What's the point of advertising?

Businesses spend money on advertising to achieve one, two or three things:

1. Increase sales volumes (either by selling to more customers, or getting customers to buy more than they would have) - usually achieved by running promotions;
2. Decrease price sensitivity (in other words, improve profit margins) - effectively done with long-term, sustained, emotional, brand building work;
3. Both of the above, at the same time - using a combination of promotional and brand building ads.

It's difficult to decrease price sensitivity in the short-term, but achieving it is a more profitable strategy to follow than increasing sales volumes.

The most profitable approach is #3 - increase volume and profit margin simultaneously.

Very successful businesses are the ones that strive to increasingly acquiring new customers, who are happy to buy a lot of goods per sale... and care less about what the expensive bill at the end of it all looks like.

Great businesses are great because they understand this interplay between volume and value and strive, over time, to affect both in their favour.

It's tempting and easy to only focus on using advertising to affect positive volume growth, but the far wiser use of an advertising budget is to leverage it to nudge your brand's worth, in the eyes of the customer, upwards.

It's a far more difficult project to succeed in, but that's the ultimate prize.