$5,000,000 Wasted on Advertising?

Money Wasted on Advertising

If you hate wasting money on marketing that doesn’t give you a return, then I have a story for you. This goes back to the days when I was just getting my start in advertising. I was working at one of those large traditional brand advertising firms. We just landed a new account for a nationwide retailer with a $5,000,000 marketing budget. What happened over the next few months taught me a valuable lesson that changed my career path.

It all started when the head of our media buying department quit. I’ll never forget what he said to the CEO before leaving, “What am I supposed to do with five million dollars? We will be pissing in the wind.” Now this chain had 23 stores spread out in several states. That gave each store a little over $200,000 for advertising, so why were they “pissing in the wind”?

As I worked on the account, I came to discover that our former senior media buyer was right and you’ll hear why in a minute. Right now I would like to explain some of the frustration that was felt by both us and our client.

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First when it came to developing a campaign, we all sat in a room and spent hundreds of hours (cumulatively) trying to figure out the best position and message for the brand. Then we would go to the client and he would give his opinion. After that, we would go back and make changes. This process kept going till the client was happy. A lot of times we felt his changes would have a negative impact, but there was no way to know for certain. This leads me to another one of our frustrations.

We had no way of knowing what was working or what wasn’t. If sales were up we would say, “See the campaign is working!”, if sales were down the client would call us and would want revisions. The truth was, no one knew for certain why sales were up or down. Here is the worst part.

The client was never happy. The client was known to jump from agency to agency because they did not feel like they were getting their money’s worth. We ended up losing the client after about a year and their pattern of jumping from agency to agency continued. I still shake my head when their commercials come on. The last I heard they still had the slogan I gave them, so at least I have that satisfaction (lol).

So why were they throwing their money away?

The problem was, they were paying for reach outside their market area. I see it all the time. Dairy Queen is an example. I always see their commercials, but their stores are nowhere near me. To build a brand the traditional way you need to saturate a demographic market area (DMA). If the client had all their stores in one DMA, they could have established their brand. Having stores spread out throughout the country meant they needed a lot more money to effectively penetrate all the markets they were in with their brand message.

So here are the lessons I learned.

1. It is better to work a small targeted market and build a dominant presence around them. Then to try and reach a large audience with one or two advertisements. This is why many agents get frustrated when sending out one or two postcards and they don’t get a return on investment.

2. All advertising should have tracking mechanisms in place. If you are not tracking your ads, you are flying blind. Sales are an indicator of response, but there are too many variables to know what is bringing in the sales. Tracking mechanisms allow you to see exactly who is responding to your ads. It also allows you test and improve your advertising. If there are problems, it can also help you identify them. By having the tracking mechanisms in place, you will let the market tell you what is working and what is not instead of “going with your gut” feelings.

After my experience with the agency, I began working in direct marketing. That was great because it allows you to track and prove response. Now I use a blend of direct marketing and brand building. That’s because you don’t have to build a brand around an entire market anymore. You can build your brand around specific individuals instead. For most small businesses, brokers included, a small audience of a thousand to a few thousand targeted individuals can yield significant sales revenues.

By tracking their response to your marketing messages, you can measure their engagement and see if you are delivering a message that resonates with them. The technology available today, makes this possible.

The good news is, you don’t need millions of dollars or even tens of thousands of dollars to penetrate your market. When implemented properly, this can be done very effectively with even a small budget.

 

(Photo Attribution: Some rights reserved by MikePhotoArt)

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