Advertising remains a growth business with annual global ad spending more than half a trillion dollars. Digital advertising is growing even faster thanks to usage and its ability to target consumers. Despite this there are situations when advertising can be pointless—and sometimes even harmful—for a brand. Here are some examples:
Corporate disaster. It’s often best for a company dealing with a nightmare situation to turn off its ad campaign and use corporate communications and PR to manage the issue at hand rather than sell more stuff for awhile.
Natural disaster. Last fall during Superstorm Sandy, retailer American Apparel sent out a hurricane-themed direct email piece to people in the New York area. They would have been better off just keeping quiet.
Better ways to sell something. A brand manager at a major CPG company once told me that improving the placement of his products in a store had a far greater effect on sales than advertising. Perhaps because of this, the majority of products at the local supermarket have no significant ad budgets behind them.
Wear out. Cable television continues to have issues when it comes to capping the number of times the same ad will appear during a broadcast. Local sporting event broadcasts are especially guilty of showing the same :30 unit over and over during a game.
Similarly, in online advertising, a poorly retargeted banner ad can follow a consumer around the internet like flypaper.
Cost. There are some keywords in search engines that are too expensive for smaller companies in a category to buy efficiently. It may make more sense to build traction for a product through word of mouth and then step on the gas later with advertising.
Seasonality. For some brands there are periods when it makes absolutely no sense to advertise. Pushing lawn care products in winter and outerwear in summer are just two examples.
Startups. Even more than a decade later, the memories of dot com companies blowing through millions of dollars in advertising are still fresh in minds of investors. Unless the return on investment can be proven, early stage startup founders are usually wise to find other ways to spread the word about their product.
Beta products. Advertising a product too early in its lifecycle can be counterproductive. Ads can drive too much trial, too early, and potentially overwhelm the company and disappoint customers.
Cult followings. Early adopters of new products like to feel special. The timing and placement of mass advertising needs to be considered carefully.
Advertising can obviously be incredibly effective. During the last recession automaker Hyundai greatly accelerated its business thanks to increased ad spend and some brilliant messaging. But it’s also important to know when ramping up paid advertising can potentially damage a company or simply be a poor use of funds.