Publicity and advertising: what matter most for sales?
- The purpose of this research is to understand the relationship between publicity, advertising activity and corporate sales in the context of a company's existing reputation.
- The study brings together four unique industry datasets and uses discriminant analysis and multiple regression methods to examine the relationship between existing corporate reputation, publicity, advertising activity and sales levels for major multi-national companies in the technology products sector.
- Positive publicity is most important in distinguishing between firms with higher and lower sales. The effects of negative publicity and advertising are dependent on a firm's existing reputation. For companies with weaker reputations, positive publicity in tandem with business-to-consumer (B2C) advertising is most highly associated with higher company sales. Conversely, for firms with stronger existing reputations, advertising has a significantly diminished role; positive and even negative publicity are most crucial in distinguishing between companies with high and low sales. Negative publicity can be harmful to these firms though if it is not balanced by more positive publicity. Finally, the topic of news coverage is related to sales. Generally, stories that are positive reporting on business outcomes, leadership and business future and marketing practices are most important in discriminating between firms with stronger vs weaker sales.
- For this set of technology product firms, publicity and advertising are relevant for sales. Firms with higher levels of sales have both more positive and negative publicity, but the volume of positive stories is much higher. Attracting negative publicity is common for firms that achieve higher sales, but it is offset by a greater number of positive stories, an aspect that public relations efforts can influence. B2C advertising spending meanwhile matters more for firms with weaker rather than stronger existing corporate reputations. It is most effective for firms with weaker existing reputations to maximize the positive signals in the marketplace as exemplified by positive publicity and B2C advertising efforts.
- Little research has examined the relationship between different forms of corporate communications and sales; this study is a rare examination using publicity, advertising spending, existing reputation and sales in a durable goods and services context where there has been a particular dearth of even basic advertising studies. Beyond understanding the relative importance of publicity v. advertising, it also uniquely focuses on the individual topics of news publicity.