Wasted Advertising Dollars

For literally years, we’ve been talking about how many ad dollars are wasted. The old saying “Fifty percent of my advertising is wasted, I just don’t know which fifty percent” just got a little clarity.

Research done by the Advertising Research Foundation believe that it is actually a little closer to 20% and the leading causes are wrong message ($20-30 Billion) and wrong timing ($10 - $20 Billion).

While I’d suggest these numbers are still low (They don’t really account successfully for the lack of relevancy and resultant lack of action or even brand adherence to my knowledge), I believe they are particularly low when it comes to small business.

Small businesses rely far to heavily on the efforts of media reps and sales people to make their buying decisions and to determine what kind of an offer to make, which all too often gravitates to the lowest common denominator, price and discounts.

Small businesses have to focus on the right message and the right time, but they must be finitely focused on being relevant to the viewers, listeners and readers of their message. It must move them to action and get the bar to move up, not just stay level.

I can’t say with 100% confidence that these studies didn’t take into account the actual impact that the ads they considered effective had on buying behavior because I haven’t read the whole study yet, but there are really only two things that good ads should do and that is cause people to buy or build keen awareness of one particular brand over another when the customer will buy.

I fear that many small businesses still waste 50% or more of their ad dollars because they are doing NO or minimal backend analysis and very little front end planning to be sure that their dollars are working harder for them. The answer of course is to spend more time focused on what you are going to say to which audience and how, then and only then effectively buying media, running ads and analyzing results carefully to know which media to use again and which messages had particular impact.

I discuss this a great deal in my new audio book called Making Marketing Work. If you are interested in the Audio Book, just send me an email and I’ll tell you about how you can get a copy. It will be available on Amazon in about 30 days.

Comments

[Steven Streight aka Vaspers the Grate]

What advertising is working and what is not?

Direct marketers solved this problem about 70 years ago: you simply test two different advertising approaches.

You take one offer, or headline, or marketing concept, or discount, whatever you think might work, and send a direct mail package containing it to every other name on a good, proven responsive mailing list.

Then you take another idea you think might also be good, or better, and send that to every other name.

It's called an A/B Split Test. Name 1 gets package A. Name 2 gets package B. Name 3 gets A. Name 4 gets B.

And so on down the list.

You can also test with print ads, by including a coupon they cut out, or an 800 number to call.

The coupon has a code, or department number, identifying which advertising approach the customer is responding to.

The 800 number operator asks the customer to read the code on the ad they're responding to.

With direct marketing, you can test anything, and keep testing, until you know exactly what works and what doesn't.

[Steven Streight aka Vaspers the Grate]

I forgot to state:

The advertising approach that generates the greatest response via the direct marketing is the winner.

An A/B split test is scientific.

What is proven to generate better results via direct mail, direct response ads, 800 number, whatever, is then capable of being used in non-direct marketing ads, like billboards, television commercials, etc.

[Dave Lakhani]

Very good points in reference to direct reponse and I agree that it is one tool to more carefully target specific groups of customers.

While direct marketing certainly has its place and many of the techniques are appropriate for many businesses, brand marketing is also important when done appropriately, even for small businesses.

You don't sell bread or gasoline with direct response, you sell it with a story that people can buy into that is relevant to them. There are elements of direct response in the ads to be sure, but they are not as easily monitored as an A/B test or a bounce back coupon.

If you want to be the dominant player in a retail market you own top of mind awareness in the consumer, one of the best ways to acomplish that is through the use of radio, television and newspaper. Again, you have to be committed to a long term plan for advertising and marketing.

Could P&G be more profitable if they used only direct response advertising, probably not. But they certainly did evolve the direct response measurement models to fit retail and they grow very predictably.

Keep your eye on the customer and know what they want, how they live and how they use your products, then tell everyone like them a story like that and they jump on board too. But only after sufficient exposure to the message that is targeted directly at them.

[Steven Streight aka Vaspers the Grate]

Very good points Dave. It seems that one might try using direct mail as a way to test other non-direct mail advertising, prior to rolling out a full-blown campaign.

I'd have to think about how you'd do that for gasoline, bread, etc. but I believe it could be done.

I mean blind advertising is not necessary. I even like the much maligned focus group and brainstorming in some cases. Almost any attempt to target an advertising approach is better than nothing, better than fumbling around with zany "creative" ideas that merely entertain, and don't really sell.

I try to address this issue in my "Psychologically Unsound 15 Second Sitcom Commercials Suck" post on the Mentally Correct Marketing blog. I am so amused that agencies are still using the proven ineffective comedy approach to selling things like airlines.

That major airlines are going broke is no joke. And doing a frivolous silly commercial, when airline safety and security is so serious, this seems so...let's just say I don't get it. I must be nice and polite sometimes, huh?