The Role of Advertising in Organizational Performance

The term ‘’advertising’’ is defined as ‘’ paid nun-personal communication from an idenfined

sponsor using mass media to persuade or influence in audience ’’ ( Welb , Biarnett & Moriarty, 2013,
p.10 ) Among the other functions of advertising highlightest in this definition, the most important is
the persuation factor which is the consequence of the rest of the functions. An advertisement
should have the potential to differentiate one product or service from others so as to produce a
desired persuasive effect deong,2004 ), if an advertisement does not produce the required impact, it
can be assumed as ineffective and as such the substantial amount of money that companies spend
on advertising their products goera waste. On the other hand, advertisements producing favourable
impact can multiply the effectiveness of advertising expenditures, Hence, it implies that advertising
plays a very crucial role in the effective functioning of an organization.

Streams of Researches on Advertising Effectiveness

To ausess the effectiveness of advertisements there have been two dreams of research (
Jeong, 2004 ). One dream of reaserch focuses on the psychological aspects of advertising effects.
These two different areas of advertising effectiveness research are discussed in the next sections.

Market Response Approach of Advertising Effectiveness

The market response method of advertising effectiveness research asseus the impact of
advertising in terms of tha relationship between advertising expenditures and sales for the
respective advertising brand during a particular period. However , advertising studies in market
response analysis have resulted in conflicting findings. For instance, Telser ( 1962 cited in
Kocabiyikoghti , 2004 ) utilized the time series data for there different cigarette brands.
Simultaneous equation models were used to explore the relationship between advertising and sales.
The study found that different cigarette brands can different return use advertising spending.
Furthermore, Telser ( 1962 ) states that other marketing variables such as conditions and the level of
competition in the market ako influence the advertising sales relationship ( Kocabiyikoglus 2004 )
also argued that other variables like disposable income, education etc. should be considered as
these factors affect the advertising-sales relationship. Murphy and Cumingham ( 1993 ) state that
Finking advertising with sales impact is not appropriate as other marketing variables such as
economics factors, market factors, etc, affect the company sale. In fact, previous research
investigating the real effectiveness of advertising has not found a clear link between advertising and
its effect on company sale ( Vakratsas and Amber 1999 ). Neslin ( 2002 ) found that other