How Effective Is Advertising? Marketers' Own Doubts

Introduction: The Enduring Question of Advertising Efficacy

How effective is advertising, in general? Almost everyone involved across a wide variety of industries that deploys mass-market advertising "complains about the inability to determine the return on investment from advertising spending" (Elliott, 2005). Yet almost "no one seems satisfied" with how advertising's outreach and influence upon actual consumer purchasing is measured. At least, research is now being conducted into the area of advertising impact and accountability as seen through the eyes of marketers and advertisers themselves. So-called advertising accountability has become a hot topic, as senior marketing analysts "are increasingly intent on figuring out what they are doing right — and wrong — as the cost of peddling goods and services climbs each year, along with the difficulty of reaching potential customers" (Elliott, 2005).

In other words, the question of advertising efficacy is not only an old one; it is also one that individuals in the marketing and advertising industries are increasingly pressed to answer with greater decisiveness and accountable data. This urgency is driven by the multiplicity of advertising channels now open to marketers, the greater need for market segmentation given the wider availability of products to consumers, and the narrowing chance of reaching consumers in a point-and-click, remote-control society where attention spans seem to be growing ever shorter and the expenses of directed advertising campaigns are growing ever longer.

The Forrester Research Survey: Methodology and Respondents

A survey of marketers conducted by Marketing Management Analytics of Forrester Research made an interesting contribution to the study of advertising efficacy in a cross-industry fashion. Rather than targeting consumers, Forrester Research attempted to explore the mood and thinking of marketers themselves, examining how they viewed their own experiences and research into advertising accountability and outreach. Of the surveyed marketers, 61.5 percent of phone-based survey respondents said it was important for their marketing companies to define, measure, and take concrete steps in the area of advertising accountability. The marketers did not endorse an anything-goes mentality regarding accountability; however, only 19 percent of respondents said they were satisfied with their ability to take those steps to ensure that their work was effective, reached targeted consumers, and achieved the needs of corporate clients (Forrester Research Website, 2005, cited in Elliott, 2005).

Key Findings: Confidence Gaps and Accountability Deficits

According to Forrester, 73 percent of the survey's respondents said they lacked confidence that they understood the effects an advertising or marketing campaign could have on sales. When asked whether they agreed with the statement "I would be able to forecast the impact on sales" of a 10 percent cut in marketing spending, 63 percent said no — they could not be certain that spending less on media would automatically translate into a similar decline in revenue for the client over the short or long term (Elliott, 2005).

In other words, respondents felt in a general sense that they understood how advertising and marketing campaigns worked and what impact those campaigns could have. However, in concrete numerical terms they could offer no guarantees, by and large, that the campaigns would achieve the desired results — that is, that the campaigns would attract new customers. The advertising might be catchy, interesting, or cutting-edge, but in terms of what most clients care about — making more money for their company — the results remained uncertain, even in the minds of industry professionals. Worse yet, from the point of view of the marketing industry, cutting spending did not seem to automatically translate into lower revenue.

Conclusion: What the Uncertainty Means for Corporate Decision-Makers

The results of this study force all individuals in the world of commerce to exercise some soul-searching about how they use marketing and advertising and direct their techniques through a variety of venues. While very few industries have the luxury of being advertising-free, and no industry can perfectly predict how any given marketing campaign may or may not affect the desired consumer base, the current state of uncertainty and lack of optimism among marketers is a sobering reminder. Corporate decision-makers may need to place greater reliance on their own informed instincts about what they know of their consumers, rather than trusting entirely those purportedly "in the know" about consumer behavior in such an unstable merchandising environment as exists today.