Idea in Brief

The Problem

The proponents of advertising have always struggled to prove that the money is well spent, making it easy for executives to justify cutting ad budgets.

Why It Happens

The advent of online advertising and “performance marketing,” in which the advertiser essentially pays for clicks, has intensified the struggle. That’s because in what is now called “brand advertising,” the link between ad spending and positive financial outcomes is more tenuous.

The Solution

New research shows that brand building campaigns anchored in a memorable, valuable, and deliverable promise to the customer are likelier than campaigns that don’t make such a promise to result in positive financial performance.

More than a century ago the merchant John Wanamaker wryly complained, “Half the money I spend on advertising is wasted. The trouble is, I don’t know which half.” Because the proponents of advertising have always struggled to prove that the money is well spent, that indictment has long helped financial executives justify cutting ad budgets. As no less an authority than Jim Stengel, a former chief marketing officer at Procter & Gamble, has noted, the struggle continues, although huge resources go toward testing advertising copy and measuring effectiveness.
A version of this article appeared in the January–February 2024 issue of Harvard Business Review.
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