Hope is Not a Strategy for Greater Return on Advertising Investment.

A couple of decades ago I introduced a friend who sold pianos to the manager of a local radio station. The manager suggested that the piano salesman consider radio advertising sales. The salesman refused.

“Sometimes advertising works,” he said, “and many more times it doesn't. The worst part is you can never predict which is going to happen. I couldn't in good conscience sell something that I don't believe will work.”

Ouch. Is advertising more of a gamble than a science?

If advertising is an investment, you should expect to see a predictable profit from that investment. Invest a dollar in advertising, get back four, or five, or six. At the very least, shouldn't you get back a dollar ten?

But if you you don't know whether your ads are driving revenue, you can't very well call it investing. If you don't know whether you'll win, or lose, or break even, you are gambling.

And if you put your money into ads that you “feel” are working, but but can't measure their effect, you're still gambling.

Noted investor Peter Lynch once said, “An investment is simply a gamble in which you've managed to tilt the odds in your favor.”

So, maybe effective advertising is that which has been tilted in your favor. Not so much an answer, as a process, which includes better targeting, more effective messaging, and improved media selection.


The purpose of an ad budget?

The reality is that most of us fear that we aren't turning our marketing dollars into profit. Not consistently. Not directly. Which is why we have advertising budgets. To limit risk.

An ad budget serves the same purpose as going to the casino with a hundred dollars in your pocket and saying “When this hundred is gone I'm done playing. Maybe I'll get lucky. But I've got to set a limit on how much I can afford to lose.”

Think about it. If you knew you were going to get back more than you spent, why would you ever stop spending?


Perhaps you don't need a budget so much as a lever.

The Greek mathematician, Archimedes, understood leverage. He's reported to have said, “Give me a long enough lever and a place to stand, and I will move the earth.”

When applied to advertising, leverage means doing more with less. Getting more bang for your buck. Controlling large sums of revenue with relatively small sums invested in advertising. Stacking the odds in your favor.

But, if you were capable of stacking those odds, wouldn't you also be running more advertising?

A surprising number of companies try to avoid advertising, then force themselves run ads when sales are down or when they have excess inventory.

Unfortunately, they're open for business all of those other days, too. And they need customers to come buy what they sell on every one of them.

That constant need for additional sales makes advertising the most important thing any of us can do for our own business. What other activity can multiply raw dollars with this kind of leverage?


First, measure.

Do you know your rate of return?

Note your sales levels. Run your campaign. Note any change in your sales levels.

Divide increase by the amount spent. This is Return On Advertising Investment (ROAI). If you are bringing in more money than you are spending, your ROAI is positive. Congratulations.

Of course if your advertising is not effective, the negative ROAI produces a constant drain on your resources. Is this why you don't advertise often? Do you justify the resulting poor return as “getting your name out there?”

How effective is your lever?


Is your advertising an investment or a gamble?

The primary question you must ask is the rate of your ROAI. Until you know the answer, this is the only question that matters.

How well does your current marketing stack up? Are you gambling with your advertising budget without even realizing it?

__________

Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about Return On Advertising Investment may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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Three Levels of Word-of-Mouth Which Determine Your Professional Reputation

According to an old saying there are only two things people want to know about you: what you stand for, and what you won't stand for. This is the basis of reputation.

We intuitively understand that people's actions are nearly always in accordance with their values. Someone who embraces fairness and treats other people honorably is likely to treat us honorably. Someone known to be dishonest has a higher likelihood of cheating us, as well.

And like our personal reputations, our companies have professional reputations, built on the experience customers have in dealing with our companies, along with their willingness to talk about those experiences.

Call it Word-of-Mouth.

Another name for professional reputation is word-of-mouth, which comes in three variants. From least to most influential, they are:

1. Awareness - Do I recognize any of these names in this directory?

2. Reputation – Have I heard of anyone who has the ability to help me with my problem?

3. Personal Experience - Do I have knowledge of, or experience with someone who can help me to solve this problem?

Each successive level takes priority over the lower.

Awareness.

