The Impact of Advertising Copy Testing: Is the Advertiser Getting More Than He Bargained For?

ABSTRACT - An agency's effort on behalf of its clients consists of message development and creative execution. The message determines the effectiveness of the ad; the execution, its efficiency. The paper examines how copy testing procedures affect the balance between these two components.

Citation:

Lauranne Buchanan and Amiya Basu (1989) ,"The Impact of Advertising Copy Testing: Is the Advertiser Getting More Than He Bargained For?", in NA - Advances in Consumer Research Volume 16, eds. Thomas K. Srull, Provo, UT : Association for Consumer Research, Pages: 479-484.

Advances in Consumer Research Volume 16, 1989      Pages 479-484

THE IMPACT OF ADVERTISING COPY TESTING: IS THE ADVERTISER GETTING MORE THAN HE BARGAINED FOR?

Lauranne Buchanan, University of Illinois at Urbana-Champaign

Amiya Basu, University of Illinois at Urbana-Champaign

ABSTRACT -

An agency's effort on behalf of its clients consists of message development and creative execution. The message determines the effectiveness of the ad; the execution, its efficiency. The paper examines how copy testing procedures affect the balance between these two components.

THE PROBLEM

Ideally, an advertisement would be evaluated as a message and as a medium. By message, it is meant the content or substance of the advertising communication; in other words, "what is communicated.'f By medium, it is meant the execution or presentation of the message; that is, "how the -message is communicated."

The message is at the heart of advertising effectiveness. If the information conveyed in the advertisement is not credible, if it is not relevant to the consumer's decision process, the advertiser has little hope of effectively persuading the consumer to follow his directives. To the extent that the information conveyed is relevant and important to the consumer's choice process, the ad's ability to influence consumer behavior increases. Such information can be conveyed either directly through product claims or indirectly through visual images or other sensory cues.

While "what" is conveyed in an ad is important to the effectiveness of the advertisement, "how it is said" is key to the ad's efficiency. If the ad is not interesting, if it is not creative, the consumer is less likely to attend to the ad. Or, if he does, he is likely to allocate only part of his processing capabilities to it. To the extent that the ad is creative, it is more likely to attract the consumer's full attention and perhaps to even generate discussion among consumers. If so, the number of repetitions needed to deliver the product message decreases, thereby reducing media cost.

The profitability of the overall marketing program is enhanced by both an effective message and an efficient medium. The message contributes to sales; the medium affects the cost of delivering the message. Obviously both are desirable; but delivery of the message is essential. Regardless of how creative a campaign is, if it does not deliver the intended message it will not contribute significantly to the marketing program.

Some fear that a highly creative execution will decrease the ad's ability to effectively deliver the message. The medium may overpower the message so that consumers pay attention to the ad without learning what it says about the product. Another problem is that a highly creative execution may offend part of the audience; what engages some, may offend others.

The necessity of conveying the product message and the risk involved in using a creative approach lead risk-averse managers to opt for more 0 conservative advertising executions. After all, dull and boring ads may eventually get the message across, even though it requires more repetition. Unfortunately, few companies in today's competitive environment can afford this approach. It has been estimated that consumers are bombarded with over 2000 commercial messages every week. With rising I media costs, many advertisers have resorted to shorter commercials and smaller ads. The net result is increased clutter, reducing the ability of advertisements to communicate effectively. In ' addition, today's technology has given the consumer i the ability to avoid commercial messages altogether. With a VCR and remote control in hand, viewers can k simply "zap" their way through commercials.

Obviously there is a strong need to balance the I message and medium, to convey product information j through creative execution. But the balance is often difficult to achieve. The process is further complicated by the fact that a client firm usually [ employs an outside advertising agency to develop the > advertising campaign, and the agency's goals may not j match the client's goals.

This paper reflects on some of the factors that affect the relative emphasis placed on message development versus creative execution. We consider the goals of both the client and agency, the client's reliance on standardized copy testing procedures to monitor the agency's efforts, and the agency's allocation of effort as a result of the monitoring process. Before we look at the client/agency interaction, let us first examine the process involved in developing the message and medium.

THE MESSAGE AND THE MEDIUM

Message Development

The development of the message, for all its importance, is relatively straightforward. Open any basic marketing or advertising text and there are several chapters on the analysis of the industry, of competitors, of target markets. The purpose of these chapters is to lay out a logical and systematic program for developing "what to say" to consumers. In addition, marketers have a sophisticated repertoire of statistical tools and procedures to aid in message identification and development. All of these provide the marketer with tools for developing an effective message.

