Retail icon John Wanamaker once said: "I know at least half of my advertising is wasted. I just don't know which half!" Last week I came across an auto industry newsletter with reference to a recent research project restating virtually the same proposition......I believe John Wanamaker might have been joking when he made his famous proclamation, but it boggles the mind to think any intelligent marketing person could make such an incredulous claim based on so-called research. If you're going to make such a conclusion based solely on direct return on investment of a specific promotion, then you might accurately conclude that substantially more than half of advertising is wasted. In fact, the number might be closer to 85%.
Although I've heard the famous "half is wasted" quote attributed to Wanamaker at least a thousand times, I've never heard anyone try to explain what he meant. Was he referring to the message or the media? Possibility an improper balance of reach and frequency? Was he suggesting that if his advertising was more efficient he would do the same amount of business with half the budget? I believe John Wanamaker was trying to convey an important message. This highly successful entrepreneur was saying that he didn't really understand how or why advertising worked, but it obviously did and what difference did it make if some of the advertising was "wasted" as long as the bottom-line goal was achieved?
I submit to you that there is no such thing as wasted advertising if your message and medium only motivate just one person to do business with you in a cost effective manner. I further submit that you will drive yourself crazy trying to figure out the absolute best possible combination of advertising messages and mediums for the highest possible return on investment.
That being said, over the years I've developed some rules that have helped our own agency achieve exceptional efficiency and effectiveness. Let me share a few with you.
1.) Determine the true "value" of each advertising medium. Use ratings and CPM (cost per thousand) as guidelines only. Station A, with half the "ratings" of Station B, may outperform Station B not only in the number of customers it brings to your business, but in the quality of customer. You can only determine the true value of each player on the ad medium team with consistent media habits analysis...one page surveys that define customer media use.
2.) Negotiate on the "value proposition" of each medium. For the first time ever newspapers are "negotiating". They have no choice. Circulation is down. Ad revenues are down and the automotive segment is their largest income category. While most newspapers rarely drop rates, many are coming to the table with bonus inserts, web site inclusions, spot color, special positioning, etc. More and more Internet sites are negotiating on the level of visitor activity.
3.) Don't spread your ad dollars too thin. Even though your advertising dollars are not necessarily wasted when you advertise on many different mediums, you will achieve more a more meaningful, measurable return if you dominate at least one medium.
4.) Be consistent. Forget Reach and Frequency...RECENCY is the key. If you're advertising when your customer is ready to buy you've got a better shot at getting the business. That means advertising consistently throughout the year. Be consistent with your message also. Across all formats and mediums. Consistency helps build recall of your brand. In the December 2004 issue of Dealer Magazine I wrote on the importance of Consistency. In the July 2004 issue I wrote on the guru of RECENCY. I'll be happy to send you a copy of both articles on your request.
5.) Don't be afraid to gamble! Some of the most successful (profitable) car dealers in history have one thing in common. They are not afraid to take a chance on new ideas. That includes advertising. This is not to say you should throw money at every new idea proposed, but sometimes, venturing into unproven territory can yield great rewards. A few months ago a very successful sandwich shop owner confided to me that he visited construction sites in the areas where his shops were located and handed out coupons to workers. At each stop he wrote down the radio station that the workers were listening to. Even though he had never used radio before, he bought time on the station he heard most often at these stops. Within three months his take-out business doubled.
If the astute businessman John Wanamaker genuinely believed one half of his advertising was wasted, he would have experimented and cut out one half at a time to prove his theorem. He didn't. Instead his advertising gradually increased as a cost of sales and his sales and profit grew to staggering proportions. I recall hearing the story of how gum magnate Wrigley was once asked by a reporter aboard the gum makers plane why he didn't cut his large advertising budget back since he was by far the largest in the industry with no close competition. Wrigley explained that it took a lot of jet fuel to get the plane they were flying up into the air and once they had reached their desired altitude, he was of not going to cut back on the fuel for he knew what the consequences would be.
Do you have questions or comments about this or past AdTalk articles? Feel free to email them to CBC.
This issue of AdTalk is brought to you by Research Partners. Serving dealers for nearly 20 years to help reduce advertising cost: Research Partners
