How You Can Make Advertising Pay Big Dividends
McGraw Hill once commissioned an extensive study to determine what marketing weapons make a company famous in it's market or community.
The study went on to show that advertising created more product, service, or brand awareness than all other marketing weapons combined.
The fact is, we know that Coke is "The Real Thing" because Coke advertises, not because it has good salespeople or does great direct mail.
Advertising stays in front of your prospects when you can't be there. While a handful of salespeople can only be in front of perhaps a hundred or so prospects per month, advertising can reach thousands of potential buyers each and every month, week, or day.
Studies also show that advertising inspires confidence from your current clients. When current clients see your ad, it reinforces their belief in you.
It makes them feel like they made the right decision to be your client. But advertising can also waste money if you don't use it properly.
To avoid wasting money, keep these three tips in mind. Don't spend money on an advertising vehicle if the majority of its listeners/viewer/readers will never buy your type of product or services.
For example, let's say that you own a commercial real estate company or a business bank. In both cases, you are only interested in business people.
Broad-reaching television or radio stations or general-interest daily newspapers base their rates on how many consumers they reach.
An examination of their audiences may easily show you that a high percentage of their listeners or readers are not business people, yet you will have to pay to reach all of them.
Conversely, there are more specialized advertising vehicles that target a far greater percentage of your potential buyers.
A business radio program or a business publication will offer you an audience comprised mostly of your potential buyers.
If you do advertise, do not expect that a single ad, or even a few ads, constitute effective advertising. Effective advertising needs to be consistent and steady.
However: If you don't have the budget to take a full advertising schedule, I often recommend that my clients buy one, well placed ad in the ideal magazine and then use that piece for years sometimes with a banner that says: "As Seen In Industry Today."
This ad then works very hard for you as a direct mail piece, promo piece, or even a hand out at a trade show.
Don't spread your advertising too thin. Some years ago, a corporate training company launched its services by buying a few spots per week on seven different radio stations.
Since it was not on any one station long enough to give its message a chance to take root, the advertising was a total failure.
The company should have taken its entire budget and sunk it into one or (at the most) two primary vehicles. Each advertising vehicle has a loyal audience.
You are far better off having a heavy schedule in one vehicle, where you have a chance to break through the clutter and get noticed, than to take a few spots in a half-dozen vehicles in which you get lost in the commercial clutter.
Today, repetition and concentration are the keys to successful advertising.
Another important point along the lines of advertising smart is that cable TV today can virtually change your life in a week. I know a fellow who has an electronic repair business.
He would fix VCR's, TV's, Toasters, etc. and he also would come to your home to hook up your entire entertainment system if you needed him to do that. The name of the business was Mr. Tim's Home Electronic Repair and Installation Service.
First, on my advice, he took an insert in the newspaper. (An "insert" is a flyer that is printed separately and "inserted" into the newspaper as a loose piece of paper).
This is generally a very good way to go with B2B in a trade journal or B2C in a newspaper.
These are good because they fall out of the magazine or newspaper onto your desk or kitchen table and they are less expensive to buy than printing your ad right in the vehicle of choice.
When I ran magazines and newspapers, we discouraged them because we NEEDED ads in the magazine/newspaper, but when we had a client we were going to lose over lack of response, we ALWAYS recommended the insert because they almost always worked.
So Mr. Tim's Home Electronic Repair and Installation Service took the newspaper insert in the local newspaper and bought, specifically, the major neighborhoods where he felt they have more time than money.
That's the other beauty of newspaper inserts is that you can generally buy a small piece of the circulation to test the idea or to concentrate geographically. This worked for months for Mr. Tim, as people kept the insert around until they needed him.
But one of the people that spotted that insert was the local cable salesperson who told him he could make him famous. Mr. Tim thought TV would be WAY too expensive, but, as it turns out, in some markets, you can buy just a neighborhood. You can buy by zip code.
So for $200 per week, Mr. Tim was on TV like 60 times per week, spread all over 50 different cable channels.
It was amazing. You'd be watching re-runs of Seinfeld and there would come this Mr. Tim's Home Electronic Repair and Installation Service ad and his phone would ring. It worked great.
