Importance of Advertising - Why Advertising is Important?

Importance of Advertising

The importance of advertising is depicted in the following image.

The significance or importance of advertising in business is as follows:

1. Crucial for a launch or announcement.
2. Source of revenue for publishers.
3. Promotes goods, services, ideas and events.
4. Helps in increasing the sales.
5. Maximizes the profit of an advertiser.
6. Creates consumer awareness.
7. Educate society.
8. Art, Science and Profession.
9. Demands creativity.
10. Element of marketing mix.
11. Target oriented.
12. Use persuasion for results.
13. Demands monitoring of demand and supply.
14. Builds brand's image.
15. Generates employment.

Above points highlighting importance of advertising are discussed below.

Why Advertising is Important?

Now let's find out why advertising is important in business.

1. Crucial for a launch

Advertising is very crucial for launching (introducing) a new product, service and/or idea in the market.

If advertisement of any concerned product, service and/or idea is done properly at a right place, through proper media, and within a specific time constraint, can attract new-customers. This helps to capture the market and increase sales of an advertiser.

Advertising is also essential for announcing an upcoming event.

Advertising an open invitation maximizes the chances of event attendance. However, if people are unaware of any such happening, they may not show up. As a result, the event may not get an expected response.

Hence, advertising contributes to the success of an event.

2. Source of revenue

Advertising is a prime source of revenue for publishers of mass-media like newspapers, TV channels, magazines, websites, etc.

The input cost involved in processing any valuable information is usually higher than its selling price. A publisher's cost rises due to various data gatherings and information-processing activities like research (investigation), professional writing, editing, proof-reading; publishing in form of printing or digital web hosting, and distribution.

Advertising pays publishers their input costs and in return use their media platform as a medium to reach maximum people. Indirectly, because of it, customers of publishers (who are mostly readers and/or viewers) also get an affordable access (or sometimes even a free access) to high-quality information databases.

For example, newspapers sell for pennies, although their input costs are very high. Most online websites give free and unlimited access to their information database for 24X7 because their input costs are mostly recovered from sponsors and ad-networks.

Without support of advertising, the publishing industry (both print and digital media) may not survive.

For example, today, the U.S. newspaper industry is falling deep due to the emergence of online digital media and plummeting demands for print media. Many newspapers in America are either laying off their staff or totally closing down due to major loss of their advertising revenue, which was primarily earned from classified-ads. The availability of free online classified services like Craigslist has compelled many newspapers to either pack up or adapt to new digital age.

3. Sales promotion

Advertising is done to promote goods, services, ideas and/or events.

Advertising is used for the promotion of:

1. Goods falling under categories like cosmetics, electronics, eatables, stationary, jewelry, textiles, etc.
2. Services provided under banking, insurance, hospitality, air travel, consultancy, health care, education, etc.
3. Ideas. For e.g., an entrepreneur encourages general public to invest in his business ideas.
4. Events or gatherings like festivals, exhibitions, ceremonies, rallies, etc.

4. Increases sales

Advertising sparks an interest in masses about advertised products and/or services of its advertiser. This interest creates demand in the market. The growing demand soon results in higher sales. Eventually, the advertiser fulfills his main goal of investing in an advertisement.

However, to continue with such a growth in sales, the advertiser must also maintain a good price-quality ratio along with regularly continuing his ad campaigns.

5. Maximizes profit

Advertising helps in increasing sales and control the cost borne by the advertiser. It helps to widen the gap between his sales and incurred cost. With maximizing sales and lowering cost, the profit of a advertiser grows.

Thus, advertising aids in maximizing the profit of its advertiser.

6. Consumer awareness

Advertising creates awareness by informing consumers.

1. Awareness : Advertising creates an awareness among consumers about an availability of any specific product and/or service in the market. It attempts to convey them why an advertised product and/or service is better than other alternatives currently available in the market.
2. Information : Advertising informs a consumer, mainly about; various features, benefits, price and use of an advertised product and/or service. It also gives information about the brand name or trade-mark used, address of a manufacture or a service provider, and other relevant details to the consumer.

While creating awareness and supplying relevant information, advertising ultimately helps a consumer to make a right choice in his or her purchase.

7. Educate society

Advertising has a remarkable ability to reach masses and educate the society. Therefore, many Governments and even Non-Governmental Organizations (NGO) often take help of advertisements to reach and educate people on important social issues.

Creative ads are made in public interest to educate people about family planning, AIDS awareness, saving water and electricity, giving children compulsory education, providing a right kind of nutrition to mother and her new-born infant, abolishing child labour, etc.

