The Influence of Advertising on Business

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Effective advertising drives business success.
Effective advertising drives business success. (Image: business building image by Dubravko Grakalic from Fotolia.com)

Advertising has the potential to influence every aspect of a business. As a communications tool, ads are used to reach a diverse mix of people affected by the products or services. These audiences can include not only customers, but also employees and investors. From employee management to customer relations, companies rely on effective advertisements to influence the success of business.

Definition of Advertising

Advertising is a communications tool used to market a product, value or service. A common misconception is that advertising and marketing are the same elements. To clarify, marketing is the overall strategy that organizations develop to enhance perceived value and persuade consumers toward a purchase decision. Advertising is one of many marketing tools used to communicate and persuade. It can be a stand-alone element or combined with a larger marketing mix. The general purpose is to influence behavior toward supporting a business as an employee, investor or customer. Here are some examples of where advertisements can be placed: traditional media---newspapers, magazines and television; new media---online, mobile applications; high traffic areas---billboards, sign twirlers; office space---internal posters.

Advertising Objectives: Consumer Focused

Advertisements are consumer focused to influence frequent shopping, enhance corporate reputation and increase sales. In addition to these benefits, the results of a good advertising program will also increase the demand for a product or service, gain more control of the market and bring in new customers. If businesses fail to gain new customers and obtain repeat business, there is a risk of losing money due to a decrease in sales revenue. Moreover, the success of a business is heavily influenced by an effective advertising platform.

Advertising Influences on Employees

Companies rely on their ability to recruit qualified personnel. Advertising programs help establish a reputation that attracts employees who would be a right fit for the company. Every progressive business with an internal advertising campaign reflects the image, beliefs and culture of the company.
If the advertising is ineffective, candidates and new employees may not know how to determine if their skills and experience fit the needs of the company. As a result, a business can spend more time and money on the development of their employees or face a financial loss due to employee terminations. Advertising programs can provide candidates with insight to company expectations, as well as give the business leverage on attracting the best talent.

Advertising Effects on Investor Relations

Advertising to enhance investor relations is relevant for businesses whose shares are traded on a public stock exchange. If advertising has effectively increased sales, investors’ interests are fueled and the enterprise value has increased. Business benefits include a boost to stock value, a reduction in capital costs and stability in financial projections. When advertising does not influence business growth, the strength of the company may be questioned. Investors base their decisions to support a business based on financial expectations.

Benefits of Nonprofit Advertisement

A good corporate reputation influences community support through influential advertising campaigns. Public and community relations are examples of cause-marketing initiatives that can influence community support and are enhanced by commercial advertising. If a business has not promoted a positive image through commercial advertising, nonprofit agencies may not benefit from the partnership and choose not to publicly endorse the business. However, an effective advertising campaign can attract and gain the support of nonprofit agencies, leading to community awareness and support of the business.

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References

  • "Integrated Advertising, Promotion, and Marketing Communications"; Kenneth Clow and Donald Baack; 2010
  • "The IABC Handbook of Organizational Communication"; Jossey-Bass Business & Management Series and IABC; 2006
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