Then one day he walks into a bike shop and someone recognized him from his TV ad. He was becoming famous from this mere $200 per week.
Not for everyone, but if you sell B2C, look into local cable and concentrate with a lot of spots.
Every business action requires some kind of cost justification. Does the effort justify the cost? Company X advertised its professional educational materials.
When it seemed as though the advertising was not working, the company was going to cancel its ad campaign.
Then it discovered a startling correlation between its advertising and its direct-mail efforts: Its direct-mail response went up by 30% in the months it advertised to the same audience.
This is typical. The more penetration you can get to the same audience, the better the possibility that you will get noticed.
In the '90s, getting noticed is everything. In today's commercial clutter, you get noticed only by continually reaching the same potential customer with a consistent theme, message, look, and feel.
If you advertise in a print medium (magazine, newspaper, etc.), you will find that most publications will rent you their mailing lists.
This means you can direct mail to the same audience to which you are advertising! This is a very smart usage of marketing dollars.
Look at the lifetime value. If you have an inexpensive product, your advertising has to deliver a high number of leads, or every lead has to turn into a repeat customer.
For example, say your average customer spends $25 with you. If you are spending $1,000 per month on advertising, you will need to attract 40 new customers per month to break even on the ad, not counting any of your other costs, such as product costs and overhead.
If those customers are one-time buyers, then you have to find a way to make your advertising more effective or less expensive. If they become regular buyers, then you can accept lower response rates.
The key here is to look at the "lifetime value" of a customer. A customer who spends $25 a month and comes to your store only once is only worth $25 to you.
But if you can get that customer to be a repeat customer, then that customer is worth $300 a year, or $1,500 over five years!
Most business people do not understand the power of advertising; they do not realize that each new $25 customer is potentially a $1,500 customer!
Advertising brings in the customers, but it is your job to keep them buying from you.
Advertising promotes word-of-mouth
Often, a loyal customer will see your ad while with a friend or business associate. Your customer will show your ad to the friend and say, "Hey Joe, now this is a really great company/product/service."
Joe will come into your business, and you will ask him how he heard of you. He will say that his friend referred him and never think to mention that it was your advertising that prompted the friend to open his mouth in the first place.
I headed up a Neilson study that tracked hundreds of ads and the response rate each ad generated. Each month, a computer printout listed the ads and how much response each had generated. The first printout came and it looked like this:
X Company....22 responsesMcGraw Hill once commissioned an extensive study to determine what marketing weapons make a company famous in it's market or community.
The study went on to show that advertising created more product, service, or brand awareness than all other marketing weapons combined.
The fact is, we know that Coke is "The Real Thing" because Coke advertises, not because it has good salespeople or does great direct mail.
Advertising stays in front of your prospects when you can't be there. While a handful of salespeople can only be in front of perhaps a hundred or so prospects per month, advertising can reach thousands of potential buyers each and every month, week, or day.
Studies also show that advertising inspires confidence from your current clients. When current clients see your ad, it reinforces their belief in you.
It makes them feel like they made the right decision to be your client. But advertising can also waste money if you don't use it properly.
To avoid wasting money, keep these three tips in mind. Don't spend money on an advertising vehicle if the majority of its listeners/viewer/readers will never buy your type of product or services.
For example, let's say that you own a commercial real estate company or a business bank. In both cases, you are only interested in business people.
Broad-reaching television or radio stations or general-interest daily newspapers base their rates on how many consumers they reach.
An examination of their audiences may easily show you that a high percentage of their listeners or readers are not business people, yet you will have to pay to reach all of them.
Conversely, there are more specialized advertising vehicles that target a far greater percentage of your potential buyers.
A business radio program or a business publication will offer you an audience comprised mostly of your potential buyers.
If you do advertise, do not expect that a single ad, or even a few ads, constitute effective advertising. Effective advertising needs to be consistent and steady.
However: If you don't have the budget to take a full advertising schedule, I often recommend that my clients buy one, well placed ad in the ideal magazine and then use that piece for years sometimes with a banner that says: "As Seen In Industry Today."
