Interviews, insight & analysis on digital media & marketing

Advertising may not be as impactful as you think

The effectiveness of advertising – and the areas it’s truly making an impact – is often called into question. Does advertising help to grow markets? What role does advertising play in product pricing? These are just two of the big questions the industry is faced with – and there may now be some answers to both.

Where does advertising’s impact lie?

Speaking on a panel at LEAD 2024, Bridget Angear, Founding Partners at craig+bridget, shared the findings of research which revealed that just 12% of ad campaigns have any impact on market growth. This revelation came following an audience poll where people overwhelmingly believed that advertising had a real impact on market growth.

Meanwhile, Enyi Nwosu, Chief Strategy Officer at UM London, wasn’t quite convinced by the findings, highlighting that it all comes down how markets are actually defined. He also pointed to the impact that advertising has had in driving growth in the wellness category, and is having in the newer digital clothing category. As such, he believes that “a lot of the next gen markets will almost entirely be driven by advertising.”

The research findings did share six exceptions where there was evidence that advertising helped to grow a particular market. The two most common of exceptions, according to Angear, occur in categories where there is a dominant brand – such as Amazon or Google – and in newer categories where there are a number of businesses experimenting.

How advertising impacts product pricing is a little bit more complicated but, ultimately, Laurence Green, Director of Effectiveness at the IPA, believes that “advertising is a very powerful macro factor in keeping prices low, keeping competition high, and depressing overall pricing levels… Advertising is a force for good in terms of consumer pricing.”

Nonetheless, Green acknowledged that there are two sides to that argument, because certain brands use advertising to support and justify higher prices.

Advertising as a driver for good

The panel also addressed one of the current wider societal issues closely linked to product pricing, and the role that advertising has in influencing markets and behaviours – sustainability.

“Can we encourage our clients to put their money behind those things that have a better footprint or are more sustainable? Absolutely, because we know there’s a power in advertising to encourage switching,” said Angear.

This encouragement can extend beyond brands to actual consumers, because “In the next generation of markets, whether it’s recycling or circular economy, advertising is going to play a big role in helping people make better, sustainable living choices,” according to Nwosu.

“Most importantly, people expect brands to make a difference in driving sustainable behaviour.”

As a result, Green is seeing an increasing number of businesses “that are transitioning to a world where they pump out less volume of stuff, but capture more value,” which he sees as a good way for them to both meet shareholder requirements and make the world a better place.