The Biggest Waste in Advertising (a Case Study)

Shoppers Flow Downstream

Water FlowingJust as a river flows downhill from higher terrain, shoppers always flow from the smaller community to the larger.

Advertising in the bigger community to draw customers to your smaller community is as futile as trying to make the water in a river defy gravity.

Tom’s Letter

I was reminded of the effects of swimming against the current when I received this letter:

“I’ve owned a boat dealership for over 30 years. We are located 1.5 – 2.5 hours northwest of Chicago in an area of lakes where our best customers own a second home. How do I use radio to reach these people?Reed's Marine

A. They are primarily up here only on week-ends in the summer.

B. They live full-time in the greater Chicagoland area where radio advertising is too expensive for us.

C. We have local radio stations, but our customers can still tune in their favorite Chicago area stations.

Over the past few years, I’ve run a Reed’s Marine radio commercial three times a day, seven days a week from April thru August. I’ve used the two biggest stations in our county, so we are permeating our area. My hope was that I might be heard by my best prospects on a rare occasion, but I was primarily targeting all the people in my county who would eventually mention us when they come in contact with the tourist coming from Chicago on the week-ends.

Do you think “second-hand” radio advertising can have an actual effect … sort of like second-hand cigarette smoke?”

Tom Johnson, owner
Reed’s Marine

Second hand advertising?

Yes, it can have an amazing effect. Another name for it is “word of mouth.” It’s also known as your professional reputation, the sum of the experiences customers have had with you. An individual customer’s personal experience determines whether that individual customer will be a good source of word of mouth.

customer_evangelistsExceptional experiences turn shoppers into customer evangelists. These are people who can’t wait to rave to the world about your exceptional business. (Of course, give them a bad experience and they could just as easily become vigilante customers – also eager to tell the world about your business).

So whether you call it word of mouth or professional reputation, those personal experiences drive repeat business, referral business, and collectively drive first-time business. Yes, “second-hand radio advertising,” works. It’s also one of the requirements of business success.

But Tom actually asked two questions, didn’t he? The second, the unstated question, wasn’t about professional reputations, or customer experiences, or referral business.

Tom Wonders if He Can Make Customers Flow Uphill

He wants to know if his situation is different enough to justify advertising in Chicago.

It’s not.

Biggest Waste CalloutThe biggest waste of money in advertising happens when a business spends it’s budget, but didn’t invest enough to persuade anyone. Compare it to buying a ticket three-quarters of the way to Europe. You spent your money, but still didn’t arrive.

The first problem is the sheer size of the Chicago market. The number of people in Chicago who own homes in Delavan is going to be a tiny fraction of a tiny fraction of a tiny percentage of the population.

In order to reach that minuscule segment of the market, you’re forced to also address the rest of the Chicago audience. And Tom, you can’t afford enough repetition of your ad on Chicago radio stations to effectively persuade anyone.** Like the salmon using all of it’s physical resources swimming against the current, you’re going to expend your financial resources fighting the inclination of all of those radio listeners to shop in bigger communities.

There is a practical way, though, to pursue that tiny fraction of Chicago’s population.

Stop Using Mass Media

Start making personal contact with Chicago residents who own homes in Delavan. The good news is it’s easier, and less costly, to make that personal contact once they’ve already arrived.