This ad then works very hard for you as a direct mail piece, promo piece, or even a hand out at a trade show.
Don't spread your advertising too thin. Some years ago, a corporate training company launched its services by buying a few spots per week on seven different radio stations.
Since it was not on any one station long enough to give its message a chance to take root, the advertising was a total failure.
The company should have taken its entire budget and sunk it into one or (at the most) two primary vehicles. Each advertising vehicle has a loyal audience.
You are far better off having a heavy schedule in one vehicle, where you have a chance to break through the clutter and get noticed, than to take a few spots in a half-dozen vehicles in which you get lost in the commercial clutter.
Today, repetition and concentration are the keys to successful advertising.
Another important point along the lines of advertising smart is that cable TV today can virtually change your life in a week. I know a fellow who has an electronic repair business.
He would fix VCR's, TV's, Toasters, etc. and he also would come to your home to hook up your entire entertainment system if you needed him to do that. The name of the business was Mr. Tim's Home Electronic Repair and Installation Service.
First, on my advice, he took an insert in the newspaper. (An "insert" is a flyer that is printed separately and "inserted" into the newspaper as a loose piece of paper).
This is generally a very good way to go with B2B in a trade journal or B2C in a newspaper.
These are good because they fall out of the magazine or newspaper onto your desk or kitchen table and they are less expensive to buy than printing your ad right in the vehicle of choice.
When I ran magazines and newspapers, we discouraged them because we NEEDED ads in the magazine/newspaper, but when we had a client we were going to lose over lack of response, we ALWAYS recommended the insert because they almost always worked.
So Mr. Tim's Home Electronic Repair and Installation Service took the newspaper insert in the local newspaper and bought, specifically, the major neighborhoods where he felt they have more time than money.
That's the other beauty of newspaper inserts is that you can generally buy a small piece of the circulation to test the idea or to concentrate geographically. This worked for months for Mr. Tim, as people kept the insert around until they needed him.
But one of the people that spotted that insert was the local cable salesperson who told him he could make him famous. Mr. Tim thought TV would be WAY too expensive, but, as it turns out, in some markets, you can buy just a neighborhood. You can buy by zip code.
So for $200 per week, Mr. Tim was on TV like 60 times per week, spread all over 50 different cable channels.
It was amazing. You'd be watching re-runs of Seinfeld and there would come this Mr. Tim's Home Electronic Repair and Installation Service ad and his phone would ring. It worked great.
Then one day he walks into a bike shop and someone recognized him from his TV ad. He was becoming famous from this mere $200 per week.
Not for everyone, but if you sell B2C, look into local cable and concentrate with a lot of spots.
Every business action requires some kind of cost justification. Does the effort justify the cost? Company X advertised its professional educational materials.
When it seemed as though the advertising was not working, the company was going to cancel its ad campaign.
Then it discovered a startling correlation between its advertising and its direct-mail efforts: Its direct-mail response went up by 30% in the months it advertised to the same audience.
This is typical. The more penetration you can get to the same audience, the better the possibility that you will get noticed.
In the '90s, getting noticed is everything. In today's commercial clutter, you get noticed only by continually reaching the same potential customer with a consistent theme, message, look, and feel.
If you advertise in a print medium (magazine, newspaper, etc.), you will find that most publications will rent you their mailing lists.
This means you can direct mail to the same audience to which you are advertising! This is a very smart usage of marketing dollars.
Look at the lifetime value. If you have an inexpensive product, your advertising has to deliver a high number of leads, or every lead has to turn into a repeat customer.
For example, say your average customer spends $25 with you. If you are spending $1,000 per month on advertising, you will need to attract 40 new customers per month to break even on the ad, not counting any of your other costs, such as product costs and overhead.
If those customers are one-time buyers, then you have to find a way to make your advertising more effective or less expensive. If they become regular buyers, then you can accept lower response rates.
The key here is to look at the "lifetime value" of a customer. A customer who spends $25 a month and comes to your store only once is only worth $25 to you.
But if you can get that customer to be a repeat customer, then that customer is worth $300 a year, or $1,500 over five years!
