I believe the core principles of value investing in the stock market also apply to the world of advertising. Whether you’re buying stocks, or advertising, the goal is the same: create a profitable return on your investment.And in each activity, there’s a speculative factor with no guarantee for success. Anyone can buy stocks, or bonds, or advertising; it is the intelligent buyers who find value where nobody else is looking.
In 1949, legendary investor, Benjamin Graham, published one of the most popular books ever written about investing in the stock market, The Intelligent Investor – The Definitive Book on Value Investing.You may know one of his most loyal followers – Warren Buffett.
Graham’s searched for gaps in the intrinsic value of businesses and the prices of those businesses, then took advantage of those gaps by purchasing stocks or bonds in these companies at a discount.These deviations in value often occurred because the prevailing herd on Wall Street (and the media) didn’t favor a specific industry or category of business.When these enterprises were out of favor, or boring – yet still profitable and dependable businesses – their stock could often be bought below the fundamental value of the business. In plain terms, the companies were undervalued by Wall Street.
For example, remember the dot-com bubble in the late 1990’s?This is when the herd on Wall Street speculated excessively on dot-com businesses while profitable but untrendy businesses saw their values stagnate and stock prices sink.
Become an Intelligent Advertiser
I find most business owners today are quick to dismiss traditional or offline media as a viable option to market their business.When I refer to offline or traditional media, I’m talking about everything but the internet.Generally speaking – print (Direct Mail, Newspapers, Magazines) and broadcast (Radio and Television).
How can I blame them? For years they were restricted to boring newspaper ads, dreary direct mail, and seemingly ancient radio and television.A lot of business owners think traditional media tactics are too expensive, wasteful, and difficult to execute profitably.
Many businesses are handing over their marketing duties to younger adults who have very little exposure or interest in traditional media.Or, they hire digitally-focused advertising agencies with zero experience – or interest – in anything offline or traditional.
The marketing universe is consumed by propaganda in trade publications, newspapers, white papers, research studies, books, commentary and interviews with industry leaders – all focused entirely on social and digital media trends.
Good news, this creates opportunity for the intelligent advertiser.Offline media is very much out of favor.Not because they don’t work, but because they had their bubble, and it burst many years ago.While digital and social media attract the spotlight, I urge you to consider the significant underlying value in traditional media.
If we were to compare advertising tactics to the stock market – you might classify offline media as an old blue-chip stock cranking out reliable profits and dividends for its investors.Kind of like IBM, or Chevron.Far from sexy, but profitable, and a classic value investment because the price of traditional media has never been lower.
There have never been more ways to spend money on advertising than there are today.And many “experts” give digital and social media far more credit than they deserve for their true influence on consumer behaviors.Many digital solutions are wonderful, but just as many are faddish, unproven, wasteful, and fueled by hype.
In case you hadn’t noticed, every major digital or social media company – from Facebook to Google to Amazon to Apple – all invest a considerable sum into traditional media.
So much marketing advice these days comes from people who are rebelling against traditional media. They have a vigor and desire to disrupt (and I applaud and support their efforts), but this clouds their judgment when they won’t consider all the available options. Professional marketers and service providers who ignore how to execute successful marketing in traditional media are basically shunning the lowest-hanging fruit of potential success.
The Bottom Line
I’m not saying you shouldn’t invest in digital marketing or online infrastructure.The point is: don’t get caught up in the hype, and don’t dilute your already small advertising budget (in comparison your national competitors) with a bunch of unproven digital and social media tactics – unless those tactics truly are the right solution.In the pursuit of value, Intelligent investors and advertisers don’t have a bias toward any advertising tactic, the only metric that matters is return on investment.
Shane Nichols is the General Manager of Ball State Sports Properties for Learfield Communications and the author of The Intelligent Advertiser, The Definitive Guide to Finding Value in Local Broadcast Media.
If your goal is to show a positive return on your invested marketing dollars, there are three key components of your marketing strategy that must work in harmony: The math, or the media buy – the merchandising, or how you maximize transactions – and the messaging, or your creative.
I believe the most important element is the messaging — what are you saying in your paid media to get a response from prospective customers? Anybody can buy media, the intelligent advertiser takes the time to develop a unique selling point, which may ultimately influence the media they use. And with the growing number of advertising options, this is now more important than ever.
Here is a very common scenario, you spend a lot of time and effort on where to invest your marketing budget, spend even more time negotiating rates, and now it’s time to submit your ad. Problem is — you’re busy running the business — so you decide to repeat last year’s ad.
This is probably the most common mistake in all of advertising, a failure to take the time and effort to develop a unique selling point or actionable offer that will resonate with your target audience. Because once you have the foundation of a truly unique selling point, it can be used forever.
If your ad wastes precious airtime or space on any of the following features, then you probably won’t get a measurable response to your ad:
How long you’ve been in business
Having a family-owned business
Being locally owned and operated
Notice that your national competitors can’t use any of these features in their advertising, and it doesn’t seem to hurt them one bit!
Try spending one day paying attention to as much TV, radio and print advertising as you can stomach, and you’ll be stunned at how many businesses claim one or all three of these clichéd features.
Bottom line: Spending money on ad space or air time and not utilizing it with some type of offer or unique selling point renders your investment unmeasurable.
Your message should be 100% about getting a direct, immediate response from the small number of customers who are ready and able to buy at that moment. And then, getting contact information from those who will buy – but aren’t ready yet.
Branding is for manufacturers with deep pockets like General Motors and their Chevrolet brand of cars and trucks. Response driven advertising is for the local Chevy dealer who sells the cars and trucks.
For example, instead of just advertising a low monthly payment, Hare Chevrolet in Noblesville, IN features the “Sisters of Savings” who help you save money in their catchy radio commercials.
Testimonials from customers describing how you helped solve their problem or impressed them with your service are among the most effective forms of messaging.
Indianapolis hair restoration clinic, PAI Medical, developed an effective and unique campaign when they started recruiting popular local DJs to endorse their service and products.
They find DJs who have thinning hair, restore their hair, then feature the successful transformation through testimonials on radio, television, and billboards. It’s a potent combination, especially when you hear your friendly DJ describe on-air how it improved their life.
Celebrated author and master direct-response marketer Dan S. Kennedy offers great advice in his book, The Ultimate Marketing Plan. He advises taking a stack of 3×5 index cards and writing down every fact, feature, benefit, promise, offer component, and idea on each card—until you have exhausted everything you know about your business and direct competitors. Then try to prioritize these items by what is going to be most compelling to your customers—and by what makes you stand out from your competition.
This doesn’t mean you have to become an experimenter or innovator – instead, be an adapter – and implementer. Pay attention to unique approaches that are working from entrepreneurs in your industry in other markets and make them your own.
If your goal is to show a positive return on your invested marketing dollars, there are three key elements of your strategy that must work in harmony — the math, the merchandising, and the messaging.
In part one I emphasized how important it is to create a unique selling point or compelling offer so you can generate immediate response and track your advertising. In part two I’ll focus on how important it is to maximize opportunities created by your advertising — also known as merchandising.
Imagine this scenario: you operate a successful grocery store in a thriving neighborhood. Through a partnership with a local dairy farm, you have an exclusive opportunity to sell a very popular brand of organic milk for half the price of your competitors. A truly compelling and unique offer.
You capitalize on the opportunity and double your usual advertising budget for the month. You also quadruple your order with the dairy farm and create more space near the entrance of the store to display the milk.
The response is tremendous. Sales of organic milk triple, and your average sale per customer reflects this, but the increase in sales is exclusive to the milk. You also attract hundreds of new customers who are not regular shoppers, but you find a lot of them purchase only the milk. It appears your regular customers are doing their usual shopping and adding just the milk, and new customers are also cherry-picking your store for this one item.
This is an example of a failure to merchandise. The failure occurred in a few areas. Although you were smart to increase advertising and the amount of product you ordered, you failed to capitalize on the surge in store traffic.
Maximizing sales opportunities from customers ready to buy your merchandise or service is one of the least expensive tactics to grow your sales.
By displaying the milk at the front of the store, you didn’t invite customers to experience the rest of your store and other merchandising efforts. If the milk had been placed at the rear of the store— you’ll notice that all dairy products are as far from the door as possible—you would have forced customers to walk the entirety of your store and be exposed to other selling opportunities. Who knows, half of the customers might have picked up two or three other items on their way to get milk!
In addition to placing the milk in the wrong part of the store, you didn’t surround it with displays for complementary items such as eggs, cereal, and bacon, to increase your basket size or overall sale.
What if you own home service business, and whenever your coupon runs in the local newspaper you receive 10–20 calls — which is great and means you took the time to develop a compelling offer!
However, the person answering your phone is not trained or prepared to handle leads, they think their job is to just to be a receptionist. In fact they are juggling several other duties as well as answering the phone.
They have no script, no process to follow, and no customer relationship software to record the caller’s information for future marketing opportunities. Half of the time, the calls go to voicemail. This is a failure to merchandise by not creating a process to manage in-bound calls.
In another example, let’s say you operate a furniture store, and from a pure merchandising standpoint the store is physically arranged to maximize sales in every possible way. The hottest sale items are in the back of the store, there are multiple displays of entire furniture sets so customer can visualize what their new bedroom, family room or kitchen will look like.
But, compared to some of the newer national chains who sell the same type of furniture, your store is dated. The carpet is old, the lights are dim, the ceiling is low, and the parking lot has potholes. This is a failure to merchandise by keeping your infrastructure up to date.
Investments made into your physical and digital infrastructure are often expensive and difficult to commit to, but often pay dividends for many years. So the cost essentially can be spread out over 5 or 10 years depending on the type of improvement.
There are A LOT of things that need to go right before you succeed in advertising.
First, you need to buy the correct media, at the right time, and at the right level of repetition.
Then, be sure your store, website and employees are ready to maximize any response to the advertising.
And finally — you must create an appealing offer or unique selling point so people have a reason to respond.
And, the definition of success is getting a measurable return on your investment, not “getting the word out.”
The secret to getting more response is to have multiple offers that appeal to all customers in the buying process for your product or service.
In addition to focusing on those ready to buy — engage the larger pool of customers not ready to buy yet — who may buy in the future.
The illustration below is a typical buying funnel starting with Awareness, then Interest, then Desire, and finally Action.
At any given moment there are people ready to buy your product or service — people ready to take Action. Depending on your type of industry, only a small percentage of a given population will be Action buyers, the vast majority are in the other stages.
My sales coach Matt Nettleton owns a Sandler Sales Training business in downtown Indianapolis, and he is great at appealing to people in every stage of their buying process (for sales training).
Low threshold offers
Matt often advertises free books, white papers and other research as a free gift to people who are interested in learning about Sandler Sales training techniques.
These non-buyers are willing to provide their contact information in exchange for this valuable information, but they’re not ready to interact with anyone in person.