  • In most communities you can find the names and addresses of all new homeowners at the courthouse (or wherever the deeds are recorded). These are highly-targeted potential customers. Consider a “Welcome to your new home” letter to those folks, and include a CD ROM of the e-book you offer on your web site: The Five Biggest Mistakes People Make When Buying A Boat. Perhaps you could make that letter a full package of “welcome” gifts. Be sure to keep testing different letters and keeping very careful records of your expenses and conversion rates. Whenever you determine that one works better, dump the old one.
  • Find locations that tourists frequently patronize… restaurants, gas stations, and local service businesses. Any possibilities for flyers? Display ads in those locations?
  • Find referral partners. Team up with other local businesses who’s reputations are as good as your own; non-competitors who share your customers. Exchange sales leads. Support one another, publicly and privately. Start with the realtors, motorcycle / ATV dealers, and sporting goods stores.
  • Consider a “boat out” on a weekday evening. Take some of your best-selling models out on the water and invite local folks (as well as any visitors in the area) to look and ride. Make it a party atmosphere. Tie in a local restaurant or caterer. Get some local artists to show off their work. Find some local musicians to perform. Most of those folks will participate for the publicity. Twist the arm of your Chaparral Boat representative to pick up any out-of-pocket costs.

These personal contact ideas are not replacements for your primary marketing plan, which will include local mass media. Any can be added to a good plan, however.

Reed’s Marine Strategy is Solid

Long term, twenty-one ads per week will be sufficient on most radio stations, provided that you’re targeting relational shoppers.

I’m assuming that your ads are customer focused.  You are personally involved in the writing of those ads, aren’t you? Please don’t leave it up to the local radio stations.

We already discussed the power of word of mouth. If your message isn’t worth repeating, it won’t be repeated.

A Few Additional Things to Consider

  • Maximize your local media impact with heavier schedules early in the season and heavier schedules on weekends throughout the season.
  • Purchase gift certificates for dinners, concert events, or movies. Offer them to your local radio stations as give-away items. “Be the 9th caller and win a family four-pack of movie tickets, courtesy of Reed’s Marine in Delavan.”
  • Consider billboards on the main roads into town. In some small communities, especially those with few roads into town, three or four boards can provide as much as a 100 showing.
  • Your web site is very well done. Crisp, clean, informative, and easy to navigate. I’d suggest that you add the free download of your e-book to the home page as well. (More companies should be following your lead in this area – its an excellent piece.)

Also consider making a link from your home page to the “Reed’s Marine Pledge To You” statement. You can’t go wrong telling customers what’s in it for them. Tell them early and often.

Most advertisers in a smaller communities can afford enough frequency in local newspaper or radio to persuade local shoppers to come do business. You’re already doing the things most businesses should be doing. Stick with your existing strategy, and when tempted to purchase advertising in Chicago, remember what happens to the Salmon. Don’t wear yourself out fighting the current.


 

* Please don’t confuse comments about marketers swimming against the current as a condemnation of any contrarian philosophy. Contrarians find opportunities in serving the existing needs of customers which other businesses are ignoring.

** There is one possible exception in which Chicago radio could pay off, but it’s a long shot.

Are there outdoor shows in the Chicago area sponsored by Chicago radio stations? Is the attendance at those shows such that you could justify your involvement?

Many of the stations will tie your involvement in the show to purchases of advertising packages. Your mission is to get the largest number of announcements with the financial investment they require. See if they’ll let you exchange prime time ads for overnight placement to increase frequency, then concentrate those between 4am – 6am, especially Friday and Saturday. Consider sponsoring Friday evening or Saturday traffic reports.

And remember, the primary value of this strategy is to get face-to-face with potential customers at the outdoor show. The radio schedule is the price of your participation.

Read More

Will Advertising Sell What People Don’t Want?

Originally Published December 11, 2007

While browsing the web, I came across an article titled, “Why is My Restaurant Not Full Every Monday Night?” (Google search if you’re all that curious. The article doesn’t answer the question, which is why I’m not linking it).

But it does pose a valid question. Why isn’t your restaurant full on Mondays?

Its a common desire in retail to advertise the things which aren’t selling, and let those which will sell easily sell themselves. This is frequently bad strategy. Very bad.

It may well be part of the reason Wal-Mart thrived while K-Mart worked its way through bankruptcy. Of course, their respective advertising policies may only be a reflection of their inventory management. Then again, this all may be only a coincidence.

And for the record, our story is completely fictitious.