Most business people do not understand the power of advertising; they do not realize that each new $25 customer is potentially a $1,500 customer!
Advertising brings in the customers, but it is your job to keep them buying from you.
Advertising promotes word-of-mouth
Often, a loyal customer will see your ad while with a friend or business associate. Your customer will show your ad to the friend and say, "Hey Joe, now this is a really great company/product/service."
Joe will come into your business, and you will ask him how he heard of you. He will say that his friend referred him and never think to mention that it was your advertising that prompted the friend to open his mouth in the first place.
I headed up a Neilson study that tracked hundreds of ads and the response rate each ad generated. Each month, a computer printout listed the ads and how much response each had generated. The first printout came and it looked like this:
Y Company.......20 responses
Z Company.....23 responses
K Company.....223 responses
J Company......26 responses
In the midst of all the other ads generating responses in the low 20's, one ad was generated more than 200 responses!
Turning to the ad, we expected to find some totally new or unique offer, product or service.
Instead, we found that the product advertised was nearly identical in price and features to four or five other products in the same publication.
Thus, it wasn't the product that made the response jump so significantly, it was the ad! After a year of tracking the highest response generating ads, we learned that, for the most part, the ads that pulled the greatest response followed four primary rules:
Rule No 1: Is it distinctive? You must design advertising that is so distinctive looking (or sounding, if you're on the radio) that it pops out of the clutter.
In print, the first goal of high-response-oriented advertising is that it be visually distinctive. On radio, the audio must be distinctive. Naturally, TV has both visual and audio possibilities.
I ran a TV spot advertising a free seminar I'm doing with Jay Abraham. Among other images we used in the spot, I put a shot of me throwing a double side kick (I have 23 years of karate training) to the head of a business owner (we're both in suits).
What's the point of that? One point. It makes you want to find out "what the heck is going on there?" Today, 70% of TV watchers are muting out the commercials.
But if you see something really intriguing, you will UN-mute just to see what the heck is happening there.
There's a spot running right now where this kid sprays his mother with a squirt gun and she pulls the hose out of the sink and nails the kid with it.
I saw that spot several times and it finally got my goat. I wanted to see what they were advertising.
So make your ad distinctive. Something that makes it STAND OUT.
Rule No. 2: Tell me what you want to tell me. If you page through a magazine, you will quickly notice that you do not read the ads that make it difficult for you to figure out what they are selling.
"Clever" is only better if it is "super clever." Clever headlines that do not tell you what they are trying to sell are simply not effective.
Most ads in most publications today don't have headlines that tell you what they are trying to sell. In the information age, don't hint around; say what you want to say, right in the headline.
A good headline follows these four criteria:
It tells you what the product or service is.
It starts with the word you or your (not always, but mostly).
It contains a benefit to the reader. Most companies brag
about themselves, rather than talk about the benefit to the reader
(prospect).
- High-response-oriented advertising focuses like a laser beam on the benefit to the customer.
The headline is the ad for the ad. If the headline isn't good, no one will read the rest of the ad. Responses to ads have jumped ten fold by simply changing the headlines.
Rule No. 3: The body copy should.
Be curiosity driven, unfolding the story you want to tell.
By highly benefit oriented. So many ads talk about features, when it is benefits that motivate buying.
Give you a reason to take action now! Can you offer something for free that will help you engage the potential customer?
Rule No. 4: Ask for the order. Too many ads do not give explicit instructions as to what action you would like the customer to take: "Order today and save," or "Call us today and receive this free..". You must always ask for the order!
Summary
Advertising is a powerful tool for becoming a well-known player in any market.
Even if you take a small schedule and a small ad, by consistently letting it run in an appropriately targeted vehicle, over time that ad will have an impact. People will see your logo and it will register.
Advertising supports everything else you do in your business. But it is only part of a total package.
You must have other marketing, and you must make sure, ultimately, that you are treating the customer like gold. Happy customers will spread the word faster, and advertising will help facilitate that. Happy advertising!
Chet Holmes is President and CEO of Jordan Productions, an international training firm that helps companies accelerate growth using Chet's proprietary techniques.
