Monday, September 10, 2007

Does advertising inform or persuade?

A working paper from Stanford estimates the effect of advertising on brand awareness (information) and perceived brand quality (persuasion).
For the empirical analysis, we assembled a panel data set that combines annual brand-level advertising expenditures for over three hundred brands with measures of brand awareness and perceived quality from a large-scale consumer survey. ... We find that advertising has consistently a significant positive effect on brand awareness but no significant effect on perceived quality.
Coincidentally, Craig Newmark reminds us that it is the 50th anniversary of the Ford Edsel--advertising may have informed consumers but it couldn't persuade.

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