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Ads About Nothing (Relevant)

They look beautiful on screen or on a page. Almost like watching a short, artsy film. But it is an ad and though you know who it is for, it doesn’t say anything about the positive attributes of the product. American Express is particularly good at this. Are such ads useful or a waste of money? Two of our friends at Yale, Dina Mayzlin and Jiwoong Shin investigated this phenomenon and came to some very interesting conclusions.

Dina and Jiwoong theorize that “uninformative” ads are actually useful if you have a high quality product. Their definition of “high quality” is attributes that can meet people’s needs. Uninformative (yet attractive) ads are likely to get people to search for more information about that brand. This will then reveal the superiority of that brand. If a low(er) quality brand were to mimic this strategy the information search would expose its weakness. So the low quality brand has more incentive to talk about just the one or two attributes on which it may excel.

If high quality brands are good on many attributes, why don’t they talk about all of them? Because advertising is expensive and people are not particularly well tuned to ads (to say the least). So a nice short film that is attractive (and uninformative) can not only get attention, but also get people to search for more information and hence increase the chance of being chosen.

The authors use a game theoretic model to develop their conclusions. As they freely admit there can be other explanations. Image based advertising is a clear alternative. American Express may want to convey a certain image of its brand with Robert De Niro pensively walking the streets of New York talking about his love for the city. Nevertheless what the authors have shown is one way to interpret why high quality brands use uninformative advertising.

Dina Mayzlin and Jiwoong Shin are Associate Professors at the School of Management at Yale University. 

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Guest Wednesday, 21 October 2020

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