At the Awareness level, simply recognizing the company's name trumps never having heard of them. This is the weakest level of word-of-mouth. If you stay in business long enough, you'll achieve some level of awareness. You'll then have a slight advantage over some newer company that has yet to achieve any awareness at all. Why? With no other information to go on, shoppers will usually buy from the company they've heard of.

Awareness is largely a function of repetition. A customer notes your name on the outfield sign at the ball park. Hears your jingle each morning on the radio. Sees your banner ad on the Internet. Catches your sponsorship of the six o'clock news. Recognizes your logo on the pee wee league uniforms. If you're part of the community, eventually people will bump into your name in the course of living their lives. The longer they're aware of you without hearing specific negatives about you, the more generally positive this awareness becomes.

Small businesses like to advertise how long they've been in business, as if years of “experience” automatically translates to a benefit in the minds of shoppers. Unfortunately, shoppers have proven not to care. (Kind of ironic, isn't it? All those years of doing business in the community have lead to awareness of your company - but the benefit is to you, not to them).

Reputation.

The next step up, reputation, beats out basic awareness. “Here's what people say” is the next best thing to first-hand knowledge – provided of course people aren't saying uncomplimentary things.

The size of the community is a factor, too. The fewer people in the population, the more likely a shopper is to run into someone with a story to tell about the business. Reputation is therefore a bigger factor in small communities than in large ones.

According to Wikipedia, one study found that a good reputation added 7.6% to the price businesses received for their goods. Some companies are finding that improving their reputations can actually boost stock prices.

Side note: the Internet has changed the nature of “community.” It simultaneously offers the potential of world wide reach while providing individual gossip to anyone who seeks it. And just as bricks and mortar stores have public relations companies to put a positive spin on community perception, their web-based brethren are now hiring reputation managers to keep track of on-line credibility.

Personal Experience.

And finally, those people who have had actual dealings with the companies in question will have the most convincing word-of-mouth of all.

Shoppers who get what they expect will probably not give the interaction with that business much thought. Word-of-mouth commentary happens when the actual customer experience differs from the expected. Delighted, wowed, or amazed customers spread positive word-of-mouth. Disappointed, disgruntled, or unsatisfied customers will spread negative.

A real life example.

The new guy on the staff has just relocated here to take the job. This morning he heard a strange grinding sound as he drove to work. New guy is worried. The disparity between his lack of knowledge about possible causes, and his pressing need for such knowledge makes him feel vulnerable.

He asks his co-workers for credible information to help him choose a solution, or at least his next step.

“Does anyone know anything about cars?” Note that he starts looking for information at the highest level of credibility - personal knowledge.

Not finding an expert among his co-workers, new guy begins to rely on word-of-mouth. Why? He's trying to lower his risk level. A bad choice in mechanics could have him paying for services he doesn't need. Worse yet, he could choose someone who won't be able to fix his problem (but will charge him for time invested anyway).

His next question: “Does anyone know a good mechanic?” addresses the most credible level of word-of-mouth – personal experience.

In the absence of such knowledge, he will quickly go down the probability scale, asking next what his co-workers have heard about mechanics in town.

Finally, he'll go to his newspaper, or to the Yellow Pages and start studying the ads to see who appears to understand his specific grinding problem, or perhaps which companies may be national chains that he's at least heard of.

Back to the beginning.

There are three levels of word-of-mouth. Only two can be effected by your advertising. The third is strictly a function of the way you operate your business.

So what are your company's values? What do you stand for? What won't you stand for? Do you consistently project those values in each interaction with customers?

Is your business not growing because potential customers don't know about you, or is it because they think they do?

__________

Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about word-of-mouth and professional reputation may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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Reticular Activation - How the Human Anatomy Prevents Ads from Reaching "Everyone."

One of the things guaranteed to make copywriters (and to a lesser extent media salespeople) groan is an advertiser who claims he needs to reach "everybody."

No ad can possibly reach everybody. The human anatomy prevents it. If you have a minute, I shall happily explain why.

