate measures of advertising effectiveness and do not give any indication of its final effectiveness.

The topic of the long-term impact of advertising has received a lot of attention recently. Participants in the discussions agree that the “long-term” effect of an advertising campaign is not only important, but also fundamentally different from the results measured immediately after its completion.

Famous advertisers Forest Bynet(Les Binet) and Peter Field(Peter Field) formulated the conclusions of their analysis of the work of the winners of the prestigious award: IPA Effectiveness(awarded for developing and executing effective advertising campaigns - R&T): “The way in which the long-term effects of an advertising campaign are generated is fundamentally different from the way most short-term effects are achieved. Although long-term effects are always accompanied by some short-term effects, the converse would not be true, since the mere accumulation of short-term effects does not produce long-term effects by itself.” (The Long and the Short of It: 2013)

These conclusions are extremely important, because, as they write in their famous article Matt Clary(Matt Clary) and Paul Dyson(Paul Dyson) “Many econometric studies have shown that the short-term return on advertising is often less than the investment made... and there is clear evidence from published econometric research that the long-term impact of advertising is 2 to 5 times greater than the short-term impact.” (The Case for Long-Term Advertising: Admap February 2014)

These data serve as a reminder of a topic we have debated for years. Almost 25 years ago, in 1990 Gordon Brown Gordon Brown, co-founder of Millward Brown, said at the seventh annual ARF Copy Research Workshop: “I am very concerned that current trends in measuring the impact of advertising on sales are clearly biased towards short-term effects. But isn't the main value of advertising to change the long-term trends of a brand? (Copy Testing Ads for Brand Building)

We have returned to this topic many times over the years. As I said Andy Farr(Andy Farr) of Millward Brown in 1996, “given extensive shopping scanning data, it is reasonable to expect that we can easily identify the short-term impact of advertising on sales for most consumer products. The problem is that this approach will most likely only demonstrate the inability of most commercials to justify themselves in terms of short-term payback. However, our own experience...shows that advertising has a long-term impact on a brand...Marketers need proof that today's advertising investments will pay off in the long term." (Advertising and Brand Equity: Admap April 1996)

At the 1998 Admap Conference on Advertising Effectiveness, a speaker from Millward Brown voiced the thesis that “most commercials created in the last 15 years did not generate enough profit to pay for themselves in the short term.” (Justifying the Advertising Budget).

Like Bynet and Field, we recognized that the short-term and long-term effects of advertising differ. In 1997 Nigel Hollis, global analyst Millward Brown wrote in a report for the Canadian Advertising Research Foundation: “Some commercials can be extremely persuasive in generating significant short-term sales impact, while others can act as brand boosters, helping it can grow on the natural switching of consumers that occurs over time in any category. Some particularly effective videos I can do both.” (Looking to the Future: the Search for Long-Term Advertising)

Over the years, we have identified several parameters that relate to short-term and long-term impact on sales. In 2007 Dominic Twose(Dominic Twose) and Dale Smith(Dale Smith) of Millward Brown commented on the short-term effect: “How effectively can ad research predict sales” (Admap, 2007): “There is a significant correlation between advertising effectiveness measured by such parameters such as ad awareness and persuasiveness, and the ad's ability to generate sales... It is important to note that the Predictive Awareness Index and Persuasion measures different aspects and there is no relationship between the two." The article also showed the relationship between long-term impact on sales and the Awareness Index.

However, while the long-term impact on sales is important, predicting it with high accuracy is difficult because the magnitude of the long-term impact can depend on many factors. As Clary and Dyson, already quoted above, write, “the ratio of DS/KS factors (long-term/short-term) depends on a number of parameters - brand size, category, level of competition in the market, purchasing cycle, media channels, creativity of the advertising message, as well as seasonality factor products. In particular, products with longer purchasing cycles tend to show higher LT (long-term effects), while seasonal products tend to have short-term effects (SS). After all, it has less opportunity to form a habit of use until the moment these products are “out of season”... Brands with a significant market share are also more likely to show a higher DS/KS ratio.”

Significance, Distinctiveness, Visibility

So we came to the conclusion that the best way to understand these complexities is to measure brand equity. In 1996, Millward Brown launched a method for measuring this indicator - BrandDynamics™, which has become widely known. Later, based on an extensive database (over 100 thousand brand reports), we developed the Meaningfully Different Framework, which can quantify brand equity more accurately and comprehensively than before. It builds on the Millward Brown BrandDynamics database, which shows that the most successful brands tend to have the following common qualities:

1. Significance. Shows how brands are able to build an emotional connection, and are perceived by consumers as able to meet their functional needs.

2. Distinctiveness . Shows how brands differentiate themselves from other brands in their category by offering something (tangible or intangible) that others don't have, and act as first movers.

3. Visibility : How quickly and easily brands come to mind.

These three qualities (in some combination) are present in those brands that have the highest sales, can command the highest price premiums, and generate the most share price growth over the next year.

Average indices of the share of sales, prices and share price growth (%)

We spent a lot of time and research to develop questions for our Link™ ad testing tool, which identifies both functional and emotional elements to better assess a commercial's likely impact on long-term brand equity across these dimensions. Together they create the basis for " Power Contribution" (advertising's contribution to brand strength), our measure of the likely long-term impact of advertising.

Incorporating long-term assessment parameters into the Link methodology

After several months of collecting data on these measures, we began to examine their validity. Initially, it was important to ensure that the Power Contribution measure measured something different than the existing short-term sales likelihood tool. Short-Term Sales Likelihood(STSL), which refers to short-term sales performance. The spread of data shown below looked encouraging. A relationship was noted between these two indicators, which seemed logical. As Bynet and Field said, if there is no short-term sales dynamics, then one should not expect a long-term effect. On the other hand, the chart shows that even strong STSL performance does not guarantee a long-term effect. This is also logical because (as Twose and Smith showed) the proportionality of short-term sales effects is determined by the persuasiveness of the advertisement, and the persuasiveness of the advertisement is strongly influenced by the novelty of the information in the advertising message (and news gets old very quickly).

Parameter of the probability of growth of short-term sales Short-Term Sales Likelihood (STSL)(based on 2855 videos of global advertising campaigns R 2 = 0.75)