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Advertising Does Not Create Demand, But...

  |  July 2, 2009   |  Comments

It may help fulfill demand. Understand the difference.

Would you agree that advertising is supposed to get a target consumer to demand a product or service sold by an advertiser? Yes? OK, hold that thought.

Consumer Demand Is Not Equal to Advertiser Sales

Let's spend a minute on definitions. "Demand" refers to the consumers' perspective -- consumers demanding (needing or wanting) a certain product or service. Often, however, the word "demand" is used by advertisers to mean "sales" or "market share" as in the following sentence: "Advertising is supposed to drive demand (sales, market share) for the advertiser."

Advertising doesn't necessarily drive demand. At best, advertising can play a role in fulfilling demand, but not in creating it.

For example, no amount of advertising will create demand for a diabetes drug if a consumer doesn't have diabetes. No amount of advertising will get someone to buy another minivan when they just purchased one. No amount of advertising will get consumers to buy a fifth quart of milk if their family consistently consumes four quarts a milk a week.

Advertising May Help Fulfill Demand

Advertising doesn't create demand, but it can help fulfill it.

If someone is diagnosed with diabetes, but isn't aware of drugs specifically for diabetes, advertising will help make that person aware. And the person may end up buying a particular drug because advertising made her aware of it. But the demand isn't created by the ad -- the demand is there because the patient has diabetes. The ad helps the patient fulfill the demand using a particular drug (there are other diabetes drugs).

Further, advertising may help companies increase sales, but not because it creates demand. Rather, sales increase because of share-shifting from similar, competitive products.

When Coca-Cola runs a national advertising push, it temporarily wins market share away from Pepsi and Dr. Pepper. When Pepsi makes a big advertising push, it temporarily wins share back. In this case, the total market for "sugary brown carbonated beverages" isn't growing; it's shrinking overall due to other beverage alternatives like water and energy drinks.

For new products, advertising helps fulfill demand by solving the predominant missing link: awareness -- people simply aren't aware of the new product. But if the product doesn't fulfill an actual demand, there will be no sales. Consider the hundreds of consumer products or grocery items created each year, 95 percent of which fail and are discontinued due to lack of demand from consumers.

Another way to illustrate the lack of increase in demand is the increased wastage of redundant products on a local level. When convenience stores, Wal-Mart grocery stores, and even local gas stations started carrying quarts of milk, it became more convenient for consumers because they didn't have to make multiple stops when running errands. They could pick up milk when buying gas. If they do this, they certainly wouldn't buy it again at the other retail locations.

In that local microcosm, the supply of milk was increased four-fold, but demand certainly didn't increase that much. So the product went to waste.

Demand Is Created in Real Life -- Not By Advertising

Take, for instance, the world of baby products. Many manufacturers air TV ads on specific TV shows and times when moms are likely to be watching or buy mailing lists of moms and send targeted direct mail to them.

But how many moms do you know who wouldn't buy baby formula and diapers based on whether they saw any advertisement? They have a real-life need now -- a baby -- which they didn't have up through the day the baby was born.

Further, advertisers can't buy a list that tells them who will become a mom (so they can market to her before the baby arrives) or which lists moms with babies who have special needs (e.g., lactose intolerance, wheat allergy). But you can rest assured those moms will be searching for the exact right formulation for their baby -- perhaps lactose-intolerant and allergic to wheat.

Talk about finding a needle in a haystack. Even if the advertiser got the "haystack" correct, it's still a very long shot getting the ad message to the "needle" because the needle only demands the lactose-free, no-wheat-product version of the baby formula and the typical ad isn't specific enough to tell them whether such a version of a product even exists.

Then there's the problem of whether the "needle" was watching TV at the time your ad aired or getting the mail when your mailpiece arrived. And even if your ad is specific enough and hit them at the perfect time, the customer may have just stocked up on infant formula from Costco.

Demand Can Be Fulfilled, Despite Advertising

Occasionally, demand is fulfilled with or without advertising, or even despite the advertising. Before my wife and I had our first child, we never gave a thought to baby strollers. Just before we had our first child, we went online to research baby strollers. We purchased a Maclaren based on positive collective feedback from a variety of sites. We never saw an ad for Maclaren strollers.

Just before our second child was born, we started thinking about double-strollers. We asked a good friend what she bought when she had her second and why; then we checked price comparison sites to make sure we paid the lowest price and bought what she bought -- a Joovy. Again, we had never seen a Joovy ad.

So we went from zero awareness through to a purchase, without ever being impacted by advertising. Joovy could have spent a lot of money on guestimating where my wife and I would look online or what brand message would appeal to us. But Joovy would've gotten both wrong because we didn't choose its product based on ads or information we found online.

Advertising's "New" Role

Advertising has consisted of advertisers shouting brand messages at consumers, hoping they would listen, retain, and act upon the information. Modern consumers don't do that.

New advertising isn't advertising at all. It's just the opposite. New advertising is making information available to be pulled by the consumer when the consumer wants it, through the channel or device the consumer chooses, and in the words the consumer chooses to use -- not pushed by the advertiser, aired at specific times, or in words that the advertiser made up to describe how awesome its products are.

New advertisers should no longer sit in a room and let creatives make up truth-stretching claims; instead, new advertisers must listen to what consumers are asking about or how they are recommending the products to peers. Then, if many consumers are asking the same questions, advertisers can provide useful answers to those questions and incorporate the words from peers-telling-peers into such content.

Finally, once the content is created, advertisers need to SEO (define) the heck out of it so people can find it when they're looking for it and using their own words as search terms.

So, if at the onset of this column you agreed that advertising is supposed to get a target consumer to demand a product or service sold by an advertiser, would you now agree that advertising doesn't get a consumer to demand it (real life does)? Would you agree that advertising helps to more efficiently fulfill demands that consumers already had, if done correctly?

Agree with me or tell me I'm stupid @acfou.

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Augustine Fou

Dr. Augustine Fou is the senior digital strategy advisor to CMOs, marketing executives, and global brands. Dr. Fou has over 15 years of Internet strategy consulting experience and is an expert in social media marketing strategy, data/analytics, and consumer insights, with specific knowledge in the consumer packaged goods, financial services/credit cards, food/beverage, retail/apparel, and pharmaceutical/healthcare sectors.

He is a frequent panelist, moderator, and keynote speaker at industry conferences. Dr. Fou is also an Adjunct Professor at NYU in the School for Continuing and Professional Studies and at Rutgers University at the Center for Management Development, where he teaches executive courses on digital strategy and integrated marketing.

Dr. Fou completed his PhD at MIT at the age of 23. He started his career with McKinsey & Company and previously served as SVP, digital strategy lead, McCann/MRM Worldwide and group chief digital officer of Omnicom's Healthcare Consultancy Group (HCG). He writes a blog "Rants, Raves about Digital Marketing" and can be found on Twitter at @acfou.

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