“We don’t advertise, we believe in word of mouth!” How many times has this been said in small businesses around the country? Quite often. You also hear “word of mouth is the best advertising”. These two statements assume three things:
1. Your business is so interesting and important that people will want to talk about it
2. Things people say are all going to be what you want them to say about your business
3. Everything that’s said will be positive and is said to a potential customer
None of these things are necessarily true. We hear that one complaint or bad mouth experience represents 100 dissatisfied customers that would not be good advertising. Since you cannot control it, word of mouth what ever it is, is not advertising. Word of mouth recommendations are effective for good restaurants, local sales events, movies, fine wines, good babysitters, perfumes, favorite beers or other items that are the everyday topics of conversation. Most people don’t discuss favorite gas stations or preferred plumbers on a frequent basis.
To control your own future
To make a statement of who and what you are
To establish a position or personality for your entity
To save money, it is the cheapest sales call
To create a call to action
What is advertising?
The entire purpose of advertising is to sell. Foote Cone Belding’s definition from 1903 was that “Advertising is Salesmanship in Print.” Certainly in 1903 when print was the only medium available that was so. With all the new media the concept holds true, the purpose is to sell.
Advertising is any sales message that can be delivered indirectly. That is, a statement that you control, have paid for, that is placed when and where you want it that communicates without face to face human contact. Telemarketing is advertising.
What about viral or guerrilla advertising? It is still advertising if you spend money to control a message and deliver it indirectly. When Gallo Wine wanted to increase sales of Spanada in 1972 they sold cases of the wine in Florida during spring break, put up displays and point of sale ads in bars and had salesmen order Spanada in the bars. The salesmen never directly sold the sangria to customers they just let people hear them order the drink. This was early guerrilla marketing & integration of sales, promotion, PR and advertising to expand a brand outside the core market of Orange County California.
What are Public Relations?
Any message that is not paid for, controlled in its distribution or where you cannot control what is being said is a Public Relations Program. Newspaper articles, TV news, publicity, propaganda, are all public relations. Word of mouth advertising is not advertising, it is PR as it is uncontrolled, and it is usually unplanned and un-focused.
What are Promotions?
Promotions are those sales messages that are timed for a short distinct period that make a specific offer to stimulate action and provide a reward. BOGO, Buy One Get One is a perfect example. Promotions may be either offensive or defensive. Offensive promotions are usually scheduled and have specific objectives such as sell x cases in a month. Defensive promotions are usually pulled off the shelf to protect the brand from a competitor’s action.
What is Effective Advertising?
It is effective if it works to meet its objective. If your objective is to increase awareness and your metrics indicate the communication has done so it is effective. If you want to generate 200 sales leads a month and you get them the ads are effective. Being cute or “creative” only helps if you improve the sales process. When Wendy’s did the “Where’s the Beef Campaign the largest increase was the sale of the baked potato entree. The ads increased awareness of Wendy’s (good but not the objective) but did not convince people that Wendy’s had bigger and better burgers (bad). The campaign was short lived but memorable, however it did not meet the original objective
How do you measure advertising?
Marketing Research has shown that
1. Advertising changes opinions and attitudes
2. Significantly improves the close ratio for both manufacturer and distributor salesmen
3. Is cost effective (provided frequency is adequate total sales costs drop between 10-30%
4. Non advertisers have a 20-40% increase in sales costs
5. Advertising works in every market and at every sales point*
*Morrill Study 1964-1969
Another study indicated that 56% of B2B buyers reported they had specified recommended or purchased something as a direct result of advertising. In the consumer marketplace the percent who buy as a result of advertising is much higher, this is why Tide the most advertised detergent, has been the number 1 selling detergent since it was introduced in 1947 with sales over $1,250,000,000 today.
Advertising does reduce the sales cost!
Since salesmen are required to deliver the final presentation and close of a sale, it is most cost effective to get them to a hot lead rather than to make a cold call. Cold calls are inefficient. Twenty years ago a cold call was estimated to cost $250/call, when travel, burdened labor and overhead were all considered. A first call by direct mail or trade publication costs less than $1.00 per buyer or influencer reached.*
Advertising creates continuity. After a salesman leaves, a print ad or brochure stays behind and provides a place where information can continue to be found. One of the most effective continuity vehicles is the web site. Keeping yours up dated and current provides the customer or prospect the chance to continually learn more about the company.
* Dartnell, Forsyth Group, Sales & Marketing Management Magazine
What do I need to do to create the most impact?
The two major answers are compelling visuals and color. It is interesting that visuals in the sound bite age are the greatest attraction to create attention; however the written word remains the most memorable. Just do it, Where’s the beef? These and other lines have become part of the lexicon even when people have forgotten the visual or the product being advertised.
Why spend the extra money for color? The answer is to gain attention. Yellow has the greatest number of receptors in the human eye so the eye recognizes yellow more easily than any other hue.
4 color advertising increases reader interest or viewer interest. A Readex study indexed B/W to 4 color readership in identical print ads. In each case color increased interest dramatically, regardless of the quality of the creative product.