The Shoppers Mindset

Amazingly, most people are not poised in front of their television sets breathlessly waiting to hear of an opportunity to dump the cash from their purses into Mr. Advertiser's cash register.

Nope. Most people are instead attempting to ignore thousands of radio ads, e-mails, product placements, signs, newspaper and television ads, billboards, matchbook covers, calendars, and the odd Rubic's Cube with some company's logo on it.

Out of self defense human brains are physiologically prevented from paying attention to things that don't directly apply to them. And truthfully, most of what they see doesn't apply.

What does apply to most people? Their kids, plans for the weekend, the empty box of corn flakes, remembering to program the TIVO, getting to the game on time, the in-laws coming to dinner, filing for an extension on the tax return, running late for work, or getting home before “Are You Smarter Than A Fifth Grader?”

They're eager to find information which will solve their problems, and yet, they're not paying attention. They see and hear advertising with their eyes and ears, but they don't consciously notice those ads.

That's because the human brain won't let them. Again, let me explain.


Four Sets of Brain Waves

The synapses of the human brain fire at different rates during four different mental states. They are:

1) Delta – 0.5Hz to 4 Hz – Deep Sleep.
Delta waves trigger release of growth hormone, which helps the body to heal. This is one reason sleep is critical to the healing process.

2) Theta – 4 Hz to 7 Hz – Drowsiness.
Theta states most frequently occur fleetingly as people pass from higher consciousness to deep sleep, or return from it. Theta waves occur during meditation, and have been linked to visual and emotional creativity.

3) Alpha – 8 Hz to 13 Hz – Relaxed.
The alpha state is a highly creative condition of relaxed consciousness. People in alpha state tend to recognize non-obvious relationships. Interestingly, it's also the resonant frequency of the earth's electromagnetic field.

4) Beta – 14 Hz to 30 Hz – Alert and focused.
The beta state is associated with peak concentration, heightened alertness, improved hand/eye coordination, and better visual acuity. During beta state new ideas and solutions to problems literally flash through the mind.

Degrees of Consciousness

The higher frequencies represent more brain activity, and require greater energy consumption. Like every other part of the body, brain activity kicks into higher performance only as necessary. The more familiar the activity a person is engaged in, the less conscious activity is necessary.

Most of us have driven to work only to note upon arrival that we have no conscious memory of the trip. Individuals who drive a lot of highway miles frequently find themselves coming up with good ideas as they drive. Daydreaming while driving is an example of the brain in theta state. It's easily induced by the hypnotic sameness of road markings and sounds.

As long as there are no surprises on the trip, driving to work can also easily produce an alpha state. The driver is relaxed, and the familiarity of the surroundings allow the driver to sing along with the radio, or listen to conversation without planning to respond.

But imagine the car in front of our driver slamming on the brakes. Our driver immediately transitions into a state of heightened awareness, faster reflexes, and instantaneous decision making. This is clearly a beta state of peak concentration.


The Reticular Activator.

At the top of the brain stem, between the medulla oblongata and the midbrain is a collection of nerve fibers known as the ascending reticular formation. Activation of this reticular system is necessary for higher states of brain activity. Think of the reticular activating system as a sentry constantly looking out for conditions which require a conscious response. Anything important or relevant snaps the brain into higher states of consciousness, even from deep sleep.

Anyone who's moved to a home near the railroad tracks has been awakened by a train passing late at night... for the first few nights. While the loud noise is unusual and potentially threatening, the reticular system jerks the brain from deep delta sleep to beta wide awake consciousness. After a few days, when the experience becomes commonplace, the reticular system doesn't even bother to activate, and the resident sleeps through the night.

Mothers recognize their child's cry even in a room full of children. The reticular system catches the familiar tones of the child's voice, activating a beta state in the mother.

And most of us have heard someone call our name in a crowd, only to discover that the caller was trying to catch the attention of someone else with the same name. The reticular system activates a beta state at recognition of the name, and de-activates for the brain to return to alpha mode once the mistake is obvious.

