In a WARC Best Practice paper, Advertising Equity: How great advertising makes consumers want more advertising, Carin Fredlund explains that highly creative, well-produced advertising can create an important value in itself, which is of benefit for the brand, employees, consumers and media.
“While brand equity is defined as the value of a brand, advertising equity can be defined as the value of a brand’s advertising. In both cases the value originates in consumers – and translates into a financial value for the brand,” she says.
If a brand is able to create advertising that is not only tolerated, but also popular – or even long-awaited and sought-after – that in itself can create value: if people actively want to watch a campaign, the brand can communicate more effectively at a lower cost.
“Advertising equity [also] signals positive characteristics of the brand and shows respect for the consumer,” Fredlund adds. “The message is ‘We realise we’re interrupting your time, and we have made every effort to make it worthwhile for you’.”
Further, research from Sweden suggests that companies that have made an effort in their communication are perceived to offer better products to take better care of their customers.
That advertising equity is not more widely considered is in part because it is not captured by traditional measurements, such as those around brand strength, purchase intention and loyalty which are focused on the value of a product or service.
But two academics from the Stockholm School of Economics have designed a simple model for measuring advertising equity, asking the consumer to score how well they agree with statements about a brand’s future advertising, based on their overall impression of its previous advertising.
Fredlund argues that it is worthwhile to regularly measure advertising equity, not least when deciding on future investments. How big they should be and what type of media should be used are some of the questions that can be answered when you know your advertising equity, she advises.
Sourced from WARC