How Advertising Works, and Why You Should Care

How Advertising Works, and Why You Should Care

How Advertising Works, and Why You Should Care

“Perhaps the most enduring challenge for those involved in the advertising industry is to explain how it actually works…” (Reed and Ewing, 2002)

“How quickly come the reasons for approving what we like!” (Jane Austen, in Ambler, 2000)

Author Note:

This white paper is a bit long and rather detailed. But sometimes reality is complicated. The thesis will challenge commonly held beliefs with regards to marketing today, in particular the desire for an ironclad ROI calculation. Reality does not always comply with our business imperatives, and to pretend otherwise is potentially disastrous.


I watch quite a bit of English Premier League soccer (though I never played the game myself) which is how I learned what “stoppage time” is– the ref will add some time to the clock at the end of the first half and again at the end of the game to make up for time lost to injuries, substitutions and other delays to the game. This is how I discovered that Progressive Insurance often pays to sponsor the stoppage time, with an eminently British announcer stating something like “The Progressive Insurance stoppage time is three minutes.” Like all marketing professionals, I have tried (without success) to calculate the ROI on that ad. It must be pretty high, though, because recently GEICO began advertising during the second half of the games. And since there are no commercials in Premier League Soccer, the GEICO ad amounts to a small banner display ad next to the score on the upper left corner of the television screen. Can’t even click on it.

Given that a team like Manchester United is the third most valuable sports franchise on the planet, it must certainly cost a fortune to advertise in that spot, and it seems like an awful lot of money to spend when Progressive has no idea what the return is on their investment. Maybe they have a “shrug” emoji they enter into Excel when running the numbers. Not all companies have the same financial resources as Progressive, of course, but even the largest companies are reluctant to waste money. So how do they know this is making a difference in the minds of consumers? And what should the takeaway (and action plan) be for small businesses? To answer the question we need to start with a topic that is strangely absent from marketing blogs and discussion groups – how marketing communication and advertising actually works.

How marketing communication works

The honest answer to how ads work is – it’s complicated. And it depends. That’s not a dodge, it’s actually a remarkably significant (and honest) statement. After over 100 years of research, it appears the academic world has settled on a few schools of thought, with the implicit recognition that no one model seems to fit in all circumstances. Indeed, in a 2016 article, a marketing professor with over 50 years of research and marketing experience noted “This lack of understanding regarding what causes the activation of advertising has resulted in the oft-repeated quote ‘I know half my advertising spending is wasted, I just don’t know which half’ – which is as accurate today as it was a half-century ago when it is said to have been coined” (Schultz 2016, emphasis added). The fact that CEOs and even some CMOs don’t want to hear this is, unfortunately, not evidence against it. So if our knowledge isn’t perfect, what do we know?

Reach and frequency – the basis (still) of marketing

We have to start with a look at the human brain, which we know but don’t often point out, is where brands live. There are several theories about how our brains work with respect to advertising, but research typically focus in three aspects – memory, affect (which means “liking” or having positive feelings toward something) and cognition, or conscious thinking and information processing.

“To understand from a neuroscience perspective what advertising does for brands, we need to consider three brain functions at three times. Memory, affect, and cognition…may be involved in (a) processing the original ad, then in (b) how it is stored and finally (c) when the consumer makes brand choices.” (Ambler, 2000)

There are three main schools of thought with respect to how advertising works, and all three acknowledge the impact of the three components, but to different degree and with different emphases.

One of the earliest theories of advertising is still widely taught and believed today, despite the fact that most recent research finds limited support for it in typical purchase situations.  The sales mantra of AIDA (attention, interest, desire, action) was applied to marketing in the 1890s and is based largely on cognition. It’s the one you’ll most likely find in a marketing text, but as more recent research has shown, it is also the least likely to represent reality in most purchase situations.

The second school of thought focuses primarily on experience and memory and the associations between memory nodes, and is often associated with the Ehrenberg-Bass school of thought and the excellent book “How Brands Grow” (Sharp, 2010).