In short, the development of "what to say" to the consumer follows a routine script. This is not to imply that creativity is not involved in the development of the message. Interpreting data and identifying opportunities are an art in themselves. However, the process is well structured, and consequently is amenable to standardized evaluation procedures.

Medium Development

In contrast, the script for "how to communicate the message" is not well defined. Such advertising giants as William Bernbach and Leo Burnett have long advocated the position that innovativeness and creativity are essential components for effective execution. As Bernbach (Mayer 1958) said:

"Why should anyone look at your ad? The reader doesn't buy his magazine or tune in his radio and TV to see and hear what you have to say ... What is the use of saying all the right things in the world if nobody is going to read them? And, believe me, nobody is going to read them if they are not said with freshness, originality and imagination ... if they are not, if you will, different."

And Burnett (1961):

"I believe the public is unable to sort out messages, not just because of the sheer flood of messages assaulting it every day, but because of sheer boredom!"

More recently, advertisers themselves have taken up the call for more creative advertising. This theme was reflected in a recent Business Week review of the advertising industry (1988, p.76):

... most clients ask one crucial and highly subjective question during the agency review process: Who produces the most creative and effective commercials? Clients have always wanted attention-getting campaigns, but with spiraling media costs and the rising clamor of competing messages, hot ads are needed more than ever."

The question is: what makes an ad "hot"? We all recognize it when we see it, but it is difficult to put our finger on exactly what makes the ad work.

Take, for example, celebrity endorsements. Celebrities have been used so often and for so many products, many advertisers fear celebrities have lost their pull despite their enormous fees. But every now and then, a campaign comes along that uses this standard technique in an innovative and creative way.

Consider a recent ad for Spiegel catalogs (Garfield 1988). On a stark white background, the ad pictures a silk nightgown draped from a wire hanger. The headline: "Bianca Jagger's Silk Gown: Purchased November 9, 1987." The copy:

"When it came time to go shopping one afternoon last fall, Bianca Jagger didn't hop into a limousine. Or even a taxi cab. Instead, she hopped on her exercise bike. And after pedalling 8 mile with the Spiegel Catalog resting on the handlebars, she found just what she wanted."

No picture of Bianca. No personal recommendation. Just the fact that Bianca buys from Spiegel.

The ad is based on the same principle as hundreds of other ads: if the product is good enough for the jet set, it's good enough for you, the average consumer. And yet, this ad is distinctively different from most celebrity endorsements. The deliberate understatement of the ad compels the reader to stop flipping through the magazine and read it.

Certainly, we can think of other "spokespersons" that captivate our attention, some that have absolutely nothing in common with Bianca. Morris the Cat sells cat food by insulting us; Spuds McKenzie sells beer by being the ultimate party animal; Charlie the Tuna sells tuna by never being good enough to make the team.

The point is that it's difficult to draw any principle about the effective use of celebrity endorsements, or any of the other creative formats for that matter. As spokespersons, Bianca, Spuds, Morris and Charlie have little in common. But every time the ad appears, we stop to read and to watch. Why? They reward the consumer with 30 seconds of cheap entertainment. And in return, the advertiser gets the undivided attention of the audience.

Since there are an infinite number of ways of communicating product attributes and any number of spokespersons (real or animated) to choose from, how is one selected? And on what grounds can the client evaluate its potential? Who could have predicted, for example, that a tuna with a Brooklyn accent (and a loser to boot) could sell so much tuna? Imagine the nerve it took to go into the client's office and say, "We've got this great idea for a spokesperson..."

In playing out this last scenario, it becomes obvious that innovation and creativity require the support of both the agency and the client. Innovation is not just the result of mystical processes employed by creatives. Rather, the magic of the creative process is significantly and predictably constrained by the client/agency relationship.

To understand the nature of the relationship between the client and the agency and its impact on innovation and creativity, we borrow from the framework developed by Principal-Agency theorists. Agency Theory was developed by economists interested in the question of how to develop optimal incentive packages under conditions of uncertainty. While our present context is far-a-field from the principal domain of the theory, the theory nonetheless provides a rich framework for analyzing the complex relationship between the advertiser and the agency.

THE CLIENT/AGENCY RELATIONSHIP

The first step in understanding the impact of the client/agency relationship on the advertising program is to consider the client's and the agency's objectives. Are they compatible? What are the sources of potential conflicts?

The client's objective is to maximize the incremental profit gained from advertising. Profits derive from additional sales due to advertising minus the cost of advertising. As we previously indicated, the advertising message and execution affect both dimensions of the profit equation. The right message creates sales by influencing consumer choice. The right execution reduces cost by minimizing the number of repetitions needed to communicate the message.