Newspaper readership increases with the addition of a photo, especially when it's a picture of people. Why? Because the reticular activating system zeros in on other people, to see if they're familiar.

Familiar is only one of the conditions the reticular system watches for. It is also ready to draw our attention to unusual, problematic, or threatening conditions. Any of these which appear to be important or relevant activate a beta state. If the conscious mind dismisses this “false beta” as not relevant, the brain returns to a lowered state of consciousness.

Can we plant a reticular activator to trigger a beta mode state at a later time? Yes, we can.

Embed a specific sound and get your listener to recall a whole series of emotions. Law and Order's “Doink Doink” sound when the next scene starts. The sound of Pac Man wilting at the end of play. Duracell's three tone logo. “You've got mail.”

Or embed a visual cue. Since 1997 Liberty Tax Service has done no advertising other than to place people in Statue of Liberty costumes on the street in front of the franchise. From roughly the first of the year until April 15th the Statue of Liberty costume serves as an activator, reinforcing Liberty's function, as well as this location.


Propinquity.

Here's an interesting fact: the effect of advertising is greatest closest to the purchase. And if you think about it, that makes sense. Remember, a purchaser only buys when she feels the gap between what she has and what she wants. If she has an empty box of cornflakes, she'll want more corn flakes. Once she's become aware of her need for more flakes (by pouring the last of the old flakes from the box) she will also become more aware of corn flake advertising.

What a great time to present your message. Advertise your brand on television, or send her a letter, or show her a point of purchase display. Give her a compelling reason to choose your brand while her reticular system is most likely to bring your message to her conscious attention.

But how can you predict when that metaphorical box of flakes will go empty? Unless your business is seasonal, you can't. And that pretty much means you need a constant presence in the marketplace.


How Shoppers Use Media.

We read from left to right, from top to bottom. The eye is drawn first to photographs and headlines, seeking, finding, and sorting through the information on the page. The reader scans in alpha state for anything familiar, unusual, problematic, or threatening. When one of those conditions is noted, the reticular activator pulls the readers attention to the words or pictures, and in beta state the conscious mind weighs the evidence.

It makes no difference whether the reader is considering news stories or advertising. If further examination reinforces the condition, the reader is engaged and stays in beta state. When the content has been read, the scan through the paper continues with the reader back in alpha mode, ignoring most of what he sees.

And though the consumption pattern may differ from left to right, top to bottom, this is how we use all media. People watching TV, listening to radio, or driving past outdoor ads will switch from alpha to beta modes and back as the content triggers the reticular activating system, and is accepted or rejected by the conscious mind.

Your corn flake ad will scream for the attention of someone who's out of corn flakes. The rest of the readers / listeners / viewers (those who don't have an empty box, as well as those who just do not like corn flakes) will either note the ad and quickly return to alpha state, or ignore it all together.

Got it? You'll never reach everyone with any ad. We don't all run out of cornflakes at the same time.

__________

Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about embedding reticular activators in your advertising may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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Testing Advertising Response in the Store

Since 1892 when the English Court of Appeals ruled on Carlill v Carbolic Smoke Ball Company, companies are legally allowed to make claims they can't substantiate. The court ruled that reasonable people don't believe exaggerated promises by advertisers. The legal term for these claims is “puffery.”

The public simply calls them lies.

The practice of puffery is so common in advertising that according to the 2008 Edelman Trust Barometer Survey, only 20 percent of respondents trust corporate or product ads.

Believe it or not, this information will effect the outcome of Ralph's new test of his advertising. At least, it would if Ralph had been paying attention.

Let's talk about Ralph. He owns an appliance store. He purchases four cases of Del Vecchio cappuccino makers from China.

Ralph places an ad in the newspaper explaining that after the Del Vecchio cappuccino maker brews up to four cups of espresso in it's glass carafe, its swivel jet frother will make steamy, frothy milk for cappuccino. The ad boasts that Del Vecchio cappuccino makers are available this weekend at Ralph's Appliances. Not at the $89.95 one would expect to pay for an appliance of this quality, but rather for only $34.95.

