How Does Advertising Work? What Makes People Buy?
While researching the topic of advertising, I 1 The infographic below opens with the notion that companies are rich and have piles of money and they use it to manipulate their poor audience. I think that’s a rather disturbing, unfortunate, and unlikely notion.
The first notion that only rich companies advertise is a bizarre idea. Our company is not wealthy and, in fact, had a couple of years of losses – yet we still advertised. Advertising, especially via digital channels, is very affordable. You can deposit $100 into any social or search engine pay-per-click (PPC) account and push some highly targeted advertisements to drive awareness of your business.
Attitudes toward business don’t align well with the actual statistics in the social media world. 1 of all businesses fail within the first two years, according to multiple studies. While people believe the average company makes a 36% profit margin, the average profit margin for the most recent quarter was 7.5% and the median profit margin was 6.5%.
Angie’s List, for example, continued to operate at a loss while spending $80 million on marketing, with a large portion of that going to the television commercials you repeatedly see on television. While a public company that’s increasing revenue quarter over quarter, they’re hardly rich. Not only are they not rich, but they’re also not advertising to make their customers feel rich. Angi provides a service to protect home services customers from being taken advantage of by the numerous shady providers out there.
Advertising works on different levels; it’s not as simple as trying to get someone to buy something. Over the last decade of content, search, and social marketing, I believe companies are becoming keener to the fact that advertising needs to be much deeper than manipulating a consumer’s insecurities. Targeted advertising to consumers who are similar to your audience can increase profitability by acquiring and retaining great customers.
Why Use Advertising?
The basis for all advertising is simply awareness. Awareness is desirable to companies for a few reasons:
- Reach: To build demand for your brand, products, or service, you must be able to reach new audiences. Those audiences already exist on websites, in searches, on social media, on radio, on television, and in other media. To reach those audiences, the companies that invested in and acquired them offer to advertise.
- Perception: Perhaps people are already aware of your products and services, but don’t have a positive perception of your brand. To counter inaccurate brand perceptions, it’s sometimes necessary (or even critical) for brands to invest in advertising.
- Sales: Driving sales through advertising can be effective, but I challenge you to observe both traditional and digital advertising for a week and see how much of it focuses on discounting and sales. In my opinion, it’s on the decline. More often than not, we find that while sales can be increased, companies that rely on it for the long term may devalue their brand.
How Does Advertising Work?
Businesses and consumers alike are seeking to enhance the quality of life and operational efficiency of their organizations. While a small portion of the population may have insecurities that advertising capitalizes on, I believe that’s minimal. In my opinion, the majority of network marketing and multi-level marketing enterprises work in this arena. Have you ever been invited to one of these events? They’re massive celebrations of happy people paraded around the stage, promising big checks, vacations, and even cars to persuade the guests to invest and begin selling for them. Vemma, an 1hat sells energy drinks, was temporarily shut down due to allegations of operating as a pyramid scheme.
While that’s extreme, it’s not the norm. Watch a typical Apple advertisement, and you won’t see discounting and get-rich-quick schemes. Instead, you’ll watch stories of people unleashing their inner creativity utilizing Apple devices and software as tools. Observe Coca-Cola’s advertising, and you’ll see a focus on the events and venues they advertise, aiming to build brand awareness where happy memories are made. Recently, they’ve also had to address the perception of sweet drinks and the associated health risks.
Some advertising works on the motivation to save money (discounts), but there are many other reasons why advertising works:
- Vicinity: Sometimes, advertising is necessary to inform a regional audience that you have a location nearby. Perhaps you’re seeking NY-style pizza nearby, and so a local pizzeria advertises for location-based terms on search or targets an interest in pizza within a radius around their restaurant.
- Responsibility: Increasingly, consumers are paying close attention to businesses that prioritize sustainability, diversity, and community involvement. Advertising can play a significant role in transforming the perception of a faceless, massive corporation into one that provides grants and scholarships to help local communities. Salesforce recently adopted a local school in Indianapolis, donating $50,000 in equipment to help them.
- Research: Where do you go when you’re researching your next vacation, your next automobile purchase, your insurance, or other significant expense? Advertising informative content to educate consumers and businesses has increased significantly in recent years. While the goal is to build trust and authority by providing the necessary research, it’s not always the end goal of a purchase. Often, it involves providing primary or secondary research that is widely shared. I often see advertisements about content that may be of interest to my friends and send it to them.
- Emotion: Storytelling has jumped to the forefront of many advertising methodologies because it not only connects emotionally with the audience, but it’s also produced to lead the viewer or reader through the story. Some may consider this manipulation, but that’s indistinguishable from an effective advertisement that evokes emotion.
- Persuasion: Utilizing emotion, advertising is often persuasive. Dr. Robert Cialdini describes six universal principles of persuasion that have been scientifically proven to persuade the advertising audience – reciprocity, scarcity, authority, consistency, liking, and consensus.
And Let’s Not Forget
If the evil goal of advertising were to motivate a sale, the vast majority wouldn’t work at all. If advertising were that sinister and manipulative, we’d all be running to McDonald’s to spend time with family and a box of McNuggets! Advertising is expensive and, more often than not, is used to change perceptions and increase awareness. Advertising, like many other marketing strategies, is a long-term approach that carries significant risk.
How Advertising Makes Us Buy?
I’m not questioning the tactics documented in this infographic; I’m challenging the motivation behind them. Advertising isn’t there to trick or scare someone into making a purchase. Advertising must tap into emotion for greater effect, but that doesn’t mean it’s manipulative; it means it’s relevant. Perhaps I’d feel more comfortable if the title were How Advertising Motivates Us to Buy. I’ve never seen an ad that forced me to click, but I have seen some ads that directly tapped into my needs, prompting me to click.
So instead, advertisers have created a tried-and-true arsenal of different techniques that are all aimed at getting consumer attention. And even if we don’t realize it all the time, these strategies all work exceptionally well.
Here’s the infographic that I’m critical of from WebFX.
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