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To Advertise Or Not To Advertise

Some brands are so universal that it raises the question of whether they even need to spend on advertising. Many people claim that they are not influenced by ads at all and, once brand loyalty is established, it’s a tricky task to get consumers to change their behaviour.

The difficulty in understanding the impact of turning advertising off is that few studies have been conducted; those in the industry are more focused on the effectiveness of their media. In the past, some studies have been conducted looking at pausing TV advertising, with findings suggesting a 50/50 chance of sales decline, but the majority of these focused on established brands.

The Ehrenberg-Bass Institute for Marketing Science has now released a report examining brand sales once advertising is halted. The study looked at the media spend and sales of 70 brands in the Australian consumer goods category over 20 years. Of these, 57 cut media for a year or longer. The initial results showed that stopping advertising for one year led to a 16% sales drop; two years saw a 25% drop and three years a 36% drop.

However, within these averages there is significant variation. Therefore, the study split the brands into small (<250k units), medium (250k-1m units) and large (1m+ units). Given that the larger brands will have greater mental and physical availability, we would expect them to be more resilient once advertising stopped. Indeed, the study found that big brands were fairly stable after a 2-year advertising pause. Medium and small brands both saw a more marked decline in sales.

The data also differed depending on the brand’s stability. Stable brands saw a substantial decline after 2 years with no advertising. Brands that were growing had very different results depending on their size. Big and medium brands continued to grow for 1-2 years, whereas small brands immediately stopped growing and then declined. Unsurprisingly, brands that were already declining dropped off at a faster rate once they stopped advertising.

The evidence shows us that while brands might be tempted to pull advertising, it’s highly likely to have a negative impact on their sales. Mental availability falls if the consumer isn’t exposed to the brand, making them more likely to be swayed by a competitor’s advertising. This is particularly important when we consider that most of any customer base is made up of light buyers. Without these customers, brand growth is impossible. Even large brands will be sacrificing sales growth if they pull their ads.

While some may consider advertising to be a nice “add on”, this study proves it to be an integral part of a brand’s success.