8. Art, Science and Profession

Advertising is all; an art, a science and a profession.

Advertising is:

1. Art because it needs creative skills.
2. Science because it depends on systematic and scientific planning.
3. Profession because it's done by professional agencies who follow certain business ethics or a code of conduct.

9. Demands creativity

Advertising is impossible without creative thinking. In other words, creativity is the essence (main ingredient or soul) of advertising.

For an advertisement to be a success, it must have some fundamental aspects or characteristics in it.

An advertisement (ad) must be:

1. Creative,
2. Original,
3. Not a copied one,
4. Artistic, and also
5. Attractive to large masses.

To make advertisements more creative and appealing, professional ad-agencies must hire people with creative minds. Preference must be given to those who think ’Out of the box’ and are always ready with their newer concept, jingles, and innovative presentations.

“Hello Honey Bunny” is a good example of a creative ad.

In India, Idea Cellular Ltd. (A mobile service provider) launched an ad-campaign called “Hello Honey Bunny.” This ad was cute, kiddy like, and so addictive that it quickly went viral.

10. Element of marketing mix

Advertising is an important element of marketing mix. It supports sales promotion.

In today's competitive world, it is getting difficult to sale something. Consumers now-a-days are more cautious and better aware about things they buy and use. They don't easily break their loyalty towards their favourite goods and/or service unless and until somethings allure them in unique way and compells them to atleast give a try.

It is rightly said,

“What they (people) often see and hear; it attracts them, allure their psyche to change their preferences, if it holds them and makes them think consciously, ’this seems trustworthy’; it SELLS.”

Developing such a level of attraction is possible only with creative ads and that's the reason why many manufacturers are ready to spend huge money on advertising.

11. Target oriented

Advertising is target-oriented in nature. Target oriented means to focus on (or target one's attention to) only a specific thing, at one time.

In context of advertising, it means to focus on (target), or deliver attention towards, only a specific group or class of consumers.

For example, AUDI (German luxury car maker) designs and targets its premium cars to suite comforts, needs, expectations and demands of a rich elite class. In contrast, Maruti Suzuki (Indian car manufacture) mainly targets its fuel-efficient sedan cars to a majority of middle-class groups.

Advertising is effective only if it is focused or target oriented.

12. Persuasion for results

Advertising use persuasion to make people act in the desired direction.

Generally, people are persuaded to:

1. Purchase (buy) products and/or services,
2. Invest in ideas,
3. Attend events, etc.

The persuasion works in the following six stages:

1. Give a creative and compelling presentation of a key message.
2. Grasp people's attention, repeat exposure and stimulate their senses for a quicker recognition.
3. Give comprehension on value (importance) of the message.
4. Gain acceptance (belief) of the message.
5. Make a possible encounter and easy identification (retention).
6. Change people's behavior and let them act (give result) as expected.

13. Monitor demand and supply

Advertising, if done repetitively, helps in generating higher demand in the market for advertised products and/or service. Rising demand must be met with an equivalent amount of supply of products and/or efficient delivery of services. Proper care must be taken to monitor the demand and supply function, so that none of the demands are skipped.

If supply is not made at par with an increasing demand, the market may soon lose confidence and downfall of demand may take place. If this happens, the sale will fall down, and money spent on advertising may not be recovered. This may add to losses.

Thus, when advertising results in higher demands, an appropriate supply must be also ready to compensate it. To see that such compensation is done properly, the demand and supply function must be well monitored.

14. Builds brand's image

Advertising creates goodwill and helps in building a brand's image in the market.

Repeated advertisements makes brands very popular. Generally, people tend to show a more trustworthy attitude towards advertised brands over non-advertised ones. Well-known branded products are usually made from high-quality raw-materials and hence are always preferred by most consumers. This increases demand for such products.

Rise in popularity and building trust gradually helps to increase the value of the brand. This eventually boosts sales of such branded products. It also increases the reputation of that entity who owns these brands.

15. Generates employment

Advertising agencies are constantly in search of newer creative ideas to cope with the rising demands from their clients (advertisers). Each ad assignment (project) demands a high-level of mental labour. There are dead lines within which projects must be completed and submitted. Furthermore, the concept of ad must be also welcomed (approved) by the advertiser. Overall, this creates a huge demand of creative people and thus opens new employment opportunities in the field of advertising.

Advertising provides employment to deserving candidates who are mainly creative thinkers, directors, artists, graphic designers, sales representatives and managers.