Lastly, the third focuses more attention on the interplay of memory and affect, and the power of emotion in purchasing decisions. What’s interesting is that the latter two theories have the most empirical support, and both emphasize memory as the critical component. Recent research in neuroscience (including EEG and fMRI studies) emphasize affect and the role of emotion in decisions. Cognition, the idea of the “rational economic actor” receiving and assessing differentiating marketing messages and often thought to be the foundation of marketing, is relegated to second (or third) class status.

Involvement and relevance

A couple other concepts need to be addressed before digging into the brain. The first is the idea of involvement. Involvement is “…the degree of personal importance ascribed to a product or situation by an individual including the perceived risk involved in the purchase decision.” (Reed and Ewing, 2002) We are wired to make the best decision with the least amount of cognitive effort, so much so that we are quite often in the words of Dan Ariely “predictably irrational.” We are “satisficers” by nature, meaning we want to achieve a minimum level of satisfaction, but typically do not want to invest the time and energy to weigh all of our options in great detail, unless the decision is of significant importance. So we stop searching once we come to the option that meets that threshold of utility. Readers of Daniel Kahneman’s Thinking Fast and Slow will recognize the System 1 side of the brain that makes quick (and sometimes irrational) decisions based on the desire to limit active cognitive processing.

But there are cases where we are more likely stop and weigh our options more carefully, because there is significant risk (expense, hassle, social status), or there are other individuals that are participating in the decision, or you will have to justify your decision to a superior.

This is the basis of “involvement” and it varies for an individual relative to the decisions that need to be made. You might try a new brand of coffee without much thought, but when it’s time to buy a new car you may take more time to ensure your investment makes sense or your social status is not adversely impacted. The Ehrenberg school of thought (discussed below) is a bit more dismissive of the idea of involvement, suggesting that memory and experience (through product trial) are dominant in all purchase decisions, including what would be termed high-involvement.

But most research indicates that evaluating involvement is a critical but often overlooked step in developing marketing programs – you need to ascertain as best as possible the level of involvement your products or services require on the part of your customers. What marketing communication tactics you employ and how you implement them depends to a great extent on the involvement demanded of your customers. We’ll return to this idea later.

The second concept is familiar to all marketers, relevance. What is perhaps most interesting in this regard is the lack of data on relevance and how advertising works. The relevance of products or services at the time of ad exposure appears to impact the likelihood of the brain processing and storing the memory (Page, 2007). In the case of direct response it is, of course, a key factor in purchase decisions since the purchase is directly tied to ad exposure. But since most advertising and marketing communications work at some point in the future, relevance can be difficult to assess at the time of exposure. If you’re 15, an ad for heart medication will not likely be processed in the same way as an ad for the latest iPhone. But even ads that are not relevant to some demographics are often stored and retrieved by those demographics (my 10 year old knows jingles for ads that are in no way relevant to her). Ultimately, ads for car insurance will still be processed despite the fact that at the moment you’re not in the market for insurance, but may be 6 months from now. So the goal is to always be relevant, but the risk is that in an effort to specifically target a currently relevant market you narrow your scope too much and over-segment. (Romaniuk and Sharp, 2017). That it’s possible to be too specific with targeting is a subject of some controversy, one we’ll return to below.

AIDA and Cognition

Sometimes referred to as “persuasion theories” that follow a “Learn, Feel, Do” process, these theories collectively suggest that the first step in ad processing is cognitive in nature. There are a quite a few theories that focus primarily on cognition, and a comprehensive description of all is beyond the scope of this paper. But they all share the key idea that ads impact individuals through some form of cognitive processing. Note that “cognitive” here does not refer to simple exposure and storage of a memory. Don’t confuse “storing a memory” with cognitive processing – cognition is more active thinking, consciously processing data and/or comparing alternatives. The various theories associated with persuasion differ as to the nature and extent of cognitive processing, with some providing for either high level cognitive processing under high involvement situations, or more heuristic processing which involves the use of “deductions or rules of thumb derived from previous experiences.” (Ambler 2000)