The more helpful and valuable this information is will determine how engaged the customer becomes with your business.
Do them a favor, share some secrets about your business while they do their research, and they’ll reward you later with a purchase.
Medium threshold offers
Matt also conducts free seminars encouraging potential clients to sample his services at no charge.
These events attract people further along in the buying process, beyond Interest and moving towards a Decision.
They’re willing to experience a higher level of commitment, to physically interact with someone. This type of personal interaction gives Matt a great opportunity to convert people into buyers.
High threshold offers
Matt also conducts paid seminars, like this Sandler Sales Training Boot Camp. People who sign up for this are are ready to take Action!
These customers are ready to buy and the question your ad should answer is — why should they buy from you?
The rationale you give for why they should buy now shouldn’t be: how long you’ve been in business, or that you are a family and/or locally owned business. Nobody cares.
This is about grasping the bigger picture. Anybody can attract the “now buyers.”
Intelligent advertisers recognize the greater value in the ENTIRE PIPELINE of prospects.
On September 21, 1970, the ABC television network first aired Monday Night Football in primetime, and it was an immediate hit — capturing over 30% of the entire US TV audience, and would remain a top 20 primetime program for decades. That is, until ESPN ruined it.
In 2006 when the MNF contract was up for renewal, ESPN grossly overpaid the NFL while giving up the right to feature the best games, and replaced popular veteran announcers like Al Michaels and John Madden with lesser known anchors from Sportscenter.
The Worst Games
ESPN pays almost $2 billion per year to air just one game a week — Monday Night Football. To say they overpaid is an understatement — they didn’t even get a Super Bowl as part of this package. It’s nearly twice what NBC pays to air Sunday Night Football.
When ESPN closed this billion dollar deal some of its top executives believed they were buying the schedule of the previous Monday Night Football package — which usually featured one of the top games of the week. But NBC cunningly negotiated this feature away.
Sunday Night Football became the NFL’s premier prime-time package, giving it the best games and the right to steal the best matchups from Fox and CBS. ESPN basically gets the leftovers, and it’s unfortunate because not only is it their loss, it’s ours too — because Monday nights aren’t as fun as they used to be.
How did this happen? Well, in part because the relationship between the NFL and ESPN has been rocky over the years. ESPN considers itself a journalistic enterprise and many of their journalists have been — and continue to be — critical of the NFL, particularly on the concussion issue. I champion journalistic voices not only in sports, but in government, politics and business. But in the world of sports entertainment it’s risky to criticize an organization (The NFL) who controls the most popular live content on the planet.
The options for where the NFL can sell their content is growing daily — and at the end of the day – ESPN is just another cable network — another platform in a sea of platforms eager for content. In an effort to take a positive step in building a better relationship, ESPN basically took whatever the NFL was offering while negotiating the MNF contract.
In Broadcast vs. Cable, Broadcast usually wins
NBC’s Sunday Night Football has been the #1 ranked show in all of TV for nine straight years. When ABC aired Monday Night Football — even as the network struggled with ratings overall — it was a perennial Top 10 primetime program. During the 2017 regular season, ESPN’s Monday night games averaged a record-low 10.8 million viewers, according to SBD. That was down 6 percent from the previous season.
There are bigger trends at work here — all TV ratings are trending downward. People are cutting their cable cords, buying antennas, and subscribing to more streaming services. There are simply more options than ever when it comes to entertaining ourselves.
Monday Night Football also changed platforms, moving from the ABC broadcast network — available to pretty much every household in America for free with an antenna — to ESPN — a cable network requiring a subscription to access their content. This drastically reduced distribution and availability to millions of viewers — now you have to pay to watch MNF.
NBC built a franchise for Sunday Night Football out of thin air and created the #1 program in all of primetime. I attribute that partly to the undervalued power and distribution of broadcast television. Also NBC is brilliant at promotion, and production, and they understand primetime games deserve primetime talent.
A Lack of Star Power
NFL commissioner Pete Rozelle’s idea behind MNF was to promote football to the masses, and to make it even more interesting they added star power to the announcing booth. When MNF debuted in 1970 it showcased the popular personalities of Howard Cossell, Keith Jackson and Don Meredith. ESPN’s latest lineup features Joe Tessitore, Jason Witten, Booger McFarland, and sideline reporter Lisa Salters. If you are a casual fan of the NFL and don’t watch Sportscenter or ESPN religiously, it’s likely you’ve never heard of these people.
Below is a list of MNF announcers over the years and pay attention to who ESPN put in the booth in their debut year — a wonderful but mild Mike Tirico alongside a very good Joe Theisman alongside Washington Post Sports Columnist Tony Kornheiser. We went from Al Michaels and Jon Madden, superstars of football broadcasting, to a Sportscenter anchor and a newspaper columnist. They are all wonderfully talented professionals, but ESPN took the fun out of Monday Night Football and turned it into a nerd fest of jock talk.
As Don Meredith famously said in the show’s heyday, “Turn out the lights, the party’s over.’’
Keith Jackson, Howard Cosell, Don Meredith
Frank Gifford, Howard Cosell, Don Meredith
Frank Gifford, Howard Cosell, Don Meredith
Frank Gifford, Howard Cosell, Don Meredith
Frank Gifford, Howard Cosell, Don Meredith, Fred Williamson
Frank Gifford, Howard Cosell, Alex Karras
Frank Gifford, Howard Cosell, Alex Karras
Frank Gifford, Howard Cosell, Don Meredith
Frank Gifford, Howard Cosell, Don Meredith
Frank Gifford, Howard Cosell, Don Meredith, Fran Tarkenton
Frank Gifford, Howard Cosell, Don Meredith, Fran Tarkenton
Frank Gifford, Howard Cosell, Don Meredith, Fran Tarkenton
Frank Gifford, Howard Cosell, Don Meredith, Fran Tarkenton
Frank Gifford, Howard Cosell, Don Meredith, O.J. Simpson
Frank Gifford, Don Meredith, O.J. Simpson
Frank Gifford, O.J. Simpson, Joe Namath
Al Michaels, Frank Gifford
Al Michaels, Frank Gifford, Dan Dierdorf
Al Michaels, Frank Gifford, Dan Dierdorf
Al Michaels, Frank Gifford, Dan Dierdorf
Al Michaels, Frank Gifford, Dan Dierdorf
Al Michaels, Frank Gifford, Dan Dierdorf
Al Michaels, Frank Gifford, Dan Dierdorf
Al Michaels, Frank Gifford, Dan Dierdorf
Al Michaels, Frank Gifford, Dan Dierdorf, Lynn Swann
Al Michaels, Frank Gifford, Dan Dierdorf, Lynn Swann
Al Michaels, Frank Gifford, Dan Dierdorf, Lynn Swann
Al Michaels, Frank Gifford, Dan Dierdorf, Lesley Visser
Al Michaels, Dan Dierdorf, Boomer Esiason, Lesley Visser
Al Michaels, Boomer Esiason, Lesley Visser
Al Michaels, Dan Fouts, Dennis Miller, Melissa Stark, Eric Dickerson
Al Michaels, Dan Fouts, Dennis Miller, Melissa Stark, Eric Dickerson
Al Michaels, John Madden, Melissa Stark
Al Michaels, John Madden, Lisa Guerrero
Al Michaels, John Madden, Michele Tafoya
Al Michaels, John Madden, Michele Tafoya, Sam Ryan *
Mike Tirico, Tony Kornheiser, Joe Theismann, Suzy Kolber, Michele Tafoya
Mike Tirico, Tony Kornheiser, Ron Jaworski, Suzy Kolber, Michele Tafoya
Mike Tirico, Tony Kornheiser, Ron Jaworski, Suzy Kolber, Michele Tafoya
Mike Tirico, Jon Gruden, Ron Jaworski, Suzy Kolber, Michele Tafoya
Mike Tirico, Jon Gruden, Ron Jaworski, Suzy Kolber, Michele Tafoya
Mike Tirico, Jon Gruden, Ron Jaworski **
Mike Tirico, Jon Gruden, Lisa Salters
Mike Tirico, Jon Gruden, Lisa Salters
Mike Tirico, Jon Gruden, Lisa Salters
Mike Tirico, Jon Gruden, Lisa Salters
Sean McDonough, Jon Gruden, Lisa Salters
Sean McDonough, Jon Gruden, Lisa Salters
Joe Tessitore, Jason Witten, Booger McFarland, Lisa Salters
What’s true about the evolution of marketing tactics, just like in publicly traded stocks, is their value (or impact) changes over time.
Just 50 years ago the most valuable companies were department stores like Sears, industrial businesses like US Steel, and low-tech pioneers like Polaroid and Kodak.
In the marketing world, the daily newspaper used to be the dominant source of information, and the most popular solution for advertisers.
Today the most valuable companies are in technology, they make software like Oracle and Salesforce, or run digital platforms like Amazon and Uber — connecting people with information, products, and services.
In the marketing world, the value (and popularity) of digital and social marketing has exploded, while the value of print marketing has plummeted.
But there is one marketing tactic that is seemingly timeless, because its value has never diminished, and today may be at its pinnacle — and that is — sports sponsorship.
Why? Because there has never been more demand for content — and there have never been more ways to consume content.
What I mean by content is the entertainment you watch, and listen to, or read in various kinds of media like TV shows, movies, sporting events, concerts, viral videos, music from the radio or from streaming services like Spotify, articles from websites, blogs, apps, and other news providers.
All of it consumed on a growing number of devices and platform like our smart phones, TV’s, desktop computers, laptops, tablets, and even watches.
Therefore, the amount of money invested in content has never been greater, Netflix alone spent over $6 billion on entertainment for their subscribers in 2017.
ESPN, a part of Disney, spent about $6 billion on just the rights to air live sporting events — the most valuable of all content.
The Value of Live
Live sports are the most valuable of all content because it’s rare now for people to share the same entertainment experience at the same time.
Most of us are plugged into our personal (on-demand) feed of entertainment, delivered by our favorite device.
Intelligent marketers covet reaching folks sharing experiences at the same time because it’s a more efficient and effective way of engaging customers.
Think about the Super Bowl in 2018, advertisers paid over $5 million PER thirty-second commercial (in part) because over 100 million people were tuned in at the same time.
Live sports, especially Football, Basketball and Baseball, translate well to every media — they are safe for anyone to watch —and they elicit an emotional connection unlike any other type of content.
Sports work well in TV, Radio, social media platforms like Facebook, Instagram, Twitter, and are ideal for streaming. Also, they provide compelling content and analysis for printed publications like magazines, newspapers, and programs.
This means flexibility in creating effective and affordable campaigns for sponsors.
Sports are also safe — meaning when a business invests in sports sponsorship, they don’t have to worry about being associated with anything obscene or politically offensive — a growing concern especially in the digital marketing space.