But Ralph doesn't display those $34.95 cappuccino makers.

When the ad hits the newsstands, the cappuccino makers are still in Ralph's back room.

Ralph wants to know who's coming in to his store as a result of his ad. He has concluded that the only way anyone would know about the cappuccino makers would be from seeing his newspaper ad. Therefore, if Ralph forces customers to ask for the item, and tallies the sales, he believes he'll have a fair test of the effectiveness of that newspaper ad.

He's wrong.

He's not testing the advertising at all.

What Ralph is measuring is a customer's willingness to ask for something she doesn't see on display. And he's limiting that test to those who've see the ad and come to the store looking for a specific product.

Will shoppers ask for items they don't see on display? Some surely will. Most will look for a Del Vecchio cappuccino maker, and not finding it, will simply leave without making a purchase.

They will also tell their friends not to believe any ads from Ralph's Appliances.

Their friends won't be surprised. “After all,” the friends reason, “doesn't every business lie in its advertising?”

So, if forcing shoppers to do things they don't want to do is a bad test, how does a manager/owner determine the effect of advertising on a specific sale?

Indirectly, My Dear Watson.

Check the day's total sales, and compare to yesterday, last week, and last year. Any significant change in trending can be assumed to be the result of some outside influence. Barring any other influences, we can assume the advertising was the primary factor.
__________

Chuck McKay is a marketing consultant who helps customers discover, and choose your business. Questions about testing your advertising may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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Conduct Only One Advertising Test at a Time.

The only Chevrolet dealer in Smallburg,Texas, augments his local newspaper ads with a schedule on a regional radio station licensed to the adjacent community, Midville. He's been selling an average of 18-20 cars per month. At the end of his first month with the new radio station he has sold a total of 27.

In his next newsletter the station manger writes, “When you see Ned Vanderslice of Vanderslice Auto, ask him why he's grinning. He'll tell you sales are up 30 percent.”

The newsletter hits the mail. Within hours the manager receives an angry phone call from Vanderslice. “How DARE you claim my success?”

“Ned,” asks the manager, “other than advertising on my radio station, what other changes did you make last month in your advertising? Did you run any additional newspaper? Any additional television? Any additional direct mail?”

“No,” says Ned, “but you had nothing to do with my sales increase. Nobody drove from Midville to buy cars from me.”

Ned thinks advertising cause and effect is common sense.

Is it? Yeah. Most of the time it is.

In this case, I'd bet that Midville's regional radio station has listeners in Smallburg. How many? At least seven. At least seven that were ready to buy new cars. Since no other part of the advertising mix has changed, we can pretty well determine what drove the increase.

The key is to test only one change at a time.

Then watch the outcome. Sometimes it's not what anyone might expect, but it's usually still common sense.

An apartment complex which does a very credible job of tracking the source of each lead has just added radio ads to their marketing mix. I advised them to watch for an increase in ALL of their lead sources.

1.Realtors, hearing the ad, will naturally think of this complex more often. We can expect them to recommend it more than they might have without the reminder.

2.People hearing the ad are likely to look up the phone number of the complex in the Yellow Pages. We can expect Yellow Pages referrals to increase.

3.People keying the name of the complex into Google will, of course, drive up the on line referrals. But common sense will tell you there was only one change in the
marketing mix.

My favorite advertisers intuitively know this. They change headlines, and record the response. They change insertion days, and record the response. They add the weekend edition, and record the response.

Roger de la Paz of Richie's Real American Diner in Victorville, California knows that this particular ad delivers a consistently predictable 118 percent increase in gross sales every day it runs.


How? Because he's already tested everything from ad size, to offer, to headline, to graphics, to the day of the week to run this ad in the Victorville, Ca. Daily Press. Roger systematically changed only one element at a time, and kept careful records of each outcome. He compares the demand for specific food items before the ad runs, and again afterward. He is then able to calculate the increased demand for specific menu items against the cost of the ads.

There are no quick answers. Each test helped Roger to make each successive ad more profitable. It took him three years to learn what he now knows about advertising his restaurant in the Daily Press.