For example, the Elaboration Likelihood Model (ELM) suggests that individual will receive a communication and process it in one of two ways. The Central route suggests high motivation on the part of the receiver, high involvement, and conscious attention paid to information in the communication. The Peripheral route suggests that the information is processed with the use of guidelines or rules of thumb. That we are able to quickly and accurately categorize previously unknown objects or stimuli is really an amazing feat of processing. The idea is that any communication processed through the central route is more likely to have strong memory associations on the part of the receiver, and will be more impactful at the time of purchase decisions. What’s interesting in the cognitive models is the acknowledgement that some processing is “less cognitive” in nature and begins to look a lot like some combination of affect and memory (discussed below).

Memory-based theories

A key objection to cognitive models is that a great deal of research suggests that the human brain doesn’t work like the computer it’s made out to be, and that we are far less likely to engage in as much cognitive processing than supposed. Exposure builds and reinforces memory and associations, and this is why some brands come to mind when we are faced with a need.

“A stark empirical fact is that we know more about the brands we buy, and we buy the brands we know more about. We rarely buy brands we don’t know and rarely think about brands we don’t buy.” (Romaniuk and Sharp, 2016).  This sums up what’s sometimes referred to as the Ehrenberg-Bass school of thought (sometimes called the “weak” theory) which emphasizes memory over affect and cognition, and notes that quite often advertising reinforces behavior (e.g. product trial), not the other way around. The net result for marketing practitioners is to emphasize the “mental and physical availability” for products and services, building brand associations in consumers’ minds through promotional activities. It’s marketing at its most basic – get your product in front of category buyers, connect it to a need and make sure they can get it easily. Since we “buy the brands we know” the key issue is “cued retrieval” which means we want our offerings associated with as many purchasing cues as possible (“category entry points” in their terminology).

What’s so fascinating about this approach is the substantial empirical research that backs it up. If you think brands are important to sales then you think memory is important to sales, i.e. you recognize the importance of creating and refreshing memory in regards to the creation of a consideration set. And of course, brands exist only in memory. And if memory is important to sales, then things impacting memory (both creating and reinforcing) are crucial for sales. And we know that ads and other marketing communications impact long term memory (if they didn’t you could never build a brand!), so what counts is clearly things that build and reinforce memory.

Some critics point to recall studies that show weak recall of ads, but what people don’t often realize is that memory is actually quite stable. When over 600 colored pictures were shown to test subjects they could recognize 97 percent afterwards. And after 120 days they still got 58 percent correct. (Bagozzi and Silk, 1983). What can be tricky is that there are two types of recall that researchers have looked at, along with what is termed “recognition.” Recall can be either 1) the ability to recall, without any aid, something you saw recently, e.g. “tell me what ads you saw during our test period.” And 2) it can also be aided with cues, e.g. “tell me what ads you saw about car insurance in our test period.” Lastly, recognition is where the actual ad (or whatever it is they are testing) is shown and the respondent tells whether or not they saw it e.g. “here’s a set of ten ads, tell me which of these you saw during our test period.” And it’s this last one aspect of memory that is both most stable and most important for our purposes. We know that ad impressions and associations are retrieved from long term memory and refreshed when a similar ad (e.g. from the same company) is seen.

“…advertising, direct response apart, only works if it changes long term memory. Where the interval between seeing the ad and any behavioral outcome, such as purchasing, are more than six hours apart, the outcome is beyond the bounds of short term memory. Accordingly, if the ad did not change long term memory, it would have no effect at all.” (Ambler, 2000)

This validates the importance of maintaining a core message and similar brand visuals for each ad, and also maintaining sufficiently high levels of frequency. Frequent retrieval and refreshing of memory associations (i.e. recognition) builds familiarity, and familiarity builds trust. And trust, as studies have shown over and over, is an essential element of a purchase decision.

