How brands can harness the principle of costly signalling

There’s not a brand out there that would want to be judged as mediocre. But how best to communicate quality?


Simple models of communication make the answer seem obvious. Within their advertising, the brand (the sender) sends a message (we’re high-quality) to the consumer (the receiver) via a medium (e.g. TV).

But of course, communication doesn’t work like that. The oversimplification of this model is brilliantly illustrated by Jeremy Bullmore in his book More Bullmore. He imagines a scenario in which a comedian aims to convince the audience of his wit. So: the sender is the comedian; the receiver, his audience; the medium is the comedian’s voice. And the message? Well, following this model it would be, “I am funny.”

What would the audience perceive? Maybe that the man is confident, possibly conceited. Maybe just a bit of an idiot. Certainly not that he is funny.

No, in order to communicate this, the comedian has to make his audience laugh. So, he tells a joke. They laugh. And their perception is that he’s funny. They interpret what he says and come to a conclusion.

So, Bullmore highlights an alternative model, in which the “message” part of communication consists of stimulus (the words that are transmitted) and response (what the receiver understands). The receiver always participates in the communication.

And the most effective communicators, says Bullmore, don’t “rage at the receiver’s insistence on contributing to communications; they welcome it and turn it to their advantage.”


Show, don’t tell

So, the key is to communicate without overt statement. It’s not what you say, but how you say it that matters.

In a 2017 blog post, Bob Hoffman added his own take on the issue: “I walk into a room. I announce that I am the handsomest man in the world. I have just ‘said’ one thing but communicated another. What I have communicated is that I am a big jerk. The message has been undermined by the signalling.”

Sending the right signals is pretty easy in advertising - if costly. But that’s the point. Printing on high density, glossy paper costs you. Airing a 90 second ad in a primetime TV show costs you.

Consumers are switched on to this, instinctively interpreting messages against the media backdrop to grasp the unspoken meaning. By investing in the best, a brand signals quality and success - premium brands invest in premium advertising.

Of course, the wrong signalling can undermine messages just as well. Certain media - think flimsy door drops arriving alongside a local curry menu - conveys the opposite of quality. Have you ever seen a Prada poster in a service station toilet? Had a Porsche flyer shoved through your letterbox?


Where’s the evidence?

There’s good evidence that sending the right signals is effective. A study by Amna Kirmani, Assistant Professor of Marketing at the University of Maryland and Peter Wight, Professor of Marketing at the University of Stanford, explored the impact of perceived ad spend on perceptions of quality.

The team asked 214 women to read a magazine article which described a jogging shoe’s construction and appearance. The article included details of the advertising campaign, covering media, ad length and copy, and the advertisement’s cost. This was described as either $2m, $10m, $20m or $40m. For context, the article also stated that Reebok, Nike and New Balance typically spend an average of $10 million on new product campaigns.

Participants were asked to indicate the quality of the shoe on a nine-point scale. The mean results for each group were: $2 million = 5.39, $10 million = 5.67, $20 million = 6.16

So, the higher the spend, the higher the perceived quality. This is the principle of costly signalling.

However, there was a caveat. When spend seemed excessive it backfired. When the participants thought the shoe brand had spent $40 million, which was out of kilter with the competition, the means score = 5.71.

The academics argued that excessive spend might signal desperation and undermine advertising impact.


What’s going on?

The association between quality product and high-cost advertising may happen for three reasons. Firstly, consumers may believe that advertisements which incur high cost likely means that marketers have confidence in the product.

Secondly, from previous encounters, consumers may have observed that high quality advertising is actually associated with higher quality products; hence this association may be reflected in future advertising campaigns.

Thirdly, more expensive campaigns may be seen as an indication of a firm’s financial strength, hence it may be perceived that firms in this position would make high quality products.


What can you do?

At first glance these findings might sound rather depressing. That conveying quality comes at a hefty cost.

Thankfully though what matters is not your actual spend as a brand but rather your perceived spend. And one way to boost your perceived spend is through your channel mix.

When writing The Choice Factory, I undertook some initial research in this area. I asked 502 people how much they thought advertising on TV, cinema and YouTube cost. The median estimate was £25,000 for a million views of a 30-second ad on cinema and TV but only £5,000 on YouTube for the same number of views. Of course, their guesses might be wrong. But that's irrelevant. What matters is the perception.

My findings were small scale and indicative, but they’re now supported by more in-depth research from Thinkbox. People infer the spend a brand has made on their advertising from the channels they use. The findings show that you can benefit from the principle of costly signalling without breaking the bank.

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