But by carefully tracking the specifics of size, placement, and frequency of his newspaper ads, Roger can now predict to within a few dollars the ROI for each newspaper ad he runs for Richie's Real American Diner.

Persistence, it appears, is also a key element in testing your advertising.

__________

Chuck McKay is a marketing consultant who helps customers discover, and choose your business. Questions about testing your advertising may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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Are You Testing Advertising, or Simply Your Offer?

Somewhere in America a rookie cable TV sales representative is talking to the owner of a men's clothing store. The rookie could have been working in newspaper, or outdoor, or radio. The retailer could have sold sewing notions, or computers, or farm supplies. The the specifics could be variable. The outcome won't change much.

The story begins.

Our rookie is explaining to the owner why his ads are such a bargain. The owner says, “Young fella, you're making a pretty good case for some cheap ads. I'll tell you what. I've got three hundred dollars left in my budget. See that rack of suits back there? You sell those. We'll test just how effective those cheap ads of yours are. Do a good job for me on this sale, and I'll consider advertising with you again.”

The rookie takes note of the rack of pea green suits, and thrilled to have cracked this account, says “Yes, Sir! We'll get right on it.” He calls his production department to schedule a video shoot at the store, and writes up the order.

Unfortunately, it will be his only order. The pea green suits will not sell.

A slightly more experienced media rep would from this point on avoid the client. The more experienced rep has already learned that these kinds of ads only work sometimes, and those times seem unpredictable.

Our rookie, however, is a little less experienced and a lot more conscientious. He will stop at the store to check on the progress of the sale. The owner tells him nothing is happening. Nobody is buying the suits. In fact, nobody has even mentioned seeing the ads.

Back at the station . . .

The rookie tells his sales manager that he's worried about the new account. If they don't make something happen, the store owner isn't likely to advertise again. The sales manager tells the rookie to order a “blind bonus” - ads that the client will never be charged for. The client won't be charged because the announcements will be added to the schedule without hiss knowledge, in an effort to increase the impact of the advertising, and cover up any shortcomings in the original plan.

Not surprisingly, the extra ads don't drive any additional traffic.

When the sale is over, the ads have run, and its time to reconcile the books, our young media rep will apologize to the store owner. The rookie will collect the three hundred dollar payment. He will decide to never again try to sell this advertiser anything.

Worse yet, this conscientious young media representative has now started doubting that advertising works. He's previously seen it work well. Sometimes. Now it seems that sometimes it doesn't work at all. And he can't see any way to predict which.

Did advertising fail the test?

Yes? No? Not sure?

Consider that rack of pea green suits. The regular customers of the store did not purchase them. Why? Are they the wrong color? Wrong size? Wrong fabric? Wrong style? Wrong price? Some combination of wrongness? It is a safe conclusion that something is wrong. The store still has so many of them in stock that those suits have become the entire focus of an advertising schedule.

Unable to sell these suits to his regular customers, the store owner now expects the rookie to magically create new customers. New customers who like unacceptable merchandise.

I submit that this exercise is not a test of advertising at all, but rather a test of whether it's possible to sell goods no one wants. “Won't you please buy one of these previously-rejected suits, despite their wrongness?” No matter how many times people see this ad the outcome is the same.

Oh, and it's also a test of the rookie's willingness to accept responsibility.

It always comes down to the offer.

Not that long ago the owner of a local business wanted me to create ads which said, “Mention you heard this ad and get a free key chain from Acme Widgets.” I agreed that any medium not able to deliver the message should not be included in his advertising budget.

Then I pointed out that a much more fair test would be “Mention you heard this ad and receive a free $100 bill.” He sputtered something about the stupidest thing he'd ever heard and slammed down the phone.

I'm assuming he and I won't be working together.

So, the first decision must always be what we are to test.

Let me save you some time. It all comes down to the offer.