Affect and emotion

“Far too many marketers have ignored the elephant in the room – the role of unconscious decision making – despite the continually amassing evidence of its importance.” (Van Praet, 2012)

One of the most important developments in the last 10-15 years has been the increased use of neuroscience in marketing research. The findings all point to one primary conclusion – we tend to be more receptive to emotional communications, and are far more emotional in our decision making processes than we’d probably like to believe. “The neuroscientist Damasio hypothesizes that all human decision making is rooted in emotion, even though we like to believe that we are ‘rational’ human beings.” (Feldwick,  2016). Furthermore, the argument suggests that mere storage and recall of ads, even if subconscious, are not effective if they are not imbued with some kind of emotional element that helps to evaluate and “rate” the brand.

What’s of particular interest is that proponents of the “affect school” suggest that it has impact even in situations of high involvement. For example, the rule of thumb that makes us believe that “expensive” means “high quality” is not a result of deep cognitive assessment, and yet it’s likely to be applied to products that could be considered high involvement. Indeed, research in the UK “…found that campaigns with primarily emotional content performed about twice as well as the approaches that focused on rational content. Emotion moves people to buy.” (Van Praet, 2012)  Ultimately this is the point – “Marketing’s goal is to generate strong positive associations.” (PlayDevilsAdvocate Blog, 2017)

Even in situations where cognition comes into play, marketing and the associations it creates have built our set of alternatives, our consideration set. And this set is, in all likelihood, not based primarily on cognitive processing. “[This] does not suggest that thinking plays no role, only that it is subsidiary to and less frequent than memory and affect.” (Ambler, 2000) At a minimum it strongly suggests what factors you should be considering in your evaluation, it influences what values to prioritize. Thus “…whatever can be easily recalled must be more important than information that is less easily recalled and people tend to weigh judgements towards this more available information.” (PlayDevilsAdvocate Blog, 2017)

And it’s not just conscious emotional appeals, we are influenced in subconscious ways as well. “The idea that advertising influences us subconsciously has caused alarm – the classic fear of the ‘Hidden Persuaders.’ But today, evidence from psychology and neuroscience that shows this is how much of advertising works is overwhelming.” (Feldwick, 2016) It appears that critical brand associations can “…pass into long term memory without conscious learning taking place…” and these associations are acquired via “low attention processing.” And the ease and speed with which we create these associations is quite remarkable. Among all our various cognitive feats “…this ability to automatically associate and categorize a seemingly infinite number of items, which even young children can do, may be the most remarkable.” (PlayDevilsAdvocate Blog, 2017)

The implications are significant, not just for advertising, but for customer research as well. “If consumers are making their decisions unconsciously, why do we persist in asking them directly through market research why they do what they do?” (Van Praet, 2012)

Most of us are familiar with the Pepsi challenge, where even loyal Coke drinkers select Pepsi in a blind taste test. What’s interesting is that Coke drinkers will point to a logical and rational reason for why they prefer Coke – it tastes better. Yet when tasting blind they tend to go with Pepsi. The point, of course, is that people are buying Coke not for logical reasons like taste, but because they have some emotional attachment or association with the brand. But the issue with consumer research is that people want to believe that they are rational people, and don’t want to acknowledge things like emotion or the effects of advertising on their purchase behavior. So to resolve the cognitive dissonance, they come up with a cognition-based reason for their preference – they say it’s the taste when the taste tests tell us otherwise. The danger, of course, is this is true when you are doing your customer research and your respondents might very well behave the same way.

Putting it together

Perhaps one of the reasons marketing professional don’t dig into the details of how ads work is simply because it’s complicated and difficult to pin down solid truths. But there are some basic facts in play that we as marketers can work with. Despite the protestations of the “memory and experience only” school we have to recognize that emotion appears to be a significant player in the reception, storage and retrieval of ad messages, as well as purchase decisions. Furthermore “…neuroscience tells us [that] memory, affect and cognition are simultaneous and interactive” but “[m]ost of the conscious choices that make us pause are dominated by affect.” (Ambler 2000)

