1. Lecture 15 Advertising Content

2. Lecture Plan Celebrities Humor Comparative Advertising
Advertising Regulation
Model of comparative advertising

3. ADVERTISING CONTENT

4. Celebrities
~ 25% of ads have celebrities in them
The general belief among advertisers is that advertising messages delivered by celebrities:
provide a higher degree of appeal, attention and possibly message recall than those delivered by non-celebrities.
affect the credibility of the claims made,
increase the memorability of the message, and may provide a positive effect that could be generalized to the brand
Despite the potential benefits they can provide, celebrity advertising increases the marketers' financial risk.
Using celebrities can be an unnecessary risk unless they are very logically related to the product

5. Endorsement by a “Celebrity Expert”

6. Risks of Using Celebrities
The celebrity may overshadow the product being endorsed
The celebrity may overshadow the product being endorsed
The celebrity may be overexposed, reducing his or her credibility
The celebrity may be overexposed, reducing his or her credibility
The target audience may not be receptive to celebrity endorsers
The target audience may not be receptive to celebrity endorsers
The celebrity’s behavior may pose a risk to the company

7. Any examples of risky endorsements?

8. What does empirical research say about celebrity endorsement effect?
Elberse and Jeroen (2011) look at stock market valuation and sales data for a number of athlete endorsements.
With a celebrity endorsement stocks go up roughly 0.25%, on average.
Sales, on the other hand, go up by an average of 4%.
These sales boosts can be recharged by a career triumph -- a Grand Slam for Roger Federer, an Olympic Gold Medal for Michael Phelps.
A caveat: The sales benefits diminish with each win, while the stock-return effects stay constant;
investors, it seems, are more impressed with an athlete's staying power than consumers.

9. What does empirical research say about celebrity endorsement effect?
Derdenger et al. (2017) look at the introduction of Titanium golf drivers and performance of celebrity golfers in major tournaments.
Wins in golf tournaments act as unplanned TV exposure and affect awareness about the new products
TV advertising affects both awareness and preferences
Unplanned exposure accounts for 23% of sales
Planned TV ad exposure accounts for 30% of sales
This suggests that firms should coordinate TV advertising spending as unplanned exposure is a substitute for planned advertising in the early stages of a product life-cycle

10. What does empirical research say about celebrity endorsement effect?
So, what accounts for this celebrity effect?
Endorsements could be a signal of quality
But the modern consumer is sophisticated. They know money's changing hands.
At a deeper level, we seem to crave connection to the famous and the powerful.

11. What does empirical research say about celebrity endorsement effect?
Newman, Diesendruck and Bloom (2011) look at why people are willing to pay exorbitant amounts of money for objects once owned by famous people.
E.g., President Kennedy's golf clubs or even Saddam Hussein's Rolex
Resale Appeal? That's circular reasoning. Why does the next person want to buy it?
Study tested how much people would be willing to pay for various objects that had been handled by either a celebrity the participants admired or someone famous they considered evil. 
For likeable celebrities, the more handling of the object the more it was worth to people.
In contrast, with evil celebrities, the more the person touched the object or used it, the less people wanted anything to do with it.

12. Message Appeal Options
Comparative
Ads
Comparative
Ads
Fear
Appeals
Fear
Appeals
Humor
Appeals
May be especially useful for new brands
Often used for brands with small market share
Frequently used in political advertising
May stress physical danger or threats to health
May identify social threats: disapproval or rejection
May backfire if the level of threat is too high
They can attract and hold attention
They are often the best remembered
They put the consumer in a positive mood

13. Fear Appeals Fear has facilitating effects and inhibiting effects.
Facilitation = motivation to approach/avoid something
Inhibition = discouragement from approaching/avoiding something
Moderate fear appeals work best by encouraging facilitation and minimizing inhibition.
Too much fear: the audience tunes out the message
Low credibility or elaboration of harmful consequences is hedonically unpleasant.
Too little fear: the audience isn’t motivated enough to do anything.

14. Humor Appeals: Pros and Cons

15. Pros and Cons of Using Humor
Aids attention and awareness
Aids attention, awareness and repeat attention
Does not aid persuasion in general
Does not aid persuasion in general
May aid retention of the message
May aid retention of the message
May harm recall and comprehension
May harm recall and comprehension
Creates a positive mood and enhances persuasion
Creates a positive mood and enhances persuasion
May harm complex copy registration
May harm complex copy registration
May aid name and simple copy registration
May aid name and simple copy registration
Does not aid source credibility
Humor is not universal
May serve as a distracter, reducing counterarguing
May serve as a distracter, reducing counterarguing
Is not effective in bringing about sales
Good “universal” humor is hard to produce!
Company seen as clever – carries over to products
May wear out faster than non-humorous ads

16. Humor and Ad effectiveness
Gelb and Zinkhan:
Humor was negatively related to advertising recall
Positively related to brand attitude
Not directly related to purchase probability or choice behavior
Any effect that humor may have on purchase probability or choice behavior appears to be mediated through brand attitude.