A Shortcut to Making Your Business Unique and Compelling
One of the biggest challenges facing business owners today is figuring out how to differentiate themselves from their competitors.
How can your law firm, furniture store, HVAC company, or auto dealership stand out from your competition?
Most businesses say the same things in their advertising: How long they’ve been in business, how well they serve their clients, and that they’re locally owned and operated.
Rarely are these features unique, and rarely are they compelling enough (on their own) to attract customers.
Sponsoring a pro or college sports team is a shortcut to the hard work it takes to develop a unique selling point.
You gain access to a team’s most valuable asset — their intellectual property. This means you can proclaim your business an official partner and incorporate their logos into your own advertising.
This creates instant credibility and a connection to their fan base, the community, alumni, university leadership, faculty and students.
Nobody understands this better than the beverage industry.
Pepsi may not taste like Coke, and Miller may not taste like Coors, but they are similar.
That’s why these savvy marketers engage with college programs and professional franchises in just about every city — because it makes them stand out AND it instantly connects them with a large pool of customers.
How to Market Your Business to Other Businesses
If you’re a business selling products or services to other businesses (a B2B), sponsorship is an especially good idea.
B2B’s have a smaller target audience — other businesses. And there are fewer ways for them to advertise — which is why they often employ salespeople.
Ads in business journals and trade publications can only be as effective as the message or offer in the ad.
So, if you’re an official partner of a respected athletic program, and cleverly weave this into your marketing, suddenly you have a more compelling message.
Ice Miller is a law firm based in Indianapolis, IN. And they work with many colleges in the state of Indiana.
The ad below ran in a local business journal — but I modified it slightly — I inserted the logos of four prominent universities above their headline “build partnerships.”
Which version of this ad do you believe would have more impact? The one with or without the implied partnership and logos?
If you sell services or products to a college or university, you’d be wise to invest in an athletic sponsorship.
Why? Guess who attends games and pays close attention to their athletic programs?
University leadership, administration, trustees, influential alumni, and decision makers within each school or department. Also, students, their parents, visiting teams, visiting administrators, fans who are business decision makers, and the community.
If you want to do business with the college or university, you’d be wise to invest in an athletic sponsorship.
Why? A sponsorship with a college athletic program is the single most impactful and efficient way of engaging these decision makers. Period.
Furthermore, you can invest in hospitality opportunities where can meet and interact with these leaders and decision makers.
Universities also have ENORMOUS economic impact on their communities.
If you operate a business in a college town, you’d be wise to invest in some kind of sponsorship — or risk having a direct competitor gain this advantage — and risk losing out on a large source of existing and potential clients.
How to Get a Return on your Sponsorship Investment
All it takes is a little effort, and some common sense.
If you buy a sign and put your logo on it — and that’s all you do — it will be tough to measure the response.
I’m not saying it won’t work, people will see your logo. Some will buy your product or service just because of that sign — but it’s still tough to measure.
Now, what if you add a clever little offer just below your logo?
What if a customer could download a coupon or some helpful research from your website? Now we have something more measurable!
Here are some other ideas (and there are many more) you can use to help develop a sponsorship likely to generate a measurable return on your investment:
Create a branded product, for example, Toyota has an Indianapolis Colts branded truck. Ford has a Texas Edition truck.
You can brand anything with an athletic team. A furniture dealer could develop a branded recliner with logos and beverage holders. Fans love to buy products with their team’s logo on them.
Have a coach or current or former player endorse your product or service. Before Peyton Manning ever threw a touchdown pass, Indianapolis auto dealer Bill Estes signed him to an endorsement contract, and reaped the rewards of that partnership as Manning’s career took off.
Not everyone can afford a celebrity spokesperson, but you can probably afford a former or current player or coach, and this instantly distinguishes you from all your competitors.
Offer a discount on your product or service with a win — or a loss — or some specific score. The more you gamble the more interesting this becomes to fans. In many cities where Papa John’s operates, when the local colleges or pro team wins, fans win 50% off their next pizza!
Put your name on it! Let’s say you own a lawn services company — name the football field — call it LAWN PRIDE FIELD!
If you own a professional services firm and want to entertain clients and rub elbows with business leaders — put your name on the suite level or premium seats, or even create a special section for VIP’s.
Share Content — as I explained earlier, sports content is valuable, so become a sponsor of replays, or the play of the game, or a special video feature. Then SHARE IT on your own social media feeds.
Watch your audience organically grow by being the source of great content from a respected athletic program or franchise.
One of the Best Ideas Ever
Many years ago, an NFL executive named Jim Steeg was inspired by a Wilson tennis racket. He noticed a giant “W” on the strings signifying the Wilson brand.
Steeg took that idea and emblazoned the NFL shield on the nets behind the goal posts at the 2003 Super Bowl and in Pro Bowls from 2002 to 2004. A few years later Allstate picked up the idea and now sponsors over 100 colleges and football events each year.
This an example of an awesome idea we know is influential but may be difficult to measure.
One day, while sitting in your office
and dreaming of ways to make more money, you call up a stock broker and buy several
thousand dollars’ worth of stock in TBD Corp.
The thing is, you are not a professional investor, far from it, and outside of bull markets (when everyone wins), most of the stocks you pick LOSE MONEY!
And, your decision to purchase TBD
Corp. wasn’t based on any research. Not
a single piece of data. Not even a
glance at CNBC.
Frankly, you winged it, and relied on gut instinct.
Sounds crazy, Right? But guess what, this is how most business
owners buy their advertising.
Nobody, well, maybe some people buy
stocks this way, but they shouldn’t.
So, why the heck would you buy ADVERTISING
Well, in advertising, gatekeepers (media companies, ad agencies etc.) guard the most helpful research. Stock market investors, however, can access an abundance of helpful research from a variety of sources absolutely free.
For example, without even logging on
to their website, I’m able to access all kinds of helpful research from Vanguard
(a large mutual fund company) about any stock or mutual fund in the US.
At my finger tips are charts, news, financials,
shareholder details, price history, earnings reports, analyst opinions and much
You would assume, in the world of
advertising, with advances in technology and access to information, a business
owner (like you) would be able to find research (like this) designed to help
(you) make better decisions.
But you’re wrong.
The advertising marketplace is shadier than a rain forest.
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half”.
John Wanamaker (1838-1922) opened one of the first and most successful department stores in the United States, which grew to 16 stores and eventually became part of Macy’s.
You can’t and won’t find this
information anywhere because:
(ad agencies/consultants/research services) don’t want you to have it and they
make it so expensive no business owner (other than an ad agency or consultant)
could justify the cost.
limited access to research creates the illusion that most advertising cannot be
measured by the common person, or in many cases, creates the belief it can’t be
measured at all.
Wanna know what’s crazy?
BILLIONS of dollars are spent each
year on advertising without any consideration of past or future performance.
And worse, without any regard to its
return on investment.
This is partly due to the amount of
“brand” advertising that exists in the marketplace today.
If you’ve been fooled into believing
that “branding your business” is a wise marketing strategy, then I have some
penny stocks I’d like to sell you.
I’m not saying building a brand or
branding your business is a bad idea. If
you have a budget like Coca Cola and Budweiser – then by all means brand
But most businesses don’t and instead
should start thinking about their marketing budget differently.
Every campaign should start with
projections on potential profit, and I will show you how to do this with a
And this starts with having
measurable and compelling offers in your advertising. (More on how to get response to your advertising here: https://intelligent-advertiser.com/2018/11/24/the-secret-to-getting-more-response-from-your-advertising/)
This approach isn’t perfect, nothing is, but it beats blindly spending money and hoping for success.
Or even worse, being taken advantage
of by an advertising agency or marketing consultant who are often afraid to
take responsibility for the results.
Need to Know and How to Get it
In the graph below, I’ve projected a
return on investment for a local TV campaign – a media that many people believe
is tough to measure.
In order to do this, you need to
collect some information from your media vendor and apply it to metrics you
should already know (or learn) about your business.
Determine the verified effective reach: In the simplest terms this is the number of people who see your ad at least 3 times per week. This used to be (back in the 80’s) the prescribed amount of exposures to make sure people saw and understood your message/offer. But today, in our increasingly cluttered advertising world, it’s not enough. However, it’s a good starting point to determine who is effectively being exposed to your ad and your media vendors can supply this so just ask!
Determine the number of buyers in the market: Depending on the industry, about 1 to 3% of the population are in the market and ready to buy your product or service on any given day. To be safe I usually assume 1.5% so multiply your verified effective reach by .015 and that becomes your pool of potential sales. This is not represented in the graph but should be in all ROI calculations.
Establish a reasonable response rate: Successful direct-mail campaigns generate a 1–3 percent response rate. You can expect a similar response from “buyers” if you have a good offer or compelling message. Always be conservative and stick to 1 percent. (In the graph please note I used less than 1 percent because I was dealing with a mass media like broadcast television in a major market like Indianapolis, IN. If you operate in large city and are using mass media you should follow this approach as well. Your estimates should always skew conservatively.)
Determine your average revenue per customer: What is your average sale? If you added up an entire year’s worth of transactions and divided by the total number of transactions – what is that number? The higher the better!
Find out your closing ratio. This varies by industry and also depends on how well your salespeople are trained. The higher, the better!
Estimate the gross revenue. Number of closed leads resulting in your earlier calculation multiplied by the average sale.
Know the full cost of your campaign. Airtime, space, creative and production costs, also costs related to digital for example if you have to create a landing page or update your website.
Calculate the ROI: Take your projected net profit and divide it by the cost of the campaign including any production or creative costs then multiply by 100. For example, if you bought a single share of stock for $500, then sold it for $600, you would calculate ROI as follows: $100 (Gain) divided by $500 (initial investment) = .2 x 100 = 20% return on investment.
When it comes to business, it’s all investing, and you can choose to be an investor or a speculator, it’s your choice.
If you use this simple formula before
purchasing your advertising media you will have a better understanding of
whether or not the campaign is likely to work, and be profitable
I’d like to tell you a story about Bob. He owns a modest golf practice facility — also known as a driving range — in Muncie, Indiana.
Muncie is a mid-sized college town with about 70,000 residents, smack dab between Indianapolis and Fort Wayne in rural Northeast Indiana.
At Bob’s Driving Range you can hit golf balls at colorful targets of varying distances, or chip and putt on multiple practice greens. And, cold Indiana winters are no excuse to avoid practice because Bob has heated hitting bays and variety of indoor practice areas.
Bob has a helpful staff of PGA certified instructors, he sells a mean cheeseburger (and other snacks), and offers a great assortment of local craft beer (and domestic beer).
But Bob also has a marketing challenge, and that is how to attract new customers — reliably and profitably.
He doesn’t have a big budget, just one (remote) location, and competes with several other facilities (and golf courses) who offer similar services and products.
Bob’s run ads in all kinds in newspapers, community magazines, church bulletins, little league programs, billboards, park benches, on the radio, and even took a crack at some Google and Facebook ads.
