Since we are business school professors, one of the things we do is read and review academic research on business topics. Specifically, Kim is an associate editor for the Journal of Advertising Research. Of course, this journal focuses on what makes advertising effective. And the bulk of academic research is on TV advertising which might be beyond the reach of most startups. Kim also gets to vote on the “best” article of the year. So we thought we might review the best articles from 2019 and give you the highlights that are relevant to startup advertising. Here are top four facts about advertising we learned last year:
Digital videos as an advertising tool have a strong impact. This is great news because relatively cheap-to-produce video ads are both effective and efficient. But there’s bad news too – you can saturate them very quickly so their effectiveness wears off very quickly. So get the videos out there, but plan to refresh them often and do not overspend on them.
Context matters for ad effectiveness. You may or may not know that this is a hotly debated topic – does it matter where the ad is seen? Some argue that placement anywhere with a reasonable amount of reach (think # of eyeballs that see it) is good. Others argue that the ad should be congruent with where it is seen. After analyzing every study that has been published looking at context, the answer is: Context matters[1]. People remember ads better when they appear on programs they like, that are congruent with the point of the ad, and when they are highly involved in the context. That means it is worth paying to be seen in the places where your target audience spends time and is highly engaged. So think clearly about what those media are – they might not be TV per se but, social media, podcasts, YouTube, other websites, etc. You have to get your message in the places your target is actively learning about your category. One word of caution – programs that are violent, sexual, suspenseful, and humorous are so engaging that they reduce ad memory.
Generating Word-of-Mouth (WOM) is an important outcome of advertising.You probably think, but might not have ever said, “Generating WOM is very important in the advertising process.” Academic researchers have already shown that eWOM (electronic WOM) has the highest elasticity among advertising forms. Pardon us for using an academic term – “elasticity.” An elasticity simply says how much of a return you get for a 1-unit increase in a factor. In advertising, we want positive elasticities. If I spend $1 more, I want to sell more not less. Price, on the other hand, has a negative elasticity – the more things cost, the less they sell, and as price goes up, sales volume tends to go down. Okay, back to WOM. Among all forms of advertising, eWOM has the highest elasticity – you get the biggest bang back for it. These researchers found that actually all WOM is good whether it is online or offline. And they found that about 25% of an ad’s impact was in generating WOM. So, the goal of your ads should really be to get people talking about you and the ad. Sadly, they did not tackle what factors lead to better generation of WOM. So you’ll have to figure this out on your own, or keep reading…
Facebook WOM behaviors are higher if brand posts use: 1) multimedia content, 2) brand names, 3) a #hashtag, 4) subjective words, and 5) social words. Hold on now, I bet most of you already thought these were must-haves in Facebook posts. So it’s good news that your intuition was right! Let’s also be straight about what these factors are. Multimedia content is a video or photo. They did not test the difference between them. We see the same about brand name in TV ads – people need to see your name to attribute the ad to your brand. So don’t think you are being invasive. Tell them who is talking. Hashtag needs no explanation, but this is an on/off switch. There is no evidence you need more than one. Subjectivity goes hand-in-hand with brand name. Tell people what they are supposed to think about the topic – “Doritos are the best snack.” “People love Doritos’ crunch.” These subjective words are an emotional, evaluative, and judgmental expression. I think you get it. Social words are those that show that a group feels a certain way, rather than an individual: “We all like Doritos because they are the best.” Two other factors that limit effectiveness: 1) url links do not help, leave them out, and 2) being overly positive can backfire too. Basically, these data suggest that you should use your posts to show and tell people what you want them to think about your brand. But be realistic as you share why they should care.
If you want to find out more, click on each of the main ideas to link to more information about the article. Or, email us to get a copy.
Taken all together, these ideas provide some good direction. Be present where people are learning about your product category. Share info in a way that gets them thinking and makes them want to talk about it. Finally, do not forget the multimedia content. Take the time to get a great picture, or even better, a video. If you made it this far, go ahead and share this blogpost with your networks. Generate some WOM for us. You can even post a comment below.
[1] In fairness, most of these studies were done on TV and radio ads. I am extrapolating that the basic idea can apply in other media.
