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Advertising is for profits

By July 22, 2012August 22nd, 2012Knowledge

Once you’ve successfully launched into your market with a PR blitz (see white paper: 3-2-1… Using PR for lift-off and lift) you need to support and defend the position you’ve created. At the point where you have introduced a new product or established a new market segment and launched it through a PR campaign, you own 100% of that market, that is, until others start to knock off your product. This is the moment when you need to advertise to defend your market ownership. When the “newness” buzz has worn off your story, your placement in relevant publications will eventually start to fade. This is where advertising shows its strength: guaranteed viewers and impressions; it keeps your product or service in front of the market and motivates viewers to buy when your salespersons are not present to do it for you.

Advertising is a controlled way to build your brand, influence perceptions and tell the market why they should buy from you and not your competitor. It can also be the best way to blast into a new market and create instant awareness and demand. Advertising is often compared to a rocket launch: you spend 90% of your fuel just leaving the atmosphere. In terms of branding, you spend the majority of your dollars blasting into your market, making a statement and creating a brand, and then you can slow down your investment and advertise consistently to defend the position you’ve created.

Think of a typical start-up company, lets say a clothing designer, for example. You might see their business plan looking something like this with a total budget of $150,000:
$90, 000 payroll
$25, 000 materials/product development
$25,000 travel and trade shows
$5,000 misc. costs

This leaves $5,000 or less for advertising! Consider that a full-page ad in a single issue of People® Magazine or Time® Magazine costs about $250,000. Our clothing designer’s $5,000 advertising budget is not going to gain many impressions. When it comes down to the numbers, it’s easy to see why over 50% of start up businesses fail in their first year. Despite these odds, one clothing designer started his company out advertising heavily and spent $25 million in his first year – and Tommy Hilfiger® has been a success ever since.

One Ruckus Creative client has been the leader in their industry for 30 years. When asked how they had remained on top for so long, the marketing director remarked, “we look at how much our competitors spend on advertising, and we just out-spend them…” And, although their marketing plan is much more sophisticated than that, there is some truth to the comment. The company that advertises the heaviest appears to be the market leader, and the market commonly assumes the leader has the best product/service.

Consider Nike® for example, they spend over $1 billion a year on advertising as a strategy to overpower their competition, and it works – they have no competition. They’ve effectively eliminated every other competitive threat through sheer volume of advertising and brand strength. There is no parallel to a company like Nike, no other company spends as much and creates as many impressions. However, the strength of their brand is not a result of the quality of their shoes; many companies make great shoes. They lead the market because they’ve squandered any competing messages in the marketplace and have created a proprietary environment – it’s really not about shoes.

In order to ensure your advertising message is effectively communicating and creating a return for your investment, you must continually test the message, creative and delivery. Once an ad and method are working for your brand, keep using it until it loses potency, or, until you’ve found something that works better. However, the same message won’t continue to work forever; advertising must remain fresh and constantly updated and improved to present your offer in new and unique ways, always keeping your eye on the bottom-line ROI. Remaining true to your brand’s singular, focused core value while presenting your message from varied perspectives gives the market fresh reasons to buy from you. It sounds like a contradiction but the ways to accomplish this are literally unlimited.

To begin with, invest in the most compelling advertising you can. Hire the most talented people and continually experiment to find the most effective ads, brochures, and web and direct mail campaigns. Test these materials to ensure they create differentiation, value and motivation. Squash your competition.

Kevin Daniels is a Principle rabble-rouser at Ruckus Creative, llc, with 20 years in advertising and marketing.
Ruckus Creative is a results-driven, full-service creative and branding agency
“Business results through strategic creative.”
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Ladera Ranch, CA 92694

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