The agency has multiple objectives in creating an advertising campaign. One is to maximize profits which is generally achieved through satisfying current clients. Their income is directly related to the client's purchases of their service, and cost is related to client acceptance of the advertising.

In addition, the agency is driven to develop a highly creative product. From an idealistic viewpoint, there is the inherent satisfaction derived from artistic expression. From a pragmatic viewpoint, the long run success of the agency depends on its creativity. Agencies develop their reputations and attract new clients on the basis of their creativity. A recent article in Advertising Age illustrates the reward of creative excellence for both the individual and the agency (Pendleton 1988).

"In many ways creative awards have become the means by which creative executives - and agencies - build careers and make reputations. ... For creative people, the rewards can be enormous: from awards flow promotions, money and visibility.... It can work for agencies, too. Fallon McElligott didn't exist seven years ago. But today it has a reputation as one of the hottest agencies in the country, attained through a calculated strategy of pursuing creative excellence - and creative awards."

A reputation for creativity increases the agency's marketability to other clients. This reduces the agency's dependence on current clients and its uncertainty about long term profitability.

In considering the individual goals of the client and agency, it is evident that their goals can be compatible with one another. The client's goals are served as long as the agency derives satisfaction from servicing the client and from the creative expression allowed by the client. However, conflict can arise when the agency's need for creative expression comes at the expense of the client's program or when the client stifles the agency's creativity. The question becomes: how can the client ensure that the agency works to maximize the client's outcomes? For insight into this question, we borrow from the framework developed in Agency Theory. Let's first outline some of the major points of the theory and then apply it to this context

Agency Theory

In its simplest form, Agency Theory involves the relationship between a principal, the owner of a firm, and his agent, the manager. The owner's objective is to maximize his firm's profits; however, his ability to do so depends on the manager's efforts. The model assumes that there is a correspondence between the manager's level of effort and the impact of that effort; in other words, the harder the manager works, the higher the owner's profits, other things being equal. (A similar assumption is made in other applications of Agency Theory in marketing; see Basu, Lal, Srinivasan and Staelin 1985; Lal and Staelin 1986). The owner also recognizes that the firm's outcomes are affected by exogenous events in addition to the manager's efforts.

The owner's problem is to write an employment contract to ensure the necessary level of effort on the manager's part. Since the owner can't force the manager to work, the contract is written to appeal to the manager's self-interest. Consequently, the first constraint is that the contract must be as good as the manager could attain elsewhere for the same level of work.

If the manager's efforts can be directly observed, all that is needed for an optimal contract is a penalty clause. By including a penalty clause to punish the manager for shirking his duties and evading obligations, the owner is assured that the manager will expend the level of effort needed to maximize the firm's profits. The contract is self-enforcing. The optimal employment contract pays the manager a fixed wage contingent on his effort but independent of the observed outcomes of the finn. This contract allocates all of the risks involved in uncertain outcomes to the owner, who is assumed to be risk neutral, and none to the manager, who is assumed to be risk averse.

If the manager's efforts are not observable, writing the optimal employment contract is more difficult. Since the owner cannot directly observe the manager's behavior, he has to rely on the firm's outcomes as a signal of the manager's effort. But the signal can be distorted by exogenous factors. High outcomes may result when the environment is kind and the manager's effort is low. Conversely, low outcomes may result when the environment is unkind and the manager's effort is high. Given limited information, the owner can only make probabilistic inferences regarding the impact of exogenous events and the manager's behavior.

Since the manager can blame poor outcomes on exogenous factors, he has no incentive to work hard on the owner's behalf. To overcome this, the owner has to impose some risk on the manager. By tying the manager's compensation to the firm's outcomes, the manager is motivated to work harder to overcome the uncertain environment and thereby improve his own outcomes. Thus the optimal incentive package is no longer a fixed wage contract, but a reward paid contingent on the firm's outcomes.

Extensions of the model have investigated alternative mechanisms for increasing the owner's information when the manager's behavior is unobservable. One mechanism available to the owner is to monitor the manager's behavior. Monitoring improves the owner's ability to distinguish between the impact of the manager's actions and the environment. To that extant, monitoring activities reduce the level of risk imposed on the manager.

Because monitoring efforts are costly, there is a tradeoff for the owner between the expense of monitoring and the potential payoff. Monitoring may make the manager work harder. On average, the increased effort will increase the firm's output. However, the incremental output gained from monitoring may not compensate for the cost involved.