But nothing works, at least not reliably, and for sure not profitably.
Where Should Bob Start?
The first thing Bob should do is pause. Stop everything.
Cancel all contracts and advertising spending.
He should spend some reflective time away from the business and brainstorm about what makes his business unique.
Celebrated author and master direct-response marketer Dan S. Kennedy offers great advice in his book, The Ultimate Marketing Plan. He advises taking a stack of 3×5 index cards and writing down every fact, feature, benefit, promise, offer component, and idea on each card — until you have exhausted everything you know about your business and direct competitors. Then try to prioritize these items by what is going to be most compelling to your customers — and by what makes you stand out from your competition.
Bob needs to figure out what is UNIQUE about him and his business — and if he can’t come up with anything, then create something unique. And forge this unique idea or quality into an offer (or bait) that makes him stand out from every other practice facility.
As a golfer and a fisherman, Bob knows you can’t attract fish without tantalizing bait — fish like worms, people like free stuff and/or VALUE.
And, since Bob already knows who he wants to target — Golfers — it makes sense for him to appeal to ALL GOLFERS. From the youngster with their first set of clubs to a single digit handicapper always honing their game.
And he shouldn’t dismiss the folks who are interested in learning golf, but haven’t yet for whatever reason.
So after much thought and consideration, Bob comes up with this idea:
At Bob’s Driving Range …. THIS MONTH ONLY …. all new customers get a free golf lesson from a PGA Certified Instructor …. there is absolutely no obligation we just want you discover how rewarding the great game of golf can be …. visit Bobsgolf.com and check out our free report: Top 5 Ways Anyone Can Improve their Golf Game …. and if you like what you read …. schedule a free lesson …. ALL skill levels are welcome ….. first time golfers, children, weekend duffers, and even skilled players …. You wouldn’t try learning how to swim without some help …. same goes for Golf …. so give it a try you have nothing to lose …. AND …. I’ll throw in a free bucket of balls so you can practice what you learned after the lesson!
He also came up with:
Hey You …. the guy on the couch ….YEAH you …. It may be cold outside but that’s no excuse not to practice …. Are you tired of never improving? …. And starting over from scratch every spring? …. Tired of never gaining any ground on your golf buddies? …. It’s summer ALL YEAR ROUND at Bob’s Driving Range in our heated indoor practice facility! …. And for a limited time …. you can purchase a VIP Practice Pass for 25% OFF! …. That’s right, I can only sell a limited number of these each year or I’d go out of business …. It includes unlimited practice time and golf balls …. 3 free lessons with the PGA Professional of your choice …. and if you sign up before February 28th …. I’ll throw in Dozen New Titleist Golf Balls for FREE …. Hurry and get your’s while they last …. Go to Bobsgolf.com and find out more about our VIP program AND check out…. also free of charge …. our top 5 practice tips that will dramatically improve your game.
The only point of Bob’s bait or offer is to get a response. PERIOD. So if Bob has to give away free stuff to get people’s attention, then he should!
Bob’s offer (or bait) should make people feel like they are taking advantage of him — and maybe they are. Otherwise nobody will notice.
But that’s good, because their first experience with Bob may leave them feeling a little guilty, which may compel them to come back OR even better, buy more stuff on their first visit!
Once they become a customer — A SATISFIED CUSTOMER — Bob has their contact information, and the powerful ability to resell them for life through social media, email and regular mailings.
Mining his database of existing customers is the least expensive and lowest hanging fruit for Bob to continue growing his business.
This is the real payoff.
In golf terms, this is very much about the long game, or the lifetime value of the customer. While the short game (the first sale) is important, it is much more important new customers thoroughly enjoy their first visit so they come back again and again and again and again.
Oh, and refer their friends.
Another powerful component of Bob’s bait is his appeal to all golfers AND his low threshold ways of interacting and learning about his products and services.
Some people will be ready to buy, most won’t.
So offering extensive and helpful information through lower threshold means — like a website — will accommodate these not-ready buyers and nurture them along their buying journey.
People who aren’t ready to buy don’t want to interact with any pesky salespeople.
That’s why Bob’s website has a lot of helpful information about his offers, his facility AND guides from his PGA instructors on how anyone can improve their game.
“Any idiot can sell things to the ready-to-leap-now buyers, so it usually pays poorly and can even be a path to bankruptcy despite success at it. The wealth is in the (management, development, and ultimate monetization of the) not — yet ready buyers.”
Dan S. Kennedy, No B.S. Information Marketing Letter #86, December 2018
What Media Will Work Best?
Now we’re going to talk about how Bob can pick the right kind of media. And much of it depends on the type of business he is operating.
Bob’s Driving Range is a niche retailer for golfers and he can attract these golfers from all over the Muncie area.
This will greatly influence where he should invest his advertising dollars. If Bob operated a Heating and Cooling business, and he serviced homes in Muncie, his advertising would need to appeal to a much broader audience: Homeowners who live in Muncie.
As I described earlier, Muncie has a population of about 70,000 residents and there are PLENTY of advertising options.
They have their own newspaper, radio stations, cable system, shared mail services like Money Mailer, billboards, buses, park benches, and get their broadcast TV signals (NBC etc. and additional radio stations) from nearby Indianapolis.
And (of course) there are many digital things Bob can and should be doing — like having the basics search and social media covered, especially making sure he is listed in all directories and maps.
Assuming Bob has those bases covered, he still needs to reach golfers, and believe it or not, when properly executed with good bait, especially in middle America where the population skews older, incomes skew lower, and the trends and fashions of the bigger cities and coasts don’t matter: Traditional media will still be the best answer for acquiring new customers.
The local newspaper might be a smart choice. While the print circulation has dwindled the actual readership between print and online is still very robust (about 50% market penetration or 35,000 readers per day).
Bob could buy ads appearing simultaneously in the print and online edition for a reasonable investment — around $500 per day.
Problem is — only a small portion of these readers are golfers, so let’s do some basic napkin math:
Cost Per Week = $1500 allowing Bob to effectively reach 35,000 readers.
Per the graph above we estimated about 9% (or 3,150) of the total readership are golfers
A reasonable and conservative response rate to Bob’s awesome offers = 1% which nets him 31 new customers (3150 x .01).
Bob’s average sale is $25 and multiply it by 31 paying customers equals about $775 in gross sales.
So for a $1500 investment Bob gets half of it back and 31 new customers. Not bad if you consider the lifetime value of each customer, but also not great, and I think we can do better.
Muncie has good radio stations too, and luckily there are 2 stations who reach the majority of the population. Since these two stations have more reach than the newspaper, our pool of potential golfers will be larger.
Here’s some napkin math:
A schedule on just 2 radio stations will reach 75% of adults or 52,500 people and cost $2,400 per week.
Per our research earlier we assume 9% of those adults play golf or 4,725 golfers.
1% of those golfers respond to Bob’s offers (48 golfers) who spend an average of $25 per person equaling $1200 in sales
So Bob earns back about half of his investment and 48 new customers. Again, not bad, but not great.
I hope you see a pattern here, mass media won’t be a profitable investment for a niche retailer like a driving range. In fact, Bob would be LUCKY to recoup 50% of his investment in most cases.
However, if Bob should have a big annual blowout sale where manufacturers from all of the major golf manufacturers were present (Calloway, Taylor Made, Adidas, Titleist) and a famous professional golfer like Tiger Woods (doesn’t need to be Tiger) was doing a demonstration for the public — THEN — Bob should pull the trigger on some mass media like radio and newspaper. The appeal and potential to profit would be much broader beyond his smaller target of golfers.
Another option is SHARED direct mail. Bob could insert a coupon in a Money Mailer or Val Pak in Muncie for about $700 per month and reach 30,000 homes. Again here is the napkin math:
For $700 Bob reaches 30,000 homes — of which 9% are golfers (or 2,700 households). Of those golfers, 1% respond to his ad (2700 x .01) or 27 new customers who spend an average of $25 each for a grand total of $675.
This is actually worth doing as he’s breaking even. Bob should employ this tactic regularly if he continues to get this kind of response.
Now let’s consider actual direct mail, meaning Bob sends his offer via post card to a verified list of golfers, a list he procures from a list broker who knows the addresses of all the Muncie area golfers based on their magazine subscriptions, google search history, credit card transactions, travel etc.
Bob’s own research (based on a simple Google search) concluded about 9% of the 70,000 adults in Muncie are golfers, and when Bob talked to a mailing list broker, sure enough — they too had about 6,300 golfers (or 9% of the population) on their rentable list.
By the time Bob pays for the list, and the printing, the stuffing of envelopes and the postage, the cost per letter will be around 40 CENTS PER PIECE (conservatively), or a total cost PER MAILING of $2,500 (40 cents x 6300 = $2520).
Let’s again assume Bob gets a 1% response meaning 63 new customers spend an average of $25 resulting in $1575 in sales.
Bob realizes for a niche business like his, direct mail is an expensive customer acquisition tool — just like mass media.
Another option is Cable TV, and like Bob’s business, Cable TV is a very niche business.
They have channels devoted to every conceivable hobby including cooking, history, tennis, basketball, nature, news, science, animals, football, soccer, home remodeling, and GOLF!
Thank you cable television and thank you Golf Channel!
With help from the cable folks — and for free (or for very little cost) — Bob produces two different :30 commercials featuring each of his amazing offers — then buys a bunch of commercials on the Golf Channel.
He ignores the conventional wisdom from his well-meaning sales rep and only buys commercials in LIVE PROGRAMMING or LIVE EVENTS.
Why? Because Bob is a golfer and he knows live events are exciting, and they have the highest ratings, and most viewers don’t tape or record or DVR live programs.
Bob knows the most popular events are live coverage of PGA golf tournaments, and live news programs like Golf Central (The Golf Channel’s version of Sportscenter).
Bob is able to buy 3 commercials per hour (a dominating presence) in ALL (and just) the live programs for about $600 per month.
Now for some napkin math: In any given month, the Golf Channel reaches 80% of all golfers in Muncie (verified by our friendly cable salesperson).
Since we established there are roughly 6,300 golfers, 80% equals 5,040 golfers.
If, very conservatively, Bob garners a 1% response, he will win 50 new customers spending an average of $25 each for a total of $1250 in gross sales.
That’s 50 new customers, $1250 in gross sales, for a cost of $600 AND a 108% return on investment!
DING DING DING DING DING! We have a winner!
This is how Bob, a small town driving range in a cold winter climate can determine where to invest his advertising money, by doing the math ahead of time. And most importantly, developing really good bait — with offers appealing to buyers in every step of their purchasing process.
Television advertising is not for everyone, but it still can work as well or better than many other marketing tactics.
Truth is, traditional TV may be the single most effective and efficient way of attracting new customers for certain types of businesses.
