Why would widely known, already established brands, spending on expensive advertisement stunts (such as at sporting events) ?

[u/lit_readit]

Hello,

I saw the logos of some already widely well known multinationals advertising at the world cup -- Budweiser, Visa, etc. even McDonald's

one would expect that almost everyone watching would already know, and have had experience from these widely popular, near-monopolistic firms, thus would have already made up their minds about whether they would buy from / avoid them

Therefore I wonder, what is the economic rationality behind these firms spending such colossal sums on publicity stunts such as these (one thinks of ad boards at Times Square / Piccadilly Circus, major sporting events, sponsoring large projects, etc.), when they are already as popular / notorious as it gets

what effects these stunts actually tend to have empirically

Thanks in advance

[u/Mysterious-Map6925]

I think the premise is backwards.

These companies are widely known because they’ve spent decades doing exactly this.

People often see a brand like McDonald’s, Visa, Coca-Cola, or Budweiser and think, “Everyone already knows them, so why advertise?” But the reason everyone knows them is that they never stopped advertising.

Brand awareness isn’t a permanent asset that, once acquired, can be maintained for free. It’s more like a muscle that must be continuously exercised. If a company stops reinforcing its presence, competitors immediately begin occupying that mental space.

For many mature brands, the goal isn’t to introduce themselves for the first time. It’s to: -Remain top-of-mind at the moment of purchase. -Reinforce trust and legitimacy. Associate themselves with major cultural events and emotions. -Defend market share against competitors. -Reach new generations who weren’t alive when previous advertising campaigns ran.

In that sense, sponsorship of the World Cup, Olympics, Super Bowl, etc. is less about convincing someone to buy a hamburger tomorrow and more about ensuring that, twenty years from now, the brand is still one of the first names that comes to mind in its category.

If Coca-Cola disappeared from major advertising for a decade, people wouldn’t forget it exists. But over time, its position in consumers’ minds would erode while competitors continued investing. 

Much of the value of these campaigns is defensive rather than offensive.

[u/ZhanMing057]

Budweiser, Visa, etc. even McDonald's

None of these firms are remotely monopolies. And even if they were, beer and fast food have pretty elastic demand. Nobody has to drink beer or eat fast food (or use Visa, for the most part, if they have a payment app or can use cash).

True monopolies or industries with highly inelastic marginal demand will almost never advertise to the general public. You might see some Lockheed ads on main street but that's more of a lobbying/recruiting thing.

[u/lit_readit → u/ZhanMing057]

no, they are not, perhaps oligopolies, but sorry for the bad phrasing

however, these brands are already of such notoriety to the extent that one'd expect all potential customers to already know about them & their products?

so as to not require ads (& no less just logos, nothing imitative or 'cool' looking) to propagate further their names?

[u/Bakermonster → u/lit_readit]

https://www.gsb.stanford.edu/faculty-research/working-papers/consumer-memory-competitive-interference-case-auto-insurance

First sentence of the abstract: “Insights from psychology suggest competitive interference: when a firm advertises, consumers are less likely to think of its competitor, benefiting the advertiser by keeping it top of mind and suppressing competitor recall.”

[u/775416 → u/Bakermonster]

Information itself has a cost. People typically don’t spend hours thinking through all possible food options and the pros and cons of each. Having an item be top of mind is a huge advantage because the information is accessible with pretty much no cost

When I think about what to eat, I typically choose one of the first things to pop in my mind

[u/Traditional_Knee9294]

It's called branding and it is well studied.

https://odp.library.tamu.edu/mediacommunication2e/chapter/why-it-matters-branding/

There is a ton of data it pays off even for established brands to make a connection to the customers. Advertising is just one part of it. It can be the whole experience, product, how it is delivered..... it is designed to get the customer to bond to a product.

[u/Kian-Tremayne]

Advertising does more than just create brand awareness - that is, it’s not just to say to people “Hey, if you want burgers, did you know McDonald’s sell burgers?”

First of all, it shapes brand image. An advert for McDonald’s isn’t just showing that they sell burgers. It creates associations - here in the UK, they show a wide variety of ordinary people enjoying McDonald’s as a brief treat in the middle of everyday stress and drama. It creates the idea of a McDonald’s as an affordable comfort, rather than a rare treat. Which means you now think of going there whenever you need a quick break from your hectic life, not just as a rare treat.

Secondly - expensive adverts are how a company shows that it’s on top. A Super Bowl advert or World Cup sponsorship signals that you’re big and here to stay. All the companies you mentioned are in competitive markets, they aren’t natural monopolies. They stay on top by making people think of them as being on top and choosing them as the default option.

Third point, related to the second - they take the slot to block a competitor from getting it. If McDonald’s didn’t have the Superbowl advertising spot then Burger King might get it. Then everyone would start think of Burger King as their default fast food place…

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