Assume that we have one Wal-Mart store and one K-Mart store, each stocked with various sizes of golf shirts in four colors: red, blue, green, and yellow. We’ll further assume that each store stocks ten in each color.

For some reason, the yellow shirts are in hot demand.

Each store sells out of yellow golf shirts.

K-Mart, in the traditional Henry Ford fashion * notes that they still have 30 shirts in stock. No problem.

Wal-Mart however, takes note that they are completely out of yellow golf shirts, and promptly puts ten more in inventory.

Humm. People will buy what they want, when its available to them. The won’t necessarily buy what’s being advertised. So, while K-Mart is advertising golf shirts in various colors, Wal-Mart advertises that they have yellow golf shirts, and they have them in stock. (Again, this story is of my own invention. It has only a passing relationship to any reality).

Can advertising sell them things they don’t want?

The bitter experience of K-Mart would indicate that people will purchase only what appeals to them, rather than what’s being advertised.

But our question wasn’t about golf shirts, was it? The question was “Why is My Restaurant Not Full Every Monday Night?”

The reason is simple.

Its not lack of advertising. (Rookie media salespeople will assure you that it is. They are wrong. It has nothing to do with advertising.)

It is because people customarily don’t go out to dinner on Monday evening.

They just don’t want to.

They tend to go out to dinner on Friday nites, on Saturday, even on Sunday. By the time Monday rolls around, they’re feeling as if they should stop being so extravagant.

On Mondays they plan to eat at home.

Is there a Monday appeal?

Is there a way to attract a relational customer to your restaurant on a Monday? Sadly, if Monday isn’t Valentine’s Day, Mother’s Day, or a spouse’s birthday, there is not. You could maybe get a transactional customer into your restaurant on a Monday if you offered a discount, but transactional customers tend to stay home on Mondays too.

OK, make it a BIG discount. That will insure two things:

1. bad turnout, and
2. no profit from those rare few who do show up. 

Humm. Advertising a restaurant is very much like duck hunting. You shoot when there are ducks to shoot at.

So what can you do about those Monday nights in your restaurant?

You can cut back on your staffing on Monday and hold your costs to a minimum. Then advertise your great Friday night specials, or your Saturday dinners, or even your Sunday brunch.

Wait for them to be inclined to dine away from home, then remind them to pick you. Cater to what your customers want – and do so on their timetable, and you’ll start boosting attendance as you fish for customers.

Your Guide,
Chuck McKay

Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

Got questions about allocating and scheduling your advertising dollars? Drop Chuck a note at ChuckMcKay@ChuckMcKayOnLine.com. Or call him at 304-523-0163.


* Henry Ford is rumored to have said about the available colors of his Model T automobile, “You can have any color you want, as long as that color is black.


Read More

Somebody Tell Lord Leverhulme

William Hesketh Lever

Lord Leverhulme: William Hesketh Lever

Half of my advertising is wasted, and the trouble is, I don’t know which half.” I’ve seen that quote attributed to a great number of people. My research indicates these words to have been first uttered by William Hesketh Lever (1821-1925), the 1st Lord Leverhulme. He was better known on this side of the pond as one of the original Lever Brothers.

Marketers today still wonder what he wondered.

Which Half is Wasted?

At the risk of sounding arrogant, I know.

Let me explain.

The seminal study of media usage was conducted by the legendary researcher Alfred Politz in February of 1966: The Politz Study Of New York Radio.

Politz studied the patterns of listening to the top ten radio stations in New York City. He detailed the number of people who listened to the radio for one quarter hour per week, the number who listen for two quarter hours per week, and so on, through the heaviest users. He then collapsed the listener distribution data into quintiles (equal fifths).

Until Politz published his study, media buyers only needed two basic figures: the number of people who tuned in at least once each week, (cume persons) and the number who were listening at any given point in time (average quarter hour persons). Fairly straight ahead math could then be used to calculate how long (Time Spent Listening) the average listener tuned in.