We also know that when (or whether) cognition comes into play will depend on circumstances – the level of motivation and involvement, and possibly when the decision is in a B2B environment where other people will be contributing or validating decisions. Ambler (2000) came up with a model that incorporates all three elements and considers their interplay. The MAC model suggests that memory (M) dominates affect (A) which in turn dominates cognition (C). He further notes that some ad impacts and decision are a combination of elements, for example MA would be a combination of memory and affect (and I would suggest this is likely the dominant combination for advertising impact and decision processes). More recent neuroscience research would probably place more weight on affect, but the basic premise of MAC suggests that with memory dominant, routine decisions happen without wasting mental energy. This is broadly supported in marketing, psychology and behavioral economics research. And indeed simple display ads like logos in a sports stadium are likely nothing more than reminders, intended to ping long term memory and refresh it. And affect, as we know, improves retention and recall in memory, with cognition coming into play with certain high involvement decisions, but less frequently than any of us would like to believe.

What’s a marketer to do?

The first step is to acknowledge the primacy of strategy. There’s a “bias towards action” in business today that creates the sense that taking time to think is automatically akin to paralysis. There are variables that the foregoing analysis identifies that can and should be assessed relative to your product market and customer base.

First, assess level of customer involvement in purchase decisions. Are customers likely weighing purchase decisions of your products based on cognitive processes? Are you selling enterprise level software systems, or shoes?

Second, assess substitutability of your product or service. This is tough for most businesses, because we all like to think we are unique and irreplaceable. If your business vanished tomorrow, would your customers easily move on to another supplier? If Home Depot vanished, could I head to Lowes without missing a beat? (Answer: Yes.)

Third, make an honest assessment of your value proposition. This may significantly overlap substitutability, although a value prop can include elements not directly incorporated in products or service, e.g. company terms and conditions, warranty or guarantees, brand awareness in specific product market area, etc). Are you truly different or are you a “me too” company?

Fourth, are your customers repeat purchasers or one-time purchasers? Being dependent on repeat purchases means purchasing is likely dominated by experience and memory (and habit), not cognition. “Where the purchase decision is habitual, only [memory] will be engaged, and that will be bringing the long-term memory of the brand, product, advertising and usage into short-term memory processing with the choice to be made.” (Ambler 2000)

Low involvement, easily substitutable good where you have no true competitive advantage requires huge amounts of affect-intensive marketing communication. Think consumer packaged goods.  “Because low involvement consumers do not engage in elaborate information processing, advertising messages in such situations should emphasize peripheral, affective cues (celebrity endorsers, execution elements, and so forth) rather than factual product information.” (Vakaratsas and Ambler, 1999).

Even slightly higher involvement but easily substitutable (e.g. car insurance) will still be better off with affect (think Flo from Progressive, or various humor-centric adds from Geico). Even Farmer’s Insurance (who just recently started running banner ads on Premier League Soccer!) is going the route of funny. Insurance, though a seemingly serious topic with significant financial ramifications evidently depends on humor rather than careful (i.e. cognitive) consideration.

High involvement goods still need affect, because even in B2B situations the distance between ad exposure and purchase are likely to be significant. Affect increases strength of the associations in memory, making them more likely to be recalled at the appropriate time. But because there are other people involved in the decision and the individuals exposed to the ads are likely to be highly motivated, cognitive aspects are appropriate (although they may be used to rationalize pre-existing beliefs). In other words, “they will be “seeking ‘rational evidence’ to guide or support their existing inclinations…” (Hollis, 2014).

If you truly have a competitive advantage, incorporating that advantage into ads is reasonable, but don’t lose sight of affect. Otherwise, emphasize “distinctive assets” (Romaniuk and Sharp, 2017), brand assets like logos, slogans, etc. to derive what has been termed a “meaningless distinction” (Flo for Progressive, “We are Farmer’s, bum bah dum, bah bum bum bum”). Though you may have nothing that truly you sets you apart from the completion (and businesses are loath to admit this), you still need to generate awareness, create positive affect in customer minds, and build critical associations in customer minds so your brand is retrieved from memory at the appropriate time.

