Research evidence to date suggests that the combined presence of item-specific and relational processing is necessary to induce higher memory performance of the target ad and proper evaluation of the target brand. This elaborative processing, however, requires cognitive capacity. In this paper, an item-specific-relational processing framework was employed to explain the roles of consumer product knowledge in the competitive and non-competitive ad contexts. Findings from an experimental study suggest that high- and low-knowledge consumers differed in product memory and evaluation in competitive and non-competitive ad contexts. Such differences could be explained by consumers' engaging in item-specific and/or relational processing depending on whether target brand information was presented with or without information on competing brands. It appears that competitive ad context would benefit low-knowledge consumers by serving as a reference. In contrast, high-knowledge consumers did not seem to be affected by ad context. Both theoretical and managerial implications are discussed. © 2011 Wiley Periodicals, Inc.