This study examines how advertising creativity affects consumer processing and response. First, traditional hierarchy-of-effects (HOE) models are reviewed and then augmented with new developments in advertising and persuasion research to identify five major stages: brand awareness, brand learning, accepting/rejecting ad claims, brand liking, and brand intentions. Theoretical links are identified that predict ad creativity will impact 13 key variables in all five HOE stages. An experiment is conducted that manipulates the two major determinants of ad creativity: divergence and relevance. Results confirm the expected divergence-by-relevance interaction effect for 12 of the 13 variables demonstrating the potency of creative ads (and the ineffectiveness of ads with low creativity). In addition, a test is conducted using structural equations modeling (SEM) to see whether all the effects of ad creativity are mediated through each successive HOE stage. Results show that the HOE s assumptions hold up reasonably well, although divergence is powerful enough to exert direct (unmediated) effects on brand awareness and brand liking.