The problem is further complicated when the monitoring technology itself is imperfect. In this case, monitoring can introduce additional uncertainty for the manager for it increases the probability that the manager will be blamed for events that are not under his control. Because imperfect monitoring systems actually increase the manager's uncertainty, the threat of being investigated may be enough to motivate the risk-averse agent to act conservatively.

It is the effect of monitoring systems, the schedule of implementation, and their impact on creative execution that is of interest to us here. Before exploring the impact of the monitoring system, let us first make a few observations about the incentive scheme used in the client/agency relationship.

The Incentive Scheme

To those familiar with the client/agency relationship, the correspondence with Agency Theory may at first be obscure. For one thing, agency compensation has rarely been used as an incentive. Instead, the traditional methods of compensation for agencies are based on fees or, more typically, the fifteen percent commission on billings, a hold over from the days when agencies acted as brokers for newspaper space.

There are obvious deficiencies with the fifteen percent commission. Rather than encouraging the agency to develop an efficient program for the client, the commission is a disincentive. The agency potentially benefits from a less efficient advertising program which requires more media time and space. Only their inherent desire to develop creative expression acts to balance their efforts on the client's behalf.

Despite its limitations, clients continue to use the fifteen percent commission. In part, this is due to the difficulty of writing an optimal contract in this situation. The client cannot observe the agency's activities. More importantly, the client cannot use the firm's outcomes as a signal of the agency's effort. The impact of the agency's efforts (the quality of the advertising) on the client's outcomes (sales) is confounded not only by exogenous factors but with the client's efforts as well. The advertising program developed by the agency is only one part of the overall marketing program which is under the client's control. Since the agency" and client's efforts are entwined, it would be very difficult to fairly allocate the risk involved in an uncertain environment.

Given the difficulty in evaluating the agency on outcome criteria, process criteria become more important. The risk averse agency will focus its abilities on satisfying the criteria established by the monitoring process.

The Impact of Monitoring

Given that clients cannot evaluate the agency's efforts through direct observation or even through their outcomes, they rely on monitoring procedures. E Agency Theory, monitoring is used as a means of gaining information. The impact of monitoring is simply to increase the agent's level of effort. In the client/agency relationship, however, the impact of monitoring is more complex. Not only does monitoring increase the level of effort, it also affects the actions taken by the agency.

In order to understand the affect of monitoring on the agency, one first has to understand the nature of the monitoring technology. Independent research organizations provide the client with the means for evaluating or monitoring the agency's efforts. Such firms as Burke, ASI, McCollum-Spielman, etc., have all developed standard criteria and procedures for evaluating advertising effectiveness. While each one uses a different methodology, each has certain limitations. One limitation is the inability to accurately evaluate the efficiency with which the ad delivers the message.

Take Burke Day-After-Recall (DAR) as an example. Burke judges advertising effectiveness on the criteria of consumer recall of the advertising message. Twenty-four hours after a commercial has been aired, a sample of 200 program viewers are called and asked if they can recall any commercials in a particular product category. If they cannot identify the brand correctly, they are prompted. If the respondent recalls the ad, copy points are elicited. The results of this test can then be compared against norms developed from the DAR test bank. The average score on the DAR is 24 percent recall. That is, 24 percent of the people remember seeing the ad and can play back some part of the advertising message.

Recall of message content is the criterion used in the DAR test. Assuming that the client is satisfied with the process by which the agency developed the message, the copy test validates the effective communication of the message. The test results provide the client and agency with a measure of the advertisement's effectiveness in conveying the message.

But do copy tests evaluate efficiency? On one hand, this seems that they do. If the ad stands out from the clutter of other advertisements, then the respondent should be able to recall the ad. But on the other hand, recall may also be high due to past exposure to advertising for the brand or product. Given the high repetition used by some companies, respondents simply expect to see their ads. For example, if a respondent were asked to recall ads for fast food restaurants, the respondent may say to himself "commercials for X are on all the time, I must have seen one last night." In contrast, he may actually recall seeing a commercial for Y because the commercial was engaging enough so that he paid attention to it. Obviously, Y's advertising dollars are buying more than X's; but a recall test can not distinguish between the two situations.

This should not be taken as a condemnation of copy tests. It is just a recognition of their inherent limitations. Copy tests provide a measure of whether the message is communicated, but they may not accurately capture the quality of the ad that grabbed the consumer's attention. To the extent that this is a result of the creative process, it will be inherently difficult to measure with a standardized test. As Bernbach indicated, creative ads are different; and it is difficult to develop a standard procedure for testing something that is different with each execution.

