Objectives of Advertising

There are at least three different viewpoints taken in attempts to evaluate the contribution of advertising to the economic health of the firm. The generalist viewpoint is primarily concerned with sales, profits, returns on investment, and so forth. At the other extreme, the specialist viewpoint is represented by advertising experts who are primarily concerned with measuring the effects of specific ads or campaigns. A middle view, one that might  be classified as more of a marketing management approach, understands and appreciates the other two viewpoints but, in addition sees advertising as a competitive weapon. Emphasis in this approach is given to the strategic aspects of the advertising function.

Building on objectives for advertising can be assigned that focus on creating awareness, aiding comprehension, developing conviction, and encouraging ordering. Within each category, more specific objectives can be developed that take into account time and degree of success desired. Obviously compared to the large number of people advertising makes aware of the product or service, the number actually motivated to purchase is usually quite small.

In the long run and often in the short run, advertising is justified on the basis of the revenue it produces. Revenue in this case may refer either to sales or profits. Economic theory assumes that firms are profit maximizers, and the advertising outlays should be increased in every market and medium up to the point where the additional cost of gaining more business equals the incremental profits. Since most business firms do not have the data required to use the marginal analysis approach, they usually employ less sophisticated decision-making models. There is also evidence to show that many managers advertise to maximize sales on the assumption that higher sales mean more profits (which may or may not be true).

The point to be made here is that the ultimate objective of the business advertiser is to make sales and profits. To achieve this objective, the actions taken by customers must encompass purchase and continued repurchases of the advertised product. Toward this end, an approach to advertising is  is needed that provides for intelligent decision making. This approach must recognize the need for measuring the results of advertising, and these measurements must be as valid and reliable as possible. Marketing managers must also be aware that advertising not only complements other forms of communication but is subject to the law of diminishing returns. This means that for any advertised product, it can be assumed a point is eventually reached at which additional advertising produces little or no additional sales.

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