And why would you waste your money testing such lame offers as free key chains or racks of pea green suits, anyway?
__________

Want to learn how to make every ad deliver a positive ROI? I highly recommend the Advertising Performance Seminar next week in Denver, presented by the Wizard of Ads Partners. For only $99, you'll come away with more knowledge of effective advertising messages and positive customer experiences than many of the media sales reps calling on your company.

__________

Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about testing your advertising may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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How Can We Test Advertising?

Transcript of actual conversation:

Potential Client: Tell me the truth. How important is advertising in this economy?

Chuck: It's critical. When there is a lot of money in circulation it's not difficult for most businesses to attract their fair share of it. When the velocity of money slows, small businesses have to work harder than ever to keep enough customers coming through the door.

PC: If I had the money, I'd advertise now.

Chuck: Why?

PC: It would help to differentiate me from my competitors.

Chuck: Why do you want to do that?

PC: Isn't being different what makes a company marketable? It's what would get me into people's minds. Prospects would be more likely to choose my company.

Chuck: If I'm hearing you correctly, you're saying that you believe advertising will bring you new business.

PC: Well, yes.

Chuck: Then why aren't you advertising?

PC: I can't afford it.

Chuck: You can't afford new business?

PC: Well . . . new business is important. I need to keep money coming in ahead of my bills. I know, I should be advertising.

Chuck: Why are you hesitating?

PC: I'm in an industry that doesn't traditionally advertise. I don't know if I should or not.

Chuck: A minute ago you said if you had the money, you'd be advertising right now. Is the economy effecting your business?

PC: Yes. We're hurting.

Chuck: How long can you afford not to invite new customers to do business with you?

PC: Honestly? I'm scared. I'm scared of what could happen, or more accurately what might not happen. I'm scared that the return on my investment won't be measurable.

Chuck: I'm hearing you say that you don't have the knowledge to make sure your advertising investment will pay for itself. What knowledge do you need? What information are you lacking?

PC: I lack knowledge of marketing. I don't know enough to understand which is a good idea and which is a bad one. What kind of return will my advertising investment bring? How can I predict it? If there were some resources that I could use to learn the basics of marketing . . .

Of all the reasons to advertise . . .

Increasing sales is by far the most important. It's been said that during good times businesses should advertise, and during bad times they must.

During the rough times, though, the stakes are much higher.

When customer counts drop, its common for businesses to find that operating costs exceed revenues. Most companies have some cash or credit which will allow temporary negative cash flow. The length of time they can sustain operations is their “staying power.”

Every additional day of negative cash flow drains those reserves.

Each day that cash flows out contributes to a chronic, protracted demise. Since none of us can accurately predict any economic downturn, we don't know how much staying power we'll need. Every dollar invested in advertising becomes one less dollar of staying power. That can put a company out of business quickly. The same conditions which create the need to invite more customers also create a danger in doing so.

Sometimes we simply fear customers won't react to advertising because they have no money to spend. We fear the advertising lessons we learned during the good times are no longer valid. These fears become more justification to hunker down and wait for better economic times.

Oh, sure. We believe in advertising. Just not now.

The astute business owner/manager will note that his competitors have abandoned the advertising arena. Their absence leaves great share of mind available to the few with the courage to invite new customers to their places of business.

The courageous owner/manager will seize the opportunity to increase market share.

The prudent owner/manager will attempt to reduce the risk by “testing” his advertising. He'll hedge his bets by doing more of that which proves to work, and eliminating that which doesn't.

Interesting concept, testing. How does one test advertising? I wish there was a simple answer.

Let me rephrase that. Of course there are simple answers. They are worthless. There are also valid answers, but unfortunately they are never simple.

For the next several days . . .

We'll be discussing methods of testing advertising. We'll be calculating ways to make sure that every advertising dollar is held accountable. And most likely, we'll come to some conclusions about media, messages, and scheduling.

We'll explore good ideas, and bad ones. We'll look at the returns that advertising investments should bring. Must bring. We'll determine how to predict those returns. We'll find some resources for basic marketing during tough economic times, or for that matter, during any economic times.

I invite you to participate.

__________

Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about testing your advertising may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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