Marketing Mistake #4 – The case against brand advertising

Dear professional,

Not a day goes by when I open up the entrepreneur, the local newspaper or any other type of business publication when I see some form of advertising being sold. I have no quibble with advertising – if it works (and you make money).

But most of the time, it simply doesn’t.

It’s not that brand advertising cannot work, it’s just that I would rather play poker with a side of aces instead of a penny slot machine.

Wouldn’t you?

Image ads, brand advertising or simply putting a name out there is abysmal at best. I’m talking about those ads that does not sell anything or the ones that don’t ask for a response back.

Here’s why they suck:

You do not know if it will work, because you have no way to measure response. It’s costly, clunky and carries waste. A lot of waste. Your chances of success are there – but I guess every once in a while someone wins something playing slots.

You may hear traditional media men say: but look how many consumers see your ad each day, look at the circulation, look at how your competitors are buying our ad space. Look at how we rotate your ads. See how your name will look on that billboard/newspaper/magazine ad.

Really?

I don’t care about circulation or any other statistic. Nor does it matter how pretty the advertising looks. If it’s pretty and it doesn’t sell – what’s the point?

Yeah sure, they can show you studies of how many people might see your road sign. But is there a way to measure how many people read it? Listen – No person can buy from you unless:

·         They read your ad;

·         They want what you have;

·         They believe you;

·         They have a way to respond;

Let’s take billboards as an example. Media people may say that their billboard gets shown to 200,000 people per month. Well, maybe only half of those people (100 000) did look at your billboard. And maybe half of those started to read and were interrupted (50 000). And maybe half of those read the whole thing, but forgot who the company was due to the robot turning green, the baby crying in the car and so on (25 000). And maybe half of those even read the whole thing, but did not have a pen to write the phone number or website down (12 500). 

We are now down to only 12 500 people who have merely glanced at your sign. 

See the problem with this? You paid for your billboard at the robot to be shown to 200,000 people, yet in reality, it was only shown to 12 500. A fraction for what you are getting.

And 12 500 is being overly optimistic…

So what we have here is known as waste circulation. And that is one of the many, many, many reasons I loathe so called traditional brand advertising.

You think brand advertising isn’t all that bad? You say you want another reason? Here you go:

Image advertising in a trade publication is shown with 10 or more of your competitors. In fact, prospect are so used to seeing this type of advertising that they automatically filter those type of ads out before they read them. 

Still not convinced? 

Roughly 3000 commercial messages gets shown each day. Can you guess which types of ad gets shown by 95% of companies? The creative type ad that tries to make the company look intelligent with some type of deep hidden message, often with a dash of humor.

Guess what? Nobody cares. You read correctly. The only reason people buy is because they do it in their own self interest. There’s only one radio station playing – the what’s in it for me station (WIFM). Open 24 hours a day, 7 days a week, from Monday to Sunday.

One more reason against brand advertising?

Simply throwing a company name with a phone number and a slogan out there appears cold. It does zip, nada, nothing to help prospects warm up to you. Folks, if you are in business right now, hark unto me, you are in the relationship business. And people cannot form a relationship with an institution.

People form relationships with people, and…

People buy from people!

No matter whether you sit high up in an office in a penthouse. No matter if you do not even have a face to face interaction with your clients. Listen to this:

You can never lose sight of the people you serve. You can never stop looking through eyes. If you want to sell what John Jones buys, you have to see through their eyes.

Note, I am not against brand building. Having a strong brand in the marketplace should be your #1 marketing priority. A strong brand allows you to sell at higher prices, more often and in higher frequency than any one of your competitors.  But more on brand building later.

For now, cut the cancer loose and stop all 'image type' ads.

Marketing Mistake #3 – Not knowing the life time value of your client

Picture this:

Mr. X and Mr. Y both run local carpet cleaning businesses. Both ran a direct mail campaign to their local neighborhood. Both received a 1% response out of 100 letters mailed. Thus they received 1 client out of their campaign. 

The cost? A grand total of R300 to send out the letters. The client they got through their efforts spent R299 on each of their services respectively. 

Here’s the big question: Did they make or lose money? On the face of it, the campaign flopped (sort of like the first pancake I ever made – that thing looked liked potato mash sown together with the pan). But my point is this:

Mr. X thought, because his marketing efforts did not make any money initially, he would yank the life cord out of the heart of the campaign. 

Mr. Y was smarter. Instead he knew that for every client he spent a measly rand for – he would accrue R2500 in back end services. In others words, those clients would return to him, year on year to get their carpets cleaned.

No, Mr. Y was even smarter than THAT. He knows every one of his clients will refer at least one of their friends, family or co-workers to him. And he knows that this will eventually create a chain link of referrals so that he will never ever have to lick, stamp and mail letters to get customers. 

Can Mr. Y get any smarter? You betcha. Mr. Y also knows if the recession hits he can turn on his client getting machine anytime he wants to and get R2500 over and over again. 

What happened to Mr. X?  He struggled to get business. He muddled along, trying to make ends meet. Eventually the rising fuel costs, employee unions and dozens of hidden costs squeezed him out of a business.

Even though this story is fictional, it makes one crucial point:

Know the marginal net worth/life time value of your clients. 

You might spend a R100 to get a R1000 sale or R10 000 to get a R100 000 sale – it doesn’t matter. If you know the cost of acquisition (CPA) in your business, the more control you will have over your marketing efforts. And the more empowered you will become to make intelligent marketing choices to fend off fly by night competitors.

You see, only by crunching the numbers will you have a bird’s eye view of what’s really going on in your operation. Know your cost per acquisition, know your average client life time value, know the amount of transactions your clients will do with you per year.

Knowing this will eliminate the #1 business killer:

Guessing!

Let me leave you with a quote from one of my favourite marketing mentors, Sir Gary Halbert – “you are not in the business of response, you’re in the business of arithmetic”