Why you should care

The key issue is that the increasing sophistication in digital marketing and its superiority in measurement have created a marketing mindset that is potentially harmful to long term brand sales. In the process of developing our marketing plans we set up goals and objectives, but without understanding how advertising works we can easily end up with the wrong KPIs, and ultimately evaluate programs based on the wrong criteria.

There’s nothing in marketing communications research that emphasizes direct response as the primary pathway for sales; in fact, it likely accounts for about 20% or so of communication. What this points to is the importance of building mental associations in the minds of consumers over the long term. “Because of [advertising’s] repeated ‘nudging’ effect, advertising achieves its best results on market share when it maintains a continuous presence and a sufficient weight relative to competition.” (Feldwick, 2016). This suggests a long term commitment, as well as persistent and consistent marketing communication.

So there’s this drunk guy in the gutter under a lamp post…

It’s late at night and there’s a drunk guy fumbling around in the gutter under a lamp post. A police car slowly pulls up and the cop approaches the man. “Everything Ok here?” the cop asks. “Yesh,” the drunk guy says, “I’m jus’ lookin’ for my car keys.” The cop looks across the street and in the shadows sees a parked car. “You dropped your keys right here?” the cop asks. “No” says the drunk guy, “I dropped them over by my car.” “So where are you looking over here?” says the cop, puzzled. The drunk guy stops, points up at the street light and says “Because the light is better over here.”

What this parable lacks as a joke (which is considerable) it more than makes up for in marketing insight. The result is an all-too-common pitfall, namely the temptation to avoid marketing tactics that are hard to measure and encourages us to look only “where the light is better.” This is due in part to our inability to incorporate years of solid marketing, psychological and neuroscience research into our marketing discussions. For example, we know that the marketing principle of frequency is based on the mere exposure effect, one of the most well-known cognitive biases (and one relentlessly exploited by politicians). Regardless of the message content, repeated exposure leads to familiarity, and to belief, which leads to higher levels of trust and lower levels of risk…and trust is typically a key element in making a sale. And yet in most applications we are unable to put a solid ROI number on the marketing effect of these exposures, leaving us in the difficult position of trying to defend what we cannot be certain of.

And so in a desperate bid to avoid the obviously uncomfortable idea that we can’t adequately measure ROI for all our marketing activities, we typically do a couple things. First, we alter the conversion metric to something we can measure, whether or not we can ultimately tie it revenue (i.e. downloads or retweets become a proxy for revenue). In the language of cognitive bias, when we are faced with a difficult and complex cognitive challenge we choose to put it aside and “answer an easier question” (Kahneman, 2011).

Second, we often exclude those marketing tactics that are hard to measure from our analysis. We’ll report out on clicks, but leave other less tangible efforts out of the analysis.

Third, and worst of all, we decide to only engage in marketing tactics that we can directly measure, and ignore the critical elements of brand marketing. In this case we might have a better idea of ROI, but because we have whittled down our marketing tactics to only those that are measureable, we are without question “under-marketing” and without a doubt leaving money on the table. Worse, by missing touchpoints with our customers and potential customers we may be potentially harming the long term viability of the brand.

As the somewhat exhaustive (and no doubt exhausting) research above shows, we have a pretty good idea of how advertising works – but pointing to a specific campaign, even a purely digital campaign, and providing a relevant ROI is extremely difficult. Research from Teradata suggests that online purchases “…are preceded by five to ten different brand interactions” (Lineate Whitepaper, 2018).  In the language of the drunk guy parable, there’s just no getting around the fact that the keys are over by the car.

I should hasten to add, that this is not to suggest that we should throw up our hands and not make every effort to measure the impact of marketing programs. Rather it is to note that some worthwhile tactics or programs may require different criteria or proxies, or, at the very least, the confidence that comes from understanding how marketing and advertising really works. So while the fast food company that put an image of a burger on the side of the bus or included a printed flyer in weekly mail circulars may not know the exact ROI of that ad placement, they can at least feel confident that the decision was based on solid marketing principles (and that it absolutely worked on me).

