Advertising 101

Welcome to Advertising 101. Some call it Marketing. We are going to discuss the concepts and application of Advertising. First of all, in my 25 years of being owner and Sales Manager of an Advertising Company, I have had to ingrain some Undeniable Truths into my clients time and time again.

 

Undeniable Truth Number 1
Advertising is a Fixed Expense

Advertising is a continuous expense that must be added to the cost of your product just as you would Rent, Utilities, Telephone etc. This is often a major misconception with business owners large and small alike. You wouldn't walk into work one day and say we don't need phones this month. Or we won't waste the money this month on electricity. Why? Because companies think of those items as a fixed expense and non-negotiable. For your company to be successful you must think of advertising in the same way.

Fortune 500

Take a look at the big boys. Coke, Ford, Cisco and on and on. They have built into the price of their product anywhere from 3-10% of their gross sales for advertising, depending on the industry. In fact, if a fortune 500 company falls on hard times, they will cut staff, close facilities, trim expenses, but
DOUBLE THEIR AVERTISING BUDGET!
Why? Because they know that most small businesses do not advertise and that if they don't bring the customers in, then nothing else matters. This is where the food chain starts.

Defining your Budget

In fact, large companies often work backwards in defining their advertising budgets.

For example- A national pizza franchise opens up a store in a new neighborhood. First they determine what their weekly sales should be. Then multiply that number by 10% and start spending that amount on advertising as soon as they open and within 6-9 months they will be achieving their sales goal!

Example1: Pizza Company  Sales Goal          $10,000 per week
Advertising Budget                                      $1,000 per week

That sounds like a lot but keep reading
Profit                                                           $3,000 per week or $150,000 per year

Where to get the Money?

Build it into the price of your Pizza. Using the previous example, if you were to add the extra expense to the price of the pizza, then your customers will be paying for your advertising budget. The average $12 pizza now cost $13.20 .

Example2:
Weekly sales                                                  10,000.00
Price per pizza                                              $12.00
Advertising Budget 10%                                 $1.20 per pizza
New Price Of Pizza                                        $13.20     

 

But I may lose customers? You may lose a few, but they will be replaced by many more customers  who think of you first when they think pizza because of the continuing investment you have made into your advertising. Besides, I don't know one person who would  switch pizza companies for $1.20 in todays market.

So the only thing you have to decide is WHERE to spend your adverting dollars, not WHETHER to spend it.

Undeniable Truth Number 2
Advertising is cumulative

That means it accumulates like seeds that fall in the autumn that don't grow or produce until the spring.

Let's use another example-- when Coke or Budweiser buys a 5 million dollar commercial during the super bowl and then spend another 2 million in developing and a witty commercial, they do not expect you to drop what you are doing and run down to your Mega Mart and buy their product. Noooo. What they do expect is to brand your conscious or your subconscious with their product so the next time you are in the mega mart you think “I think I will buy some (insert product here).

Believe me it works!

Instant Gratification or Long Term Effectiveness.
It feels great when we can directly tie your expenditure to an instant result, but the nationwide statistical truth is that over 60% of the results you will get from any adverting you do will be difficult to track. In fact with a direct marketing mail campaign you will receive 40% of your results within the first 10 days, another 30% within the next 30 days and the last 30% in as much as two years later. It happens with our own advertising. We send out mail to our target audience and often months later someone from the other part of the country will call us in a completely different industry and inquire about our product and services. When we question them as to how they heard about us.
He replies “My brother in Florida in the mattress business received this mailer in September and saved it for me because he knew I am starting a Mortgage business in Colorado and was thinking about doing some mailing."

You see! Four Months and eight states away, Advertising is never wasted. The key is to get the most bang for your buck. Which brings us to truth number 3.

Undeniable Truth Number 3
Track, Track, Track

Imagine one day you decide to clean out your refrigerator and you decide to make a soup. You throw in some odds and ends of vegetables, left over roast, beans and a few other ingredients. Later, a few friends stop by and you offer them some soup and they say this is the best soup we ever tasted, can you give us the recipe? You could give them the general idea of a recipe but you didn't measure anything or write anything down so the next time you attempt to make the soup it is not quite the same, not quite as good. Without hard data it is impossible to recreate a success.

Developing a successful  advertising campaign is in some ways trial and error. Every industry is different. You would not use the same methods to reach a mattress customer as you would use to reach a mortgage customer. I will go even further; every city is different. So if you fail to track your results, you are just blindly throwing out your line in the water and on occasion catching a fish. But as a whole, the result is rather disappointing. Now imagine if you went to your local tackle shop and spoke with an expert. He explains the best fishing is between 6am and 9am, and which bait is the most effective for what you are trying to catch. Then which method to use(Under a cork or  on the bottom with a sinker. Maybe a spinning bait that works best in muddy water). When you return to fishing you will see a huge difference in your catch. 10 times the fish with half the effort.  As time goes on you begin to get better at understanding what works and what doesn't so that you become the expert of your own fishing hole. 

That is why it is important to use a company that knows your industry and can introduce you to proven mail campaigns that will work the first time and with feedback from you, gets better and better.