Index Improvement Index
|Company A 6 B/W ads
|5 4/C ads
|Company B 2 B/W ads
|3 4/C ads
|Company C 2 B/W ads
|5 4/C ads
Readership measurements by average noted scores over a 20 year period (89,000 different ads) are consistent with the above findings.
|Black & white ads
||2 color ads
||4 color ads
The conclusion is that if you want to have a message well read and remembered don’t be penny wise and pound foolish. Spend enough to do the job properly. That is one of the reasons to be sure that before you spend make sure that you have a defined creative strategy and that your position is clear enough that it can cover all the messages you want to use.
How often to advertise is a more difficult decision for business to business advertisers. In consumer products there is more research into buying habits and the length of the buying cycle. A manufacturer will know how long it takes for salad dressing to be consumed and how long a box of Tide will last. One of the reasons beer ads are so frequent is that a heavy beer drinker will drink a six pack or more a day. Schaeffer came up with the theme “Schaeffer… is the …one beer to have when you’re having more than one” because of this research. Do some research to find out what people think about your company. Find out what is important to them and deliver it.
We have discovered the following in business advertising; most buyers spend between 5.7 and 17 days investigating potential suppliers when they are investigating a product or service. This short time frame is the opposite of the situation Danielson Fuel Services found at the Sardis Café where the owners looked for new gasoline suppliers for a year before Jerry Danielson happened to walk in. The fact that this happened to occur, reinforces the need for a continual marketing outreach program integrating PR, direct mail, advertising and sales calls focused on shortening the sales cycle.
Buyers initiate 73% of business to business sales orders. 19% of the orders were generated by sales people and only 8% were generated by telemarketers.
This would argue that B2B products are bought not sold which is the conclusion Accenture reached in their research for the Distribution Research and Education Foundation.
Average Number of Days in the Buying Cycle
Selected B2B Categories
||Determining Needs & Specs
||Evaluation & Selection of Supplier
||Final Approvals & P.O.
|Materials & Components
|Maintenance & Repair
* PRO reports Penton Research Services and Accenture Consulting (formerly Anderson)
In each instance noted above the collection of information, needs, specs and supplier data consumed the preponderance of time. Successful informative advertising can provide much of that information and shorten the cycle, improve close rates, and improve cash management. How long should it take Extreme to get feedback in your buying cycle?
It is important for suppliers to present their offer to buyers during the media aperture of receptiveness and respond quickly to requests for information. Most of this research predates widespread internet use. Now that everything is on the web websites are necessary to allow the buyer to collect information with greater speed and detail that ever was possible before. One change in the rules is that you must drive buyers to your website. One of the most successful examples were the Super Bowl ads for Victoria’s Secret Lingerie which generated so much web traffic that the website went down in minutes. The site ended up with over 2,000,000 hits in the first 24 hours. Lingerie sales skyrocketed as men bought. We don’t know if the women actually wore what the men bought but the sale was made.
Frequency Trumps Reach
Own what you can own. As Jim Croce said, “You don’t tug on Superman’s cape” so don’t pick a fight you can’t win. Focus on your core customer with a message that they care about. This is especially important in the B2B market. Recent examples indicate that 11 sales calls are now required to make a sale where once 3 would suffice. Since sales calls are expensive an indirect, frequent ads are economical and more polite than constant phoning. Customers have joined do not call lists which prohibit calling them and many who haven’t joined are annoyed by the frequent call. Broadcast faxes can be useful but California has a law against unsolicited faxing, does Texas? Frequent pleasant reminders that break through the clutter however may actually be welcomed into the mind set and the frame of reference. Direct mail can be effective to build frequency if it is simple; a website is superb if the customer can find it.
To support the case for frequency we need to look at concentration in media against the specific target. This is true in most markets whether restaurants, construction, aviation or petroleum. There is a law of diminishing returns. So hit your customer often but not two often the number is usually from 3-10 times in the buying cycle. So to reach a GC for your electrical company you might want to have at least 3 messages received in a 6 week period.
Advertising is a leading indicator and it is contrarian. Since its purpose is to sell goods and services efficiently, up front spending is often required. When a new product or service is being introduced the percentage of money spent on advertising is the highest it will ever be. The curve of increasing revenue will lag behind your expense which is why most introductions take 24-36 months to payout.
In a recession the same situation arises. When sales slow the tendency is to cut advertising. The correct response is to do the opposite as advertising is designed to increase sales. It makes no more sense to cut advertising than it does to fire all your sales people and expect to gain sales. Research has proven that when a company remains constant or even increases advertising spending during a recession the business increases dramatically more than non advertised brands when the economy improves.
In summary why should a small business advertise?
- To control your own future
- To make a statement of who and what your company is
- To establish a position or personality for your firm
- To save money, it is the cheapest sales call
- To create a call to action
Research has shown that advertising changes opinions and attitudes, significantly improves the close ratio for both manufacturer and distributor salesmen. Advertising is cost effective (provided frequency is adequate) total sales costs drop between 10-30%
To make advertising work you need to do the same things you do when you plan a construction job or a financial plan. You take the time to decide what you want to accomplish, you write down what you intend to accomplish and then execute. Advertising is a tool just like job scope, construction drawings, a printing schedule or an income statement.
The last thing to remember is that at the very beginning you must know if your target audience thinks your message is IMPORTANT if not get a new message. Next the message must be BELIEVABLE if not change the message, and lastly it must be UNDERSTANDABLE. If not, change the message. Ask some customers in the target audience, if you don’t get an 8 on every measure on a ten point scale. Start over.
Everyone cares about WIIFM.