Ads About Value, Not Prices and Promotions, May Work Best in Recession

JC Penney has had a hard time executing a new marketing strategy that plays up laughs with Ellen DeGeneres while trimming annual promotions to 12 from nearly 600. But maybe the retailer was on to something. Humorous commercials consistently resonated best with viewers before, during and after the recent recession, a new study from Nielsen suggests. Advertising relying on prices and promotions, on the other hand, didn't perform as well -- even when the economy suggested many consumers would be scaling back and spending less. The study looked at 4,000 packaged-goods commercials from 2006 through 2011, evaluating the effectiveness of various creative approaches while the economy was still strong, during its plunge and after the recession officially ended. "Effectiveness" reflects measures such as appeal and likeability, ad recall and purchase intent. "While a humorous storyline was the top driver for each period, suggesting in good times and bad consumers like to laugh, the real surprise was the low scores ads focused on price and promotion received, even during the height of the recession," said James Russo, VP for global consumer insights at Nielsen, in a statement provided by the company. "Contrary to what many leading companies might have thought." Mr. Russo is presenting the findings at the Cannes ad festival on Thursday. In 2008 and 2009, when the recession was at its worst, humorous ads scored 133 on Nielsen's effectiveness scale, where 100 is the average. Price-driven ads received a score of 73 during the same period. Humorous ads' effectiveness dipped somewhat in the recession while price ads improved marginally, but price ads still underperformed other creative approaches, according to the study. While price- and promotion-centered ads did not particularly resonate with recession shoppers, however, value propositions did. Instead of focusing primarily on a sale or specific price, Nielsen said, value-centric ads go beyond price to communicate other benefits such as convenience and affordability. Ads pitching value saw a significant lift in effectiveness during the recession, when their scores jumped to 107 from 88, according to Nielsen. "Another example of how savvy consumers were -- and are, for that matter -- redefining value," Mr. Russo said.

Ads About Value, Not Prices and Promotions, May Work Best in Recession

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