TV should not replace your other advertising, especially ones that are working. It’s a tool for acquiring new customers. PERIOD. And should only be used if your growth has plateaued and you are in a financial position to test new marketing tactics.
TV is a Tool For Customer Acquisition, Not Branding
Your business qualifies for television if you have a burning desire and ability to grow, and if you can serve or appeal to an entire city or region.
For example, if you operate a home service business like a plumbing or heating and cooling company. If you operate a retail operation with multiple locations like a fast food franchise. Or if you are a destination retailer like a new or used car dealer.
If you are happy serving a neighborhood or niche market, then TV is not for you. Cable TV might work because it can be geographically targeted.
But for now I’m focused on growth, and that means gigantic reach and influence through traditional broadcast or network TV — which you know as the local ABC, CBS, NBC or FOX stations in your city.
Despite the talk about the eventual doom of traditional media, these network stations still reach the majority of adults in any given month. Sure, you’re gonna miss some young millennial types, but no media is perfect.
But where do you start if you don’t have major TV dollars? First, don’t be intimidated by your lack of money, even the most successful marketers started small, the key is focus.
TV stations are eager to win new business from clients so the pricing and access to affordable production has never been better.
Success in TV advertising is about repetition of your compelling offer which should appeal to a large quantity of viewers
You will have success in television if you follow the 3 guiding marketing principles: Have a unique selling proposition, have an effective merchandising infrastructure, and focus your resources for maximum repetition.
The key here is to conserve capital, and to test. Pick one local broadcast station, not the most popular because they think too much of themselves.
Pick the station you feel best reaches your ideal customers but make sure it’s an ABC, CBS, NBC or FOX station — there is still tremendous equity in these old networks
Call the station and ask to work with an experienced account executive, one who works with local businesses (not just advertising agencies). Then do the following:
Ask the account executive for the rankings of the top local news and syndicated programs (Ellen, Dr. Phil, Jeopardy, etc.) based on households viewing. You want a list of live or taped-live television shows because they don’t repeat, there is always fresh content and therefore a reason to tune in each day, and few people record (DVR) these programs. This allows you to get a repetitive message in front of a large audience in a brand safe and credible environment.
Decide which programs reach your target the best — network TV can rank programs by a viewers age and sex. Generally you want people with disposable income and a good range is Adults 35-64.
Request all information in thousands (000’s) not in ratings. This allows you to determine the cost per thousand (CPM), and forecast your return on investment.
Get rates for those programs based on running a 6-week schedule over three months and ask if the station would be willing to produce a commercial at no cost. If they can’t do it for free they’ll surely be able to do it for less than any outside production company.
Take advantage of this — it’s video you get to keep and use on your website, social media feeds and even on other TV stations.
Determine the most ideal 30 minute or 60 minute local news or syndicated program. If you sell hearing aids to seniors, try a noon news program. If your target is the career woman, then focus on early morning (5–7 a.m.) shows like the Today Show or Good Morning America. If you sell home improvement services then the 6pm news on Sunday, Monday and Tuesday makes sense because people discover leaky faucets on weekends.
Select ONE program then ask your account executive to build a proposal. If it’s a 30 minute program you want a minimum of 2 commercials per day. If it’s a 60 minute program you want 3 commercials per day.
Always have 2 commercials in a 30 minute program, or 3 commercials in a 60 minute program. Run 3 days in a row in the same program with this schedule. Run at least two consecutive weeks in a row, if not more. Target weeks when generally people are in the market for your product or services.
Them’s the rules of repetition
Commit to 6 weeks over 3 months of this type of schedule. This should be enough to properly test and earn you free or discounted production.
Most major auto and national retailers like to run Thursdays through Saturday towards the end of the month, so find better rates by placing ads earlier in the week and even on Sundays.
If you can’t afford to investment of 6 weeks in this program either find a more affordable program or don’t invest. In my hometown of Indianapolis, a top 30 TV market reaching over 1 million households, this should range in cost from $3 — $5k per week or a total investment of up to $18 — $30k. In a smaller city like say Lafayette, IN — the home of Purdue University — it should cost less than $2k per week.
If you don’t get immediate results from your first few days something is wrong. Don’t stay in a program that is not getting you response, and don’t air a commercial without a compelling call to action!
An Unknown Secret
Here is a secret, you can cancel your advertising schedule anytime without any legal penalty, because you won’t have to sign a contract to book air time, just a credit check, or you may be asked to prepay.
However, it is usually station policy that you provide 2 weeks notice. But you can still cancel, and it is ethical to provide the 2 weeks notice because stations can usually resell your inventory.
Book the airtime at least 30 days out; the longer you wait, the higher the rates.
The best rates in TV or Radio are generally procured by buying in advance.
The slowest advertising months and the lowest rates can be had in July and January.
Avoid the months of April, May, September and November due to political races if you can.
Now comes the hard part. You, the business owner, needs to objectively determine what your unique selling point will be. The buying strategy is simple in terms of what works: dominate a program, test, add more programs, test, continue investing in what works. Pretty soon you are dominating an entire medium.
10% Off Is Not Compelling Enough
Nope, 10% off won’t do it. Buy one get one free may work but it’s pretty tired. (BOGO) may work, but it’s pretty tired.
Think bigger. Ray Skillman, a large auto dealer in Indianapolis, gives away a free large screen television with the purchase of a new car.
Although the station is producing the commercial, you are very much the director and your commercial needs to be 100% about getting as much response as possible. Even if the initial sale is a loss, consider the lifetime value of a customer before you chicken out with a boring call to action.
It’s not hard to buy advertising, anybody can do it. You don’t have to work with an ad agency, and you don’t have belong to any exclusive club. All you need is money and a desire to buy. In fact, the buying part is the easiest part of a marketing strategy — It’s like finally playing a game you’ve been practicing for.
In previous posts I’ve pointed out how important it is to have a merchandising infrastructure in place to ensure every response or lead is maximized, whether a lead comes through the front door, phone or website. And you must develop some sort of unique selling point or your message won’t stand out or get any results. This is the required practice so you’re prepared on game day when the media you’ve purchased actually runs.
The key to buying is focus and repetition. Just like in the stock market, if you spread yourself too thin your returns will suffer. But if you focus on a few winners and tolerate a bit more risk, your returns will be exponentially higher.F
From 2014 to 2016 I worked as a media director at a large marketing firm based in Dallas, TX. My first assignment was to develop a TV media strategy for the Albertsons grocery chain. They had a budget of $10 million, and the idea was to promote a “stock-up” sale over a two-week period featuring aggressive discounts on soups, snacks, and soft drinks.
Albertsons is one of the largest grocery chains in the U.S., and they own multiple grocery brands, including Safeway in California, Jewel in Chicago, Shaw’s in Boston, and Tom Thumb in Dallas. A great thing about the grocery business is they get a significant amount of co-op funds from their vendors, and for this campaign, vendors were funding most of the advertising budget.
$10 million dollars may seem like a lot of money, and it is, but when you operate in major cities like Chicago and Los Angeles, any size budget can evaporate quickly. We made some key decisions early on to focus the investment for maximum impact.
First, we decided to target the spend in only their top 10 markets, which accounted for about 80 percent of their sales. With this approach, we were able to purchase a dominant share of media in each market, rather than less media sprinkled across dozens of markets.
Then we decided local broadcast television provided the greatest potential return on investment. Albertsons had dozens of stores in each market, and their products appealed to a large portion of the population. Also, they wanted to flex their creative muscles and show off their newly remodeled stores — a perfect candidate for high definition network television.
We continued our focus by choosing only the local news and syndicated programming (e.g., Ellen, Wheel of Fortune, Dr. Phil). Both programming types offered an engaged, brand-safe environment with fresh content every day. This reduced the chances our commercials would be skipped by DVRs— typically — viewers don’t record live news and syndicated programs because there are no continuing storylines or plots. Each day is a new day, and a reason to tune in. We further focused our budget to the days when most people do their grocery shopping, Thursday through Sunday.
Our focused efforts allowed us to air more commercials than any other advertiser in the programs we purchased. In every one-hour program, we bought three commercials. In every half-hour program, we bought at least two commercials. We did so for two reasons: viewers of news and syndicated programming tend to cycle in and out every 15 to 20 minutes, plus we wanted as many viewers as possible to see our commercials at least six to nine times every week.
The chart below shows what a 30-minute program looks like in terms of programming vs. commercial time. Stations also run their own commercials, called promos, usually at the top and bottom of every hour. For example, two commercials may seem like a lot over a 30-minute program, when actually, it’s only 60 out of 1,800 available seconds.
We started with the highest-rated programs and stopped buying when we ran out of money. In some cases, we maxed out all our broadcast opportunities and had money left over; in those rare instances, we supplemented with cable.
Our TV campaign resulted in double-digit sales and customer traffic gains for Albertsons. We had aggressive pricing offers on popular national merchandise (unique selling point), we focused our spending for greater impact (math), and the in-store displays, signage, and a well-trained team made it easy for customers to spend beyond the advertised items (merchandising).
Our two-week schedule absolutely dominated the airwaves in 10 major cities across the United States. We even had customers complaining on Facebook about seeing the commercials too often. Generally, if customers are complaining about seeing your commercial too much, you are doing something right.
We probably received a few hundred complaints out of more than 10 million viewers reached. I believe these complaints influenced Albertsons to try a less-focused strategy the following year, which I was not a part of, and they did not experience the same growth in customer traffic or gross sales.
Now, I know you probably don’t have a $10 million dollar budget so how does a smaller business use a powerful medium like broadcast TV or even cable TV without getting burned? Check out Part Two of this series.
If you’ve ever driven through South Dakota, you know about Wall Drug. If you’ve never visited South Dakota …. Chances are …. You’ve heard about Wall Drug.
This sprawling retail operation in the middle of nowhere draws over two million visitors per year. Why? There is nothing unique about their merchandise, aside from having a lot of western gear and tourist trinkets.
And there is nothing extraordinary about their food, they sell a lot of rib-sticking favorites like biscuits and gravy. In fact, everything they sell you can find somewhere else — like Amazon — for less money.
But Wall Drug excels in large part because they have embraced their remoteness as a unique selling point, and have a laser like focus on WHO they want as customers and HOW they go about attracting them.
Their WHO are tourists driving through South Dakota and neighboring states and their HOW is through outdoor signs.
A key ingredient to their success, and what most businesses fail to do, is becoming repetitive enough in one media to be truly impactful. Wall Drug has a 100% unwavering focus on clever, rustic outdoor billboards. Over time they have built a roadblock of signs across every major highway in South Dakota and neighboring states. The sheer number and cleverness of their signs has spawned a viral effort from customers to place more of their signs across the US and in foreign countries.
If you travel along the 600 plus miles of Interstate 90 from Minnesota to Montana you will encounter a perpetual string of Wall Drug billboards. And you may try to ignore them, and even become irritated at this invasion of the landscape.
