How does advertising affect sales in the long-term?
Marketers have long known advertising increases sales in the short-term. Show consumers an ad, and they’re more likely to buy that brand in the near future.
But the long-term incremental effect of advertising has been hard to measure. A seminal 1990s study concluded the long-term effect of advertising is roughly equivalent to the short-term effect, a phenomenon commonly known as the 2x (“two-times”) multiplier. The study was revelatory, and the 2x multiplier quickly became widely-accepted knowledge in the industry.
NCS sought to test the theory and measure the actual multiplier of any campaign.
NCS’ long-term effectiveness study reveals that while the average sales lift is roughly a 2x multiplier, every brand and campaign is different. Advertising can increase sales lift by as much as 3.5 times in the long-term, depending on the length of the purchase cycle.
Perhaps more importantly, the study found it’s easier to increase sales among existing customers than it is to convince someone to buy your brand for the first time. The finding convinced marketers that oftentimes, their money is better spent building long-term equity with pre-existing customers than getting consumers to switch brands.