17. Comparative Advertising
Definition: Mentioning/showing the competitor in your ad by way of comparison (and typically how we are better)
History: Early 80’s FTC lifts the ban on CA to enhance the provision of choice-making information to consumers.
Legal issues: Advantages must be substantiated
Used offensively (attack) or defensively (“fight back”)
Great for newly launched products with small (or zero) market share that offer a distinct edge over the competition.
The confusion aspect: Which brand was advertised???!, though consumers may remember attributes advertised.

19. Comparative Advertising, cont.
Political ads
Negative information tends to outweigh positive information
Typically more effective to besmirch the opponent than to praise one’s self.
Exception: Negative tit-for-tat exchanges (“mudslinging”) usually wind up helping neither candidate.
Too much attacking results in negative perceptions of the attacking brand.

20. Negative Political Ads: Research
Not much evidence that that negative campaigning is an effective means of winning votes.
It tends to be more memorable and stimulate knowledge about the campaign.
There is no reliable evidence that negative campaigning depresses voter turnout.
Though it does slightly lower feelings of political efficacy, trust in government, and possibly overall public mood.

21. Current Regulatory Issues Affecting U.S. Advertisers
Tobacco advertising
Consumer Privacy
Advertising to children

22. Regulatory Aspects of Advertising
Areas of advertising regulation:
Deception and unfairness
Representation or omission that can mislead
Judged from perspective of consumer
Advertising to children

23. Some TV Network Guidelines for Children’s Advertising
Must Not Over Glamorize Product
Must Not Over Glamorize Product
No Exhortative Language, Such As “Ask Mom to Buy”
No Exhortative Language, Such As “Ask Mom to Buy
Generally No Celebrity Endorsements
Generally No Celebrity Endorsements
Can’t Use “Only” or “Just” in Regard to Price
Can’t Use “Only” or “Just” in Regard to Price
No Costumes or Props Not Available With the Toy
No Costumes or Props Not Available With the Toy
No Shots Under One Second in Length

24. Key Regulatory Agents Government Regulation
Federal Trade Commission (FTC)
Wide range of regulatory programs and remedies
Federal Communications Commission (FCC)
Food and Drug Administration (FDA)
Bureau of Alcohol, Tobacco, and Firearms

25. Federal Regulation of Advertising in North America
Federal Trade Commission (FTC)
Defining deception
Comparative advertising
Defining unfairness
Investigating violations
Remedies for unfair or deceptive advertising
Consent decree
Corrective advertising
Cease-and-desist order

26. Key Regulatory Agents--FTC
FTC Programs and Remedies
Advertising Substantiation Program
Affirmative Disclosure
Consent Order
Cease and Desist Order
Corrective Advertising
Control of Celebrity Endorsements

27. Lanham Act
The Lanham (Trademark) Act (title 15, chapter 22 of the United States Code) is a piece of legislation that contains the federal statutes of trademark law in the United States. The Act prohibits a number of activities, including:
trademark infringement,
trademark dilution,
false advertising.

28. Suing a competitor under the Lanham Act
False statements have been made about advertiser’s product or your product
False statements have been made about advertiser’s product or your product
Elements Required
To Win a False
Advertising Suit
Under the
Lanham Act
The ads actually deceived or had the tendency to deceive a substantial segment of the audience
The ads actually deceived or had the tendency to deceive a substantial segment of the audience
The deception was “material” or meaningful and is likely to influence purchasing decisions
The deception was “material” or meaningful and is likely to influence purchasing decisions
The falsely advertised products or services are sold in interstate commerce
The falsely advertised products or services are sold in interstate commerce
You have been or likely will be injured as a result of the false statements, either by loss of sales or loss of goodwill

29. Key Regulatory Agents (con’t)
Industry Self-Regulation
National Advertising Review Board (NARB)
State and Local Better Business Bureaus
Ad Agencies and Associations
Media Organizations

30. Sources of NAD Cases Competitor Challenges 66% 15% 5% 14%
NAD Monitoring
Local BBB Challenges
Consumer Challenges 20 40 60 80

31. NAD Review

32. Key Regulatory Agents (con’t)
Internet Self-Regulation
No industry-wide trade association has emerged to date
Global Dialogue on Electronic Commerce (GBDe) is emerging as a governing body
Little progress has been made to address consumers’ complaints

33. OPTIONAL and not on the test!
Modeling Comparative Advertising (optional material – Prof. J. Liaukonyte’s research)