But you can’t, and this sense of being overwhelmed, this realization that submission is easier than wasting time trying to ignore their signs, is the type of sensation you should strive for in your own advertising.
You must realize it’s not about looking good and branding your business, and that success in advertising requires a relentless, premeditated pursuit of ownership within your chosen media. This is the kind of frequency you must achieve to compete with the likes of Amazon who can sell for less AND buy dominating levels of advertising in multiple media.
Another thing Wall Drug gets right is using their remote location to their advantage. Business was very slow for Wall Drug until the wife of the owner, Dorothy Hustead, came up with the idea of advertising free ice water to parched travelers heading to the newly opened Mount Rushmore monument.
Today Wall Drug claims to give away over 20,000 cups of water per year, and in addition to free water, they also offer cups of coffee for only five cents.
Very few businesses advertise with a unique selling point and with enough frequency or repetition to break through to their desired target audience. If you aren’t able to afford a dominant level of advertising in one chosen media, then you are either spending ineffectively it in too many places, or you haven’t properly defined your target audience, or your target audience is too large.
In Dan S. Kennedy’s book Magnetic Marketing, he advises you find a small, carefully selected and manageable target audience and set out to become the dominant presence in that target market in as short a period of time as possible.
In the case of Wall Drug I can assure you they did not start with thousands of billboards. They chose one road full of tourists, put up a single sign, came up with a compelling offer, and built from there.
What you pay to advertise to customers directly influences important measurements such as cost per lead, cost per customer acquired, and cost per sale
Intelligent investors use reliable measurements when evaluating stocks, like earnings per share (EPS), or book value. Intelligent Advertisers should embrace Cost Per Thousand, or CPM, as their most reliable metric in measuring advertising investments and value.
CPM is the only universal measurement that shows how much you are paying per 1,000 people who view, read, or listen to your media. For example, if you regularly buy meat from a butcher or grocery store, you know it’s priced by the pound. Ground beef is usually the least expensive, and prime cuts of steak are usually the most expensive meat per pound. Different cuts and sources of the meat influence the pricing. The same thing goes for media, and just like cost per pound, cost per thousand is a simple and reliable method of determining value.
Ad sellers and agencies make this more complicated than it needs to be. In radio and television, a common measurement is cost per rating point, or CPP. Don’t bother with this; it’s confusing on purpose so you feel compelled to pay an agency to buy your media and they feel compelled to pay a ratings service like Nielsen. Simply put, you can’t compare the cost or value of other tactics with a broadcast specific measurement so why bother?
Also, getting worked up about the cost of the ad or the rates is a waste of energy and not the best way to secure a good deal. If you believe the cost is high, there is probably a good reason, and it’s usually based on the quality and quantity of audience reached, or the demand for this media. I’m not saying don’t negotiate, but the best rates are secured by making long term commitments, having an understanding (based on CPM’s) where the market is, and planning ahead.
Knowing the CPM will guide you to effectively judge the overall value of all media. For example, while newspapers can still be extremely effective, generally their cost per thousand is higher than local TV like the NBC or CBS station in your city. Everyone assumes or believes TV is expensive but in reality they just reach a lot of people. Only CPM reveals the true cost comparison, as you can see in the figure below.
For print media, the measurement pushed by salespeople is often readership, which assumes paid subscribers aren’t the only ones reading the magazines and newspapers. Publishers assume their publications are being read by more than just the paid subscribers, and to a certain extent, they are correct—for example, when newspapers are passed around coffee shops, offices, libraries, or airports. However, there’s no way to accurately measure this, so stick to relying on the CPM of verified paid subscribers, because this is the only guaranteed measurement. Consider pass-along readership as added value.
In digital advertising, it’s even more confusing. Website publishers will push impressions and page views. Instead, you want the cost per thousand of unique visitors in an average month, which is most closely tied to verified paid subscribers and an indication of the actual reach. The unique-visitor metric simply indicates the number of different people who viewed the website or a particular section of a website.
The only important measurements are how many people see your ad, how many times they see your ad, and what it costs to reach per 1000 verified people. Every media can provide this information.
Below is a very general guide of various media, their attributes and average cost based on CPM.
Very few local businesses have enough of an advertising budget to purchase effective amounts of advertising — or develop effective creative — in more than one type of media.
Intelligent Investors know diversifying their stock portfolio spreads risk among many asset classes, but it also reduces returns in bull markets. Intelligent Advertisers must realize a focused approach will lead to the greatest return on investment, with little risk of any bear market.
One of the keys to getting results in your advertising is repetition and consistency. It’s important because we are bombarded by more advertising than ever. Some studies suggest the average person in a large city will see over 5,000 commercial messages per day.
Think about some of the marketers you’re tired of seeing, the advertisers who never cease to invade your daily space. Probably a local car dealer, a furniture store, maybe a grocery chain like Kroger. On a national level you will probably see an ad from GEICO or AT&T by the time you get to work in the morning. This is the type of repetitive consistency needed if you want customers to think of your product or service in their time of need. And it’s absolutely obtainable if you focus your resources.
But what if I miss some people?
If you choose the one right media, and you’re consistently repetitive, you will eventually reach a majority of your prospective clients. Day to day or week to week, you’d rather be unavoidable to 30% of our target than forgettable to 90%. Over time the penetration of your messaging will grow as different people cycle in and out of your chosen media.
Managing multiple campaigns is expensive and difficult for a smaller business. In most cities it can take a five or six figure investment —per each form of media—to establish an ongoing dominating presence. So every dollar spent in another type of media could be keeping you from being effective in the one right media.
There are a lot of reasons why businesses buy too many media: They take bad advice or employ ineffective media professionals, they meet with too many salespeople, or they try and copy what larger and more capitalized businesses do. Big businesses can buy everything because they have big budgets!
All of us are consumers of media, and we all develop very strong opinions based on our own consumption and behaviors. This often negatively influences media buying decisions — the conclusion that your customers also consume media the way you do.
This creates a terrific contrarian investing opportunity, because setting up a roadblock in one type of media is proven to work yet very few marketers have the discipline or courage to stick with it.
Try picking one local media and seek to dominate it. By dominate I mean take advantage of this focused spending and run more ads, more often, than any of your competitors.
Ever heard of Snapple? They started with just one radio program, Howard Stern, after a great response they added Rush Limbaugh. Just focusing and dominating two programs basically launched a billion dollar brand. You could do the same, only on a slightly smaller scale.
The #1 Chevy Dealer in Indianapolis is Hare Chevrolet, located in the far northern suburb of Noblesville. If you want to buy a Chevy, there is no lack of choices or dealers to visit. But one of the reasons for Hare’s success I believe is their unwavering commitment to one media — local radio.
You may be familiar with Shane Co. jewelry stores and the voice of Tom Shane. From a jewelry perspective, they own radio. On any given day in any given week, if they have a store in your market, you will hear Tom Shane’s soothing (or annoying to some) voice with an appealing story and offer. Notice that you won’t see Tom Shane on TV, in the newspaper, or doing much of anything online. And I promise you, Mr. Shane was not able to dominate radio from the very beginning. He started with one station, in one city, and built from there.
All marketing and advertising —from the Goodyear blimp to a coupon sent to customers on their birthday—fall under one of three categories
Customer Acquisition or lead generation, or how you drive new customers into your retail business, website and ultimately into a database.
Value Optimization or up-selling, or how you maximize customer transactions, for example when McDonalds asks you if you want to supersize your meal.
Retention and referrals, or how you keep customers so happy they buy more and tell their friends and family how great you are.
Some businesses who operate in extremely competitive environments — like the fast food or automotive industry — require a constant stream of customer acquisition advertising.
However, some business owners are content with a niche or a smaller footprint; they can survive and thrive without investing much money in customer acquisition. A good example is one of my best friends, Dayne, who’s a real estate agent in Indianapolis. He has never advertised, aside from maybe a post on Facebook or a postcard, and has a thriving business through referrals. Dayne is happy to have a certain level of business that suits his lifestyle. He does everything himself with zero help from assistants or staff.
If Dayne finds himself in a situation where he has too many referrals, then he can be pickier about who he spends time with. When his pipeline is weak, he’ll spend more time developing insights to share with his network, and usually has a customer appreciation event a few times a year which reengages him with all of his clientele. The distinguishing factor here is that Dayne doesn’t want to deal with the hassles of a larger business. He’s content with his quality of life, is great at his job, and he has a systematic way of reminding clients to refer him.
On the flip side, there is another local real estate agent who is usually #1 in sales volume in Indianapolis—her name is Bif. I know this because she promotes her #1 status through constant advertising in direct mail, magazines, and local business publications. She invests money to keep her pipeline full of leads and has a large staff of realtors who benefit from her customer acquisition efforts. Bif has a burning desire to keep growing and stay #1, and is comfortable delegating numerous aspects of her business.
When you begin building a steady supply of leads, it’s critical to have processes and training in place to maximize every transaction and to build relationships.
Crew Carwash, an Indianapolis-based car wash chain, uses TV, radio, and billboards for lead generation. They also invest in training their salespeople because every time I get my car washed, regardless of which location, I am politely asked—with a smile—if I want to upgrade my wash or buy a book of washes (most of the time I buy a book). Their employees seem to follow a clear process and script, and they are all dressed in a similar fashion. All of their car washes are clean and brightly lit, have signage encouraging customers to buy more washes, and are located near busy intersections.
Crew Carwash constantly seeks new ways to package and sell a simple service—a car wash. I would argue this investment in training, professionalism, and consistency has more to do with their success than their actual lead generation.
A book by Dan S. Kennedy and Shaun Buck, No BS Guide to Maximum Referrals and Customer Retention, quotes Keith Lee, a contributor and owner of five businesses:
“What can business owners do to improve their customer service?
Train your entire team to deliver exceptional customer service.
Consistently reinforce customer service expectations with your team.”
One of the most common breakdowns in marketing occurs at this step. Many businesses get plenty of leads through their marketing tactics, yet they fail to maximize or capitalize on those leads in a meaningful way – And then they blame their advertising!
Customer Retention and Referrals
Consider this fact. The reason a lot of businesses struggle to increase their profits is this: the cost of losing customers exceeds the cost of profits gained from new customers. Again, I will reference the excellent book, No BS Guide to Maximum Referrals and Customer Retention, in which coauthor Shaun Buck illustrates the potential of just reducing the loss of customers, or attrition, by only five percent.
Let’s say hypothetically you have 1,000 customers who spend on average $1,000 per year, grossing your business $1 million dollars per year. You lose five percent of those customers every year—some through natural attrition (people die, move, etc.) and the rest through dissatisfaction with your service or competitive offers from lower-priced national retailers. This equates to 50 customers or $50,000 of lost customer revenue per year. But let’s expose the true value of the lost customers over a five-year horizon:
50 customers lost per year = 250 customers lost over 5 years
250 customers @ $1k per = $250,000 of lost revenue over 5 years
On average, you get 2 referrals per 50 customers, and over 5 years that equates to 10 lost customers and another $50,000 in lost revenue.
