Halo Effect in Advertising

by George N. Root III

A "halo effect" occurs when a company or product finds marketing success due to its association with a successful company, product or other recognizable element. If the halo effect is used properly, it can help a company save money on marketing by using previous momentum to reach a target audience. But there are also dangers to this marketing approach that business owners need to understand. By examining examples of halo effect marketing, you can better understand its benefits and challenges.

Catalog Sales

Companies often benefit from the halo effect of catalog sales when they release a product that becomes popular with consumers. Not only do past products start to sell, but the halo effect can also extend to future product releases. When one product from a family of products sells well, the rest of the product catalog can benefit. One of the most common examples of this is in the sales of music CDs. When an artist has a hit song or album, the rest of his catalog starts to sell along with the current hit. The one drawback to capitalizing on catalog sales occurs when the previous products are significantly different than the popular one. In the music example, if the artist changed his style to sell more records, then trying to market the entire catalog may confuse fans who are expecting all of the music to be in the same genre.

Corporate Brand Name

Some corporate names become powerful marketing tools in their own right, which can lead to a halo effect to marketing other products. For example, the Nike company developed strong reputation for making basketball sneakers and tennis shoes. Nike used the successful image it had developed in sports shoes to expand out into sporting equipment such as golf balls and golf clubs. If the corporate brand name is strong, then any product released by that company will become instantly recognizable to consumers.

Celebrity Endorsements

Celebrities are used to endorse products in all forms of advertising. The connection does not always need to be obvious to be effective. For example, a sports figure endorsing a shaving cream does not offer a direct correlation between the athlete's profession and the product. But the halo effect stems from the marketing value gained by associating the product with the fame of the celebrity. This can become a problem if the celebrity gets involved in a public scandal such as a drug arrest or charges of domestic abuse; the association is no longer beneficial and the company often severs ties with the celebrity. However, such an association can remain in the minds of many consumers even when a new celebrity is hired for a new marketing campaign.

Industry-Wide Halo Effect

When a product phenomena takes off in a given industry, it can create a halo effect that all of the manufacturers within the industry can take advantage of. For example, when hybrid vehicles were marketed as offering significantly better fuel efficiency than standard vehicles, several auto makers used the ensuing popularity of hybrid vehicles as a way to improve sales by introducing their own hybrid models.

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