Is there a point to television advertising?

Well there is, if you compare the different fortunes of Acorn Computers and Apple. Acorn, once the biggest supplier of computers to British schools and a major seller to UK homes, ditched its TV advertising – and made a fatal blunder.

BBC A3000When Acorn did advertise on the telly, the company did well and was profitable. During 1992, the company ran substantial advertising on television and in newspapers. Sales, which had previously been declining, went from £40.9m in 1991 to £48.2m in 1992 and then £54.3m in 1993. There was a high-profile television advertising campaign from November to Christmas 1992, which highlighted the fact that while the computers did all the games and leisure stuff that children like, they also had exclusive educational software that would keep the parents happy. The campaign had a USP that evidently worked – even despite the launch of the hugely popular Windows 3 in 1990.

So, faced with this success, what did Acorn do? Well, they dropped their advertising agency and dramatically scaled back their ad spend. They never advertised on television again. The result? Turnover collapsed and the company went from profit to perpetual loss.

For a while, thereafter, the marketing concentrated around mailing VHS cassettes to those who had requested information. The argument was that a video tape would allow more time to explain the benefits of the Acorn machines.

But in so doing, the company missed an essential point of television advertising. Because it is expensive, it reassures consumers like nothing else. TV adverts don’t just sell a product: they convince people that a supplier will still be around in two years’ time. Bear in mind that dozens of significant computer brands had disappeared in the 1980s, so such reassurance was necessary.

By the middle of the 1990s, people didn’t care that Acorn machines had certain technical features that were nice: they worried about investing considerable time and money into a computing ecosystem that was about to be wiped out. This lack of consumer confidence meant that, by 1998, the company was forced to exit the market.

Meanwhile, Apple continued investing in its advertising and, despite its many problems in the Nineties, survived.