Total lost revenue = $300,000 (almost 1/3 of your annual gross revenues)
Cost of investing in ways to keep more customers = much less
What if you reallocated a small portion of your overall budget to improving customer retention: training for your staff, upgraded customer relationship management software, and direct mail and email campaigns designed to keep existing customers engaged with your products and services at all stages of their buying process? Something like this could be done for as little as $10,000 per year, and if you just reduced attrition by 2.5 percent, it would mean you lose 25 fewer customers per year.
25 retained customers per year = 125 customers saved over 5 years
125 customers @ $1k per = $125,000 in saved gross revenues
You retain 5 referrals, resulting in 25 new clients and $25k in saved revenues over 5 years.
For a minimal investment, you saved $150,000 from leaving your business.
In his book Flip the Funnel: How to Use Existing Customers to Gain New Ones, Joseph Jaffe argues customer acquisition is a waste of money, while retention and loyalty deserve the lion’s share of your budget. I absolutely agree. But somehow you need to build up a customer base.
Once you have a robust database of happy customers, you have a significant asset—perhaps more valuable than any physical inventory, equipment, or real estate. I’ve heard the single easiest way to double your business is to convince each of your current customers to bring a friend.
Depending on how mature your business is, and your personal desire to grow, your needs may differ. If you’ve been in business for a long time and have a large customer database, you may find a better return on investment through value optimization and retention with email marketing, direct mail, VIP sales, and events. If you are a new business without customers, allocate more of your budget to efficiently capturing new clients. Never can any one of these areas be ignored, but generally it’s a more efficient model to generate revenue from an existing clientele base.
Every business needs to have a fundamental digital infrastructure in place to effectively communicate with buyers in all stages of the buying process. Some businesses more than others: for example, if you sell merchandise online, you will need to make a larger investment into your digital operations.
These are not advertising tactics. This infrastructure is just like any physical space you rent or own to conduct business—only it’s virtual space. Anything beyond what I describe here becomes advertising. A website is not advertising; it is a tool (a virtual address) that enhances your advertising. Optimizing your websites so search engines (Google, Bing, Yahoo, etc.) and their mapping services can help people locate your business is not advertising—it’s making sure you can be discovered in what serves today as the new White Pages of the phone book (and unfortunately, Google doesn’t list everyone’s business in alphabetical order).
The word digital encompasses many different tactics and products. Most local businesses have already made the necessary digital investments: a robust website full of helpful content, the basics of search optimization and search engine marketing, some way of contributing compelling content via social media (if necessary) and monitoring review sites, and customer relation management software (CRM).
Therefore, the investments you make in this digital infrastructure should not come from (or dilute) your advertising budget. They are more like capital expenditures just like rent, equipment, signage, and remodeling. And in each case below, you should seek a trusted, reliable third-party vendor to manage each of these functions, just as you do with other large capital expenditures.
Your website. Your site should be friendly to every conceivable browser (Safari, Chrome, Internet Explorer, Firefox, etc.) and platform (desktop, mobile, tablet), and should contain foundational advice and content to aid potential customers in their decision-making process. The more your site helps through its content, the better it ranks in the world of search engines. Try to emulate a successful business like yours in another market, one you admire. Even better, hire their vendor. Simply put, your website should work to capture leads and move a customer toward a sale just as a salesperson would.
Search engines and maps. Pretty simple. There are three primary search engines (Google, Bing, Yahoo), and if your website is built and managed properly, you should show up in organic searches for your products and services. Each of the main search engines has a popular mapping service and identifies your business by location. This is very critical, because so many people rely on mapping services to go anywhere. Your developer needs to make sure your business is listed on all the mapping services (don’t forget Apple) and that your website is geographically targeted to prospects and customers in your primary trade area.
Search Engine Optimization (SEO) is different from Search Engine Marketing (SEM), which involves purchasing keywords that potential customers might use when searching for your product. To use the phone book as an example, SEO is a bit like the White Pages, in that customers know what they want but don’t want advertising to guide their decisions; it’s a search for credible research. SEM is more like the Yellow Pages: these are ads meant to guide you toward a particular business.
I believe a certain level of SEM should be a part of your overall search strategy—if you sell apples, it’s a good idea to serve ads to people searching for apples. But numerous businesses get carried away with search engine marketing, giving this tactic far too much credit for influencing the purchasing decision (something called last-click attribution). Simply put, this is attributing all credit for a sale (or lead) to search engines, because it’s the last place someone visited before making a purchase or providing you with contact information—when in reality, numerous other marketing tactics likely influenced their decision making. Think of it this way: when you go out to dinner, the decision on where to eat is made before you arrive at the restaurant. Last-click attribution would be like giving the restaurant’s physical sign all the credit for your choosing to eat there, because it’s the last thing you saw as you entered the restaurant.
Social media and review sites like Yelp. The great thing about social media is that if you continually please your customers in ways they want to share and brag about, then you have the potential of replacing much of your paid advertising. St. Elmo’s Steakhouse, a 100-plus-year-old institution in Indianapolis, is a good example of a business that doesn’t need to do a lot of paid advertising and is thriving through the use of social media. One of the world’s most successful restaurants, it provides customers with a first-class dining experience, serving food so delicious that even celebrities make it a point to visit. (St. Elmo’s is famous for shrimp cocktails smothered in the hottest cocktail sauce you will ever taste. Prepared with freshly ground horseradish, this sauce will make your mouth burn and eyes water, yet you’ll crave more.)
Customers are encouraged (and willing) to share their experience on all forms of social media, especially Facebook and Twitter. If yours is not a St. Elmo’s type of business that can elicit this type of response, or create fans, then your social media efforts could backfire. Customers could complain, their complaints could become viral, or even worse—internet trolls (people who have nothing better to do than bitching online) could pile on and make it their job to bully you. You must weigh these risks when entering this space and determine whether you want to invest in producing interesting content.
If your business interacts with a lot of customers, there probably is some type of rating site where customers are invited to share their experience with your service or product. You need a good third-party vendor who will develop a system to engage existing and new customers and encourage them to give positive reviews on sites like Google and Yelp. My advice here: get used to not pleasing everyone (unless you can deliver service like the previously mentioned St. Elmo’s Steakhouse). Bad customers will get good, reasonable, and even superior service and still find reasons to complain. Someone on your management team (or you) should have the responsibility of managing a vendor who will respond and resolve all complaints posted online. A quick response and resolution go a long way at proving you are paying attention to customer feedback.
Customer relationship marketing software. Every business needs a way to record customers’ contact information into a digital database—for the purposes of future marketing communications—by capturing their physical address (direct mail), email address (email marketing), and phone number (telemarketing). How elaborate this system is depends on the size of your business. It can be as simple as MailChimp (an entry-level, free email marketing service), a higher-level product like Infusionsoft or HubSpot, or a customized system from a company like Salesforce. Bottom line: your database will become one of your most valuable assets, with the potential to reap additional sales and referrals, and even to sell or rent your list to other marketers.
I recently met with JD, the owner of a furniture store in Muncie, IN. He used to operate independently but now is part of a regional franchise who provides marketing, inventory and technology support in exchange for a royalty or fee.
Muncie is like many midwestern towns once reliant on manufacturing, it’s trying to figure things out in terms of economic growth. Factories that once employed thousands of workers with decent wages have closed. But — Muncie is home to Ball State University, and a large teaching hospital — Ball Memorial Hospital. Both provide a tremendous boost and stability to the local economy.
JD’s challenge is figuring out how to reach adults who own their homes and have disposable income — generally aged 35+. Not long ago he could simply put an ad in the local newspaper, The Muncie Star, and customers would respond in droves. Or, he could buy radio on the two local stations that reached 90% of the population in Muncie.
Those options still exist, but there are now thousands of other ways he can invest his marketing dollars. And JD is hearing that many of his fellow furniture store owners who are sidestepping traditional media with the latest social and digital media tactics.
But as I meet with JD, he’s frustrated and confused because every dollar he spends on marketing now seems like a roll of the dice, with no guarantee of getting a return on his investment.
So I thought about it, deeply, and here is what I would do if I were JD and this was my own money at stake: I would conduct a very thorough audit.
The Intelligent Advertiser Audit:
The Math: Compile a list of every single marketing expenditure from largest to smallest. How much money is being skimmed out of your budget from fees or royalties tied to corporate marketing? Every dollar spent on printed signage, every sponsorship — even charitable, all digital expenditures including any fees associated with websites, search optimization, search marketing, social media, listings, and other infrastructure based spending. Do you pay for the music being piped into your store, or is it just the local radio station? How much are you paying someone to manage marketing? Perhaps it’s an agency or “consultant” — or if its none of those consider how much of your time is spent on marketing related matters. You may discover it’s such a time suck that hiring someone to do it for you makes sense. The goal here is to truly capture how much you are investing, and where — over a calendar or fiscal year.
The Messaging: Compile a year’s worth of promotional messaging — all print ads, digital ads, billboards, circulars, in-store signage, promotions and sales, and any radio or TV. Any audio or video examples should be compiled onto a USB drive then put everything into a binder and reference it by year moving forward. Wherever you purchased media and developed an ad for that media — this is what we want to analyze. Because often the mistake is not the media, it is the messaging or promotional offer that rendered this media useless.
The Merchandising: This relates to the physical appearance of your retail and online infrastructure — are they both optimized to help close sales? Is the carpet old, does the sign out front have lightbulbs missing? Is the arrangement of the store conducive to maximizing customer transactions? You also need to take a hard look at your salaried employees and determine who is earning their keep because the cost of just one full-time employee can easily by $50K +. That’s enough to buy a year’s worth of advertising in Muncie, IN. This is probably the toughest of all things to audit and many business owners will have a tough time objectively looking at this. However, it could be the single thing that is keeping you from being a profitable business vs. a non-profit business.
Once this is complete, and this may take a week or as long as a month depending on the complexity of the matter, we move onto the strategic phases of this process.
The Intelligent Advertiser Strategy:
Determine from the audit what could be cut from the budget, and there should a lot in most cases. Then take those dollars and re-invest into tactics that still work and reach your target audience as follows:
Customer Acquisition Tactics and Messaging: What are the advertising mediums that have the potential of providing the greatest return on investment? For JD in Muncie, the traditional mediums are still often the most efficient. JD will be better off having a more consistent, frequent and impactful presence in fewer mediums than having less impactful and infrequent presence in dozens of media. I would recommend one or two radio stations, the local newspaper (both their printed version and website), a sponsorship with Ball State Athletics, and some local billboards. That’s it. Those tactics will reach everyone he needs to reach. And more importantly — what messaging or bait will JD use to attract customers? Will his messaging truly break through the clutter or will it sound like every other local advertiser? The messaging is often the toughest part to tackle because it requires re-wiring the brain from “branding” the business (which is a waste of money unless you are Chevrolet) to becoming a “direct marketer” of your business demanding response from every marketing expenditure.
