How to Stretch Your Advertising Dollars

By jason on Dec 30, 2011• 2 Comments
stretching advertising

There is an old ad industry slogan that goes “I know half my advertising dollars are wasted – I just don’t know which half!” The mere existence of this slogan is a testament to the wastefulness and inefficiency of far too many ad campaigns. Perhaps careless advertising is acceptable for sellers of mass-market commodities like Coca-Cola or Twix, but it doesn’t work for small to medium-sized businesses with limited budgets and unique products to sell. These companies need to stretch their advertising dollars and know with certainty that they are delivering the goods.

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Use Direct Response Advertising

(smath.)

The biggest mistake a company can make is trying to mimic how “big companies” promote themselves. You have no doubt seen billboards with cute slogans and catchphrases, or TV commercials with funny but meaningless scenarios. These are all well and good when it comes to cheap laughs, and you may even remember some of these ads by heart. However, the true test of an advertisement is whether or not it compels someone to take out their credit card and buy. For this purpose, there is nothing better than results-accountable, direct response advertising.

Run Ads in Targeted Spots

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Instead of seeking to create ads that are merely memorable, direct response is about creating ads that provoke action on the part of the consumer. An ad’s chances for success can be won or lost by where the ad is displayed. A vital component of direct response advertising, therefore, is running your ads in targeted, strategically chosen places. Let’s use a company selling sports equipment as an example. This company would be wasting money to rent billboard space because it’s highly unlikely that a random sampling of passing motorists will be athletes or coaches.

Instead, a more targeted ad venue suitable for a direct response ad might be the sports section of a local newspaper or magazine. The ad would describe the product in plainspoken language to an obviously interested audience and offer a phone number, web URL or mail-in form, accompanied by a request that readers order the product. Search advertising, which offers the opportunity to advertise when specific search phrases are typed into a search engine, like Google or Yahoo!, is another form of targeted advertising.

Track Response

(Horia Varlan)

After transitioning totally or partially to direct response, the next step is tracking the response. Each ad your business puts into circulation must be measured in terms of how many qualified leads or sales it generates. If you have a specific URL or web page that you are displaying in your ad, consider using different one’s for a different ad so you can track which one performed better. If you are advertising on Google, they have built in reporting tools so you’ll know which ad is driving more sales for you. If customers order your product, the ad is a success; if they don’t, it’s not. Over time, the idea is to create a sort of Darwinian selection process whereby ads that perform get more exposure and ads that fail to perform get scrapped. Additionally, you should always be striving to beat whichever advertisements are currently your highest performers by creating new ones. Just make sure each ad runs long enough to prove that it wasn’t the beneficiary of good luck or the victim of bad luck.

Improve Your Follow-Up Sequence

(stefanweihs)

Sometimes, not even the best ads can close a sale right away. This is particularly true of expensive, high-end or complex items (such as cars or computer systems) that cause consumers to shop around and ask questions. Overcoming this strategy usually boils down to the strength of your follow-up sequences. What happens to customers who respond to your ads? Is there a system or process in place for qualifying their level of interest, answering their questions and following up with repeated requests to buy?

Follow-up is easily the most neglected activity in advertising, but when executed well it’s also one of the most lucrative. One way to minimize the headaches while maximizing the upside is to automate your follow-up as much as possible. Fortunately, a variety of e-mail auto-responders, phone systems and other technologies exist to help you move prospects through your funnel.

Have a Robust Customer Base

(epSos.de)

Another way to multiply the effectiveness of a limited ad budget is to have a robust customer base, or existing customer base. After all, it’s easier (and cheaper) to sell more products to an existing customer than it is to go out and find new ones. In fact, businesses that consistently sell over and over to the same buyers often find that they can afford to lose money when acquiring customers. The profits from future up-sells and cross-sells actually outweigh the marginal sums lost when bringing customers into the sales funnel. Marketing instructor Jonathan Mizel calls this the “Unlimited Traffic Technique.” As Mizel’s partner, Terry Dean, explains:

“It [the Unlimited Traffic Technique] simply refers to having a visitor value higher than all your competitors. Whoever has the highest visitor value eventually moves to the top position in the marketplace. If all your competitors earn $3 per visitor (from immediate sales and long-term sales to the customer list), but you’re earning $10 per visitor…who will eventually win in the marketplace?”

The same basic principle applies to offline advertising, as well. The companies who have solid core values, can properly utilize direct response ads and targeted ads and can effectively respond to customer’s requests will succeed in squeezing the most revenue and profit from their ad-generated customers.

  • kagey

    I’ve got to disagree with your assessment that ALL advertisements should be judged on whether or not they’ve compelled you to take out your credit card and buy. The goal of good advertising isn’t always about make the cash register ring. They can be about creating awareness about your brand, educating your customers about what you do or simply building relationships with your customers. When you’re operating in a highly competitive marketplace, decisions are often based on the value of your brand image. A direct response ad is like a door-to-door salesperson calling on your customers and asking for the sale. But what happens if you’ve never heard of the brand? Or worse, you know someone who’s had a bad experience with the brand? Do you even open the door to hear the pitch? Or if you let him in, do you discount or ignore the salesman’s pitch? Or say two competing salesmen are at your front door selling the same kind of product… which one do you invite in? Direct response advertisements ultimately only benefit you after your core audience has already formed a perceived value about your product or service, your industry or your brand. And even then, what makes direct response most effective is the offer.
    Marketing is like managing a football team. You might conclude that only running backs and receivers score touchdowns – and therefore are the only valuable members of the game. But you’d be wrong. As part of your marketing mix, direct response is an effective tactic that can produce results. Be used as your sole from of marketing, it can cause you to fail.
    BTW – I would recommend a billboard to a sports equipment company if the billboard were located on the road to a baseball or football stadium, or in a town that’s sponsoring a sporting event like the Olympics. Since most pro and amateur athletes probably already have their preferred vendors, I would need to interrupt their preconceived notions about my (and their) brand to get them to consider me. I could not get them to switch to my brand no matter how good my direct response offer is, if they think I’m cheap, ineffective or both. Nike billboards are a good example of how billboards built a brand and ultimately created sales.
    k.

  • http://www.postsgenius.com/ Charlotte Day

    We all know that if advertising works, money comes in. It’s what they’re trying to say here. I guess it’s the power of human minds to create good promotional strategies towards the success of their goods and services.