Direct response “lite”

The desire to measure marketing efforts is also leading towards efforts to target consumers near the point of purchase (i.e. closer to direct response), because purchase intent is high and proximity to purchase enhances efforts at attribution. The effect of this, however, is “likely to reach people already predisposed to buy the brand…and targeting people with a high propensity to purchase ‘has a tendency of emptying the pool of people in a market without refilling it.’” (Hollis, 2014)  In other words, you seal the deal with a smaller number of purchasers who were possibly going to make the purchase anyway, but you run the risk of failing to build mental availability with a vast pool of future potential purchasers. Nobody likes to see an abandoned shopping cart, but “…while short-term ‘sales activation’ is both effective and necessary, only repetitive brand advertising has long–term, cumulative effects on the competitive strength of the brand.” (Feldwick, 2016) “Successful advertising rarely succeeds through arguments or calls to action. Instead, it creates positive memories and feelings that influence our behavior over time to encourage us to buy something at a later date.” (Hollis, 2011). In addition, Romaniuk and Sharp (2016) make a compelling argument that brands grow through penetration – adding to the existing customer base. Focusing on direct response lite, which emphasizes targeting near the point of purchase, potentially limits future growth by failing to “refill the pool” and build the next batch of customers. It is far better to tackle the attribution issue head on than to use purchase proximity as a crutch.

The ever-present attribution problem

In 2013 researchers at Google and Microsoft authored an incredibly detailed research paper titled “On the Near Impossibility of Measuring the Returns to Advertising.” The title pretty much sums it up, but the essence is this:

“Statistical evidence from the randomized trials is very weak because individual-level sales are incredibly volatile relative to the per-capita cost of the campaign – a ‘small’ impact on a noisy dependent variable can generate positive returns. A concise statistical argument shows that the required sample size for an experiment to generate sufficiently informative confidence intervals is typically in excess of ten million person-weeks. (Lewis and Rao, 2013)

This only serves to increase our desire to measure the cost and revenue impact of every marketing lever we have available, and as a result are moving us towards digital direct response as the arbiter of ROI. But even pure ecommerce plays are likely understating the impact of ads and offline marketing since they are still unsure if it was the billboard on the side of the bus, or the logo on the soccer player’s uniform that first piqued the interest (and may have led to the click in an email). I may download a coupon for Jack in the Box, but it happened because I saw, over the course of several weeks, an ad on the side of a bus.  So even if you have a good measure for the ratio of white paper downloads-to-revenue, you still have the issue of determining what precisely led to the download in the first place.

Printed Mailer

Digital Ad

For example, Hootsuite sent me an email recently and I downloaded their ROI ebook, and they required that I fill out the contact form with name, company, etc. Was this a conversion? Sure. But what prompted me to sign up initially? Not the email, not the ebook, but word of mouth – and the fact that they had worked their way into my consideration set as a well-known name in social media management. The irony is that they may have attributed my conversion to their email and social marketing efforts (ROI!), but it’s actually the long and indescribably hard-to-measure marketing process that did it. In other words, what worked was all those intangible and hard to measure marketing efforts that they undertook to build awareness and brand salience, never knowing if they would directly pay off. My propensity to click on a banner ad had been created offline long before the email came.


The purpose here isn’t to dismiss efforts at measurement or ROI calculations. It’s simply to point out that our fear of ROI uncertainty may be pushing us towards tactics that we believe are more concrete in terms of success metrics. The danger is that these tactics alone may in themselves be insufficient to build and maintain brands. Forbes notes that the almost 70% of CMOs are removed from their position in less than four years. Is it possible that CMOs are faced with a no-win situation? Where boards pressure them towards the quantifiable, but the quantifiable is not sufficient to ensure topline sales success? Sometimes we need to lean on our understanding of how marketing and advertising work in order to feel confident that we are doing everything possible for our customers and our brands.


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