Customer Retention Tactics: The audit should have uncovered a great deal of wasted spending, and some of the re-investment of those funds needs to go into improving your operation’s ability to maximize every single customer facing moment. The way your phone is answered and customers are treated should be scripted, everyone should go through some sort of customized sales training. Your employees should be seeking ways to obtain contact information from every customer who walks through your door, or calls your store, or visits your website for future follow-up. This is also where you determine what investments need to be made to improve the retail and online shopping experience. This bucket may deserve the largest allocation of your budget initially but these initial investments pay dividends for a very long time.
Customer Maximization Tactics: Once you attracted a customer, then wowed them with your service and experience, they are likely to come back. So stay in touch with them. Send them mail, emails, a newsletter, have special events and invite them. Find out when their birthday is and send them a card. This is where having a database full of responsive clientele with key information about each customer can become your most valuable asset. If you manage this correctly over time the amount of money you need to spend on acquiring new customers should decrease because you have so many happy repeat customers.
The most important thing to realize in advertising is no media is perfect for every business, and each media (newspaper, radio, TV, direct mail, digital, social etc.) has its strengths and its flaws.
When a business can serve an entire city or metro area (e.g., service company like HVAC, Plumbing, home improvement like Windows) or is a destination type business which can draw customers from a large area (e.g., car dealership, furniture store), the efficiency, reach, and creative influence of broadcast media are still hard to beat if your goal is growth and customer acquisition.
My belief grew stronger as a media director at Ivie & Associates, a Dallas-based marketing services firm who works with regional and national retailers.A media director is kind of like being an investment manager in charge of allocating other people’s money. Instead of dividends and capital gains, media directors seek results such as customer traffic, web traffic, gross sales etc.
Our clients were increasingly influenced by hype from trade publications, digital salespeople, and the growing number of digital “experts” in their industry.Some of our largest clients were grocery chains whose primary media tactic is a weekly printed circular distributed by the newspaper and often supported with radio.Coming from a broadcast background I dismissed circulars as a complete waste of money and paper.I developed a limiting belief – partly because I did not use circulars – and assumed print no longer worked, and something like a circular should be digitized and emailed.
What’s great about the grocery business is they track everything.Reams and reams of data about their customers and transactions.And without fail, when one of our grocery clients tried going without a circular and/or radio they would see a decline in store traffic and sales.And I’m not remembering this from many years ago, this is as recent as 2017.
In late 2017 I joined the NBC station in Indianapolis, IN – WTHR Channel 13.They had just concluded negotiations with DIRECTV over re-transmissions fees.These are the fees paid by the distributor (DIRECTV is a distributor of television content through satellites) for the right to carry WTHR’s programming (WTHR licenses the NBC network’s content and produces their own local news programming).DIRECTV must pay fees to every content provider whether they’re a cable network like ESPN, CNN, or a local broadcaster like WTHR.
Contract negotiations happen every few years, and it can be very contentious.In this instance DIRECTV pulled WTHR off their system because of a disagreement over the what DIRECTV would pay for WTHR’s content.DIRECTV is especially popular in Indianapolis, partly driven by their NFL package – about 25% of the market subscribes and many were desirable upper income viewers.
The dispute lasted more than a month and WTHR was eventually restored to the DIRECTV lineup.WTHR wanted to reimburse advertisers for their loss of audience incurred during this dispute.An often overlooked or unknown aspect of broadcast advertising is that stations like WTHR guarantee their ratings and bonus clients by giving them additional commercials until those ratings are delivered.
I sat in on several conversations with clients to discuss the blackout, and without fail every single advertiser described an immediate and measurable loss in leads, web traffic, and sales because their ads could not be seen by the DIRECTV subscribers.Thousands of subscribers cancelled their DIRECTV subscriptions, and thousands more purchased antennas just so they could continue to access WTHR.This dispute was covered daily by the local newspapers, business journals, and trade publications, and I couldn’t go anywhere without hearing people complain about the loss of their beloved broadcast station.
I’m telling you with 100% certainty that if CNN, ESPN, MSNBC or FOX News were pulled from the DIRECTV lineup there would be no similar outcry from the public, nor would advertisers have felt a similar impact on their business.
I often asked myself, what would Warren Buffett, the smartest investor in the world buy, if he were allocating media dollars instead of investment dollars today? As a legendary value investor, always zigging when everyone else is zagging, I think Mr. Buffett would roundly ignore most of the digital hype and plow his advertising investments into television and radio. In fact, he does so indirectly through many of his subsidiaries, such as GEICO.
GEICO spends over a billion dollars on advertising, and much of it on broadcast or network television. The company has ascended from a little-known specialty insurer for government employees to one of the top automobile insurers in the United States.
When it comes to reaching numerous potential customers and doing so in an efficient, brand-safe, and transparent manner – boring traditional broadcast media are still unmatched in their distribution and influence.
By unmatched distribution, I mean an antenna (costing under $20) is the only device anybody needs to tune into the top local broadcast TV networks and dozens of other channels.Broadcast television is like a public utility because it’s government-controlled and generally available to anybody in any city, except it’s FREE. This is often forgotten, but do not underestimate the power of FREE.
Although the number of Internet users has exploded, and continues to grow, the world wide web still doesn’t have the kind of distribution TV or radio does. Not everyone can afford a broadband connection, laptop, smartphone, or tablet. Many elderly people – a huge portion of our population with enormous spending power – have never been and will never be online.Generally, it costs money to access the Internet whether it’s on your phone or with your laptop.
Most people have a TV in their home, often multiple TV’s, and technology has enabled most of our TV’s to be supersized and thin.Consider this, the national broadcast networks, CBS, NBC, FOX, and ABC will typically reach 90 percent or more of a city’s adult population in any given month – and often in any given week.A study by Pivotal Research Group in November 2017 concluded the networks reached 98% of the population for at least one minute in any month.Pivotal provides proprietary research to hedge funds and institutional investors – so there is no bias – they’re just seeking value.
Brian Wieser, a senior research executive with Pivotal who focuses on advertising related stocks wrote:“While it’s true that viewing of individual networks on traditional TV are losing reach – and it is also true that digital media owners such as Google’s YouTube, have almost as much reach among younger audiences if we consider all of the content consumed there, the platform of (broadcast) TV as a whole is holding up better than many people think.”
Amazing right?Even in this fragmented world of digital, social and traditional media – these four dinosaurs still reach most of the adults in any given city.Radio is the only other media who can match this kind of reach – but it would take ten or more radio stations to reach this many people – and several hundred if not thousands of individual websites to do so.
Or think of it this way: If you were a manufacturer of a product and wanted a to maximize your retail distribution, you’d want Walmart, Target, and Amazon.These 3 retailers would put your product in front of most buyers in any city.
This is exactly what the major broadcast networks are – they are the largest distributors of entertainment, sports and news in the United States.
A Brand Safe Environment
On April 16th, 2014 a South Korean ferry boat capsized and sank off the southwestern tip of South Korea.The ship went under while passengers trapped inside sent text messages, shot videos, and cried for help and said goodbye to their families on their smartphones.More than 300 passengers drowned, and tragically, many were teenagers on a school trip.There were 324 students on board, 250 drowned.
I remember watching video clips recovered from survivor’s phones showing footage of passengers screaming for their lives.It was disturbing to watch, and if I knew how disturbing the video was going to be, I would have chosen not to view it.Unfortunately, this kind of viral video is becoming an all too common thing in our online world.The first time I watched it was on the New York Times website, and immediately before and after the video I was shown an Allstate Insurance ad.These are the ads you are forced to watch before an internet publisher allows you to see their video content.I thought afterwards, here’s a clip of dying teenagers, brought to you by Allstate.
This same video was also shown by the networks on broadcast TV, but a news anchor was there to put it into context, warn me of the explicit nature of video, and encourage those who didn’t want to watch to turn away.And when the video was over, more context and updates about the accident.The commercials airing immediately before and after the news segment did not appear to exploit the content, instead, the commercials supported the news program and the journalistic effort.It is this difference in environments which makes advertising on broadcast television so unique and valuable.
Broadcast networks license their airwaves from the government and as part of deal they must provide independent journalistic programming and serve the public at large.Cable and Internet news providers are not held to this standard and can provide content with indecent language, graphic violence, nudity, and political bias.In this case the publisher was the New York Times, one of the most respected journalistic institutions in world.But even with publishers like the New York Times, no matter the source, you are taking a greater risk of appearing near objectionable content when you sponsor videos on the internet.
The combination of sight, sound, and motion increases the chance of eliciting an emotional response and is the most creatively influential method of telling a story to the masses.If you don’t believe me consider amount of money spent on movies and television entertainment compared to printed entertainment.It’s trillions vs. billions.And while a local advertiser won’t be able to produce their own movie or TV show, they can produce the most creatively influential tactic in advertising history – a thirty second TV commercial.
Adding more influence to a thirty second TV commercial is reaching people within a credible programming environment, ensconced in the comfort of their favorite chair or sofa, viewing your commercials on their giant flat-screen TV, which is often the centerpiece of their living rooms.
An Agreed-Upon Advertising Environment
It’s true nobody likes to get stuck watching commercials, and certainly most of them are not as good as what we see in the Super Bowl every year, and people are increasingly using digital video recorders (DVR’s) to avoid commercials. I know people who even record live sporting events to skip commercials (myself included).On the other hand, it’s also true commercials on broadcast television are a widely accepted part of a long-standing agreement between networks and viewers. Networks need to sell ads to fund what we all hope are great television shows, news and live sports. Viewers aren’t required to pay a cable operator or satellite company for these programs; they are available free over the air anytime.
What people generally don’t like is being forced to watch commercials, which happens in many cases on the Internet (e.g., YouTube, or any other site providing video) or through certain streaming services (e.g., Hulu, unless you pay for their no commercials plan). These commercials (called pre-roll ads) tend to appear before – or after (post-roll) you can watch a program or clip, and people shun them for two reasons: the content they are waiting to see is often not worth the trade-off, and they have no control over the ads—and viewers hate not having control.There’s no way to just turn the channel, like you can while watching TV or listening to the radio.
Most of the popular social media sites were developed without advertising, and partly because of this, they flourished. The best current example is Facebook, and now that advertising is taking over this sacred personal space, many people don’t like it.The most successful advertisers using social media seem to be creative start-ups disrupting established businesses who have compelling stories to tell – like The Dollar Shave Club.Over time, the resentment to advertising in these new medias will fade; however, commercials are already an accepted part of the broadcast experience, another benefit to this media.