The department store pioneer John Wanamaker said "Half the money I spend on
advertising is wasted. The trouble is, I don't know which half." He
may have overstated the case.
In a recent study, market researcher Rex Biggs and GregStuart of the Interactive Advertising
Bureau found that only 37.3% of the money spent on advertising in
the United States
is wasted. But that adds up to $56.8 billion blown away every year.
Why? And how can you make sure your
company's advertising budget isn't one of the casualties?
Here's how to avoid waste by the numbers.
Original post date: 9/25/06
No numbers.
A marketing communications program without a precise goal and a
predetermined metric for success is drop-dead certain to be a waste
of money. Without a destination it's hard to know how to get there,
when (or if) you arrive and whether the trip was worth the cost and
effort.
Avoid the pitfall:
Know exactly how you're going to define and measure success before
you do anything.
Wrong numbers.
Chrysler recently made two announcements:
The Dr. Z advertising campaign was a success because awareness was
up.
Sales were off 38% compared to the same period last year.
Their criterion for advertising success had nothing to do with the
company's success. Is it just us, or is that lunacy?
Avoid the pitfall:
Make sure that success is defined and measured in terms that relate
directly to the company's goals.
Fantasy numbers.
Some marketing communications programs are based on the way
companies want things to be, not the way they actually are.
The Fort Worth Convention and Visitors' Bureau knew that everyone in
their target market was aware of their city and its amenities. Data
showed that fewer than 7% actually were. That knowledge became the
foundation of a campaign that generated 300,000 additional room
nights. But a campaign based on their wishful thinking would have
been a total failure.
Putting resources into an unrealistic plan is almost always a
complete waste of money.
Avoid the pitfall:
Base objectives, plans and decisions on data, not wishful thinking.
No bottom-line number.
A campaign that pours enough money into advertising can reach
everybody in a market area frequently enough to persuade them to buy
just about any product or service (assuming, of course, the campaign
has good commercials, ads, mailers, web materials or whatever). They
could wind up making a lot of sales and losing a fortune.
Avoid the pitfall:
Figure the incremental profit on each additional sale, the total
number of additional sales you plan to make and a reasonable
percentage of the profit on those additional sales to invest in
advertising.