Since the incentive program rewards inefficiency and the monitoring system cannot detect it, there is little incentive for the agency to develop its creativity for the client. Fortunately, the agency itself has the internal motivation to develop creative campaigns. In the next section, we consider different monitoring schedules and how these schedules interact with the agency's development of effective and efficient programs for their clients.

Monitoring Schedule

Clients differ in the* philosophies regarding copy testing. On practice, it seems that clients take one of two extremes. Some insist that each and every ad be tested using a particular testing procedure. Others never test their ads.. Based on the agency theory literature, we now exam*ne the potential impact of the testing schedule on the agency's efforts for the client.

Continual Schedule: By a continual schedule, it is meant that monitoring has become a standard operating procedure. That is, the agency expects that every ad will be evaluated using a syndicated research service. It is not important whether every ad is actually tested. As long as the agency thinks that the ad will be tested, it is likely to be more conservative in the development of the advertising campaign. The agency will not want to risk preparing a highly creative campaign that might interfere with message delivery and cause the ad to fail the test.

If the agency thinks that the ad will be tested and that a "go"/"no go" decision will be made on the basis of the results, the risk-averse agency opts for writing an ad that will pass the copy test. As any seasoned copy writer will attest, formulas exist for passing standardized tests: identify the product early, repeat the name often, use a catchy jingle, and so on.

Knowing the criteria for evaluation, a risk-averse agency is more likely to adhere to the tried and true rather than risk the unknown. If the client is going to rely on a DAR score, the agency is more likely to invest its time and money in producing ads that pass the test and win client approval.

The net result is an advertising campaign that is effective in the sense that it delivers the message, but is likely to be inefficient. As David Bernbach (Rowsome 1970) indicates:

"One of the disadvantages of doing everything mathematically, by research, is that after a while, everybody does it the same way.... If you take the attitude that once you have found out what to say, your job is done, then ... you've lost your impact completely."

A continual monitoring scheme has the effect of reducing creative or innovative execution. Clients who engage in continual monitoring will benefit from effective message development. Their ads will probably be on track, communicating the right message to the right audience. But they are less likely to be innovative, attention-grabbing ads.

The irony is that the agency is more likely to sacrifice creative expression for more important accounts. Recall that the tradeoff for the agency is between the utility derived from satisfying the client and that of creative expression. The more important the client, the more willing the agency is to forego creative expression.

To the extent that the client insists on testing ads, the lack of creativity will not hurt the agency's reputation. The agency has no choice but to comply with the client's evaluation process. Given this constraint, potential clients will not hold the lack of creativity against the agency.

Absence of Monitoring: While some advertisers test every ad, others never engage in monitoring activities Perhaps this is because they cannot afford the additional expense involved, or they simply do not believe in research.

In this case, the agency's need for creative expression is more likely to surface. Without monitoring, there is no mechanism to focus the agency efforts on a strong strategic program from which to develop the message. They are more likely to allocate less effort to message development and more effort to the creative execution. The result for the client may be award-winning creative campaigns. But they may also be a much higher risk. Some campaign may succeed despite the lack of strategic planning, but many others will fail.

CONCLUSION

In summary, copy testing has more of an impact on the advertising program than one might think. Not only does the process of copy testing ensure that the agency is working on the client's behalf, but it also directs the agency's efforts. Continual monitoring tends to focus the agency's attention on message development at the expense of creative execution. This leads to an effective but potentially inefficient advertising program. The total absence of monitoring, on the other hand, allows the agency to express its creativity, but at the expense of the discipline imposed by a strong strategic program. Consequently, this is a potentially high risk strategy for the client.

REFERENCES

Basu, Amiya, Rajiv Lal, V. Srinivasan, and Richard Staelin (1985), "Salesforce Compensation Models: An Agency Theoretic Perspective," Marketing Science. 4 (Fall), 267-291.

Burnett, Leo (1960), "Keep Listening to That Wee, Small Voice," in Communications of an Advertising Man, Chicago: Leo Burnett Company, Inc.

Garfield, Bob (1988), " Spiegel Catalog Strips its Mass-Market Image," Advertising Age, Vol. 59, No. 16 (April 11), 84.

Lal, Rajiv and Richard Staelin (1986), "Salesforce Compensation Plans in Environments with Asymmetric Information," Marketing Science, S (Summer), 179-198.

Mayer, Martin (1958), Madison Avenge, USA., New York: Pocket Books.

Pendleton, Jennifer (1988), "Awards," Advertising Age, 59 (April 25), 1, 94.

Rowsome, Jr., Frank (1970), Think Small New York: Ballatine Books.

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