Why Basic Arithmetic Doesn’t Work To Measure Audiences

Before 1966 media buyers were satisfied to know that the average listener tuned in for, say, 20 hours per week. After the Poliz study we learned that the heaviest users, (the top 20%), will stick with their favorite station for a full 60 hours per week. At the other extreme the lightest quintile would listen for only 2 hours per week.

Within each quintile the average listening might look like:

60 hours
21 hours
11 hours
6 hours
2 hours
20 hour average

Other studies confirmed that consumers of other media were also not equal. This same pattern occurs in television viewing, reading of newspapers and magazines, and even the reading of outdoor signs. Each medium has very heavy consumption at the top quintile, which grows progressively lighter as each additional quintile enters the equation.

Politz made us aware that every single consumer was a different human being. Some were heavy users of media. Some not so much.

Effective Advertising Frequency

The next step in our understanding came in 1979 when Mike Naples authored Effective Frequency, The Relationship Between Frequency And Advertising Effectiveness.

In a project commissioned by the Association of National Advertisers, Naples evaluated the data from a number of existing studies of consumer behavior. He concluded that the first and second exposures to any ad were not effective in persuading a shopper to buy. Naples stated:

By and large, optimal exposure frequency appears to be at least three exposures within a purchase cycle.” He concluded “The central goal of productive media planning should be to place emphasis in enhancing frequency rather than reach.”

Media planners everywhere started combining Naples goal of three exposures with Politz audience distribution observations. The new Holy Grail (and 80’s media buzzword) became “Effective Frequency.”

Using the ratings services cume persons and quarter hour average persons, along with the math developed by Group W Radio from the Politz study, media buyers determined that there is an optimum number of exposures to an advertising message for each listening audience. *

How to Find That Optimum Advertising Level

Let’s explain the concept with a hypothetical radio station. Our hypothetical station has 111,800 cume persons listening each week, and 16,700 average persons of during during weekday prime time. These 111,800 people listen for an average of 5 hours per week. The optimum number of ads to reach this audience is 17 per week.

That schedule of 17 ads should reach 84,705 different listeners at least once. It will completely miss the remaining 27,095. Of those who do hear the ads, 21,646 of those listeners will hear only a single ad. 12,825 listeners will hear only 2 of them. Thus, the Effective Reach, the number of listeners who will hear 3 or more ads, will be 50,234, or roughly 40% of the cume. That makes sense. Here’s why.

Achieving an effective frequency of 3 with each of these five quintiles of listeners requires a schedule of:

First Quintile: 3 ads.
Second Quintile: 17 ads.
Third Quintile: 29 ads.
Fourth Quintile: 53 ads.
Fifth Quintile: 184 ads.

Let’s Start With the Bottom Quintile.

What do you pay per ad? How much would you have to pay for 184 ads per week? I’m willing to wager that you can’t afford a long term schedule of 184 exposures per week.

Perhaps you could stretch the budget enough to afford 53 ads. That’s a schedule which could motivate the fourth quintile. Congratulations. You’ve broadcast enough ads to persuade quintiles one, two, three, and four.

We Now Have Another Problem.

The first quintile only needed 3 ads to “get it.” Run 50 additional ads per week once they understand your message, and it’s highly probable that you’ll irritate those listeners. Annoy them this much and they’ll refuse to do business with you. Somewhere around ad number 17 they’ll split to some other radio station. **

Dogone it, you’re just never going to get them all. Customize your schedule for the heavy listeners and the light listeners will miss your ads. Plan to impact light listeners and you’ll repel heavy listeners. From one end or the other, you’re going to miss half.

Which Half Should We Attempt to Reach?

Wizard Of Ads ® Senior Partner Roy H. Williams suggests that on most radio stations 21 ads (plus or minus 2), each week will give you the greatest impact from the least number of dollars invested. You will effectively reach about half of that station’s audience.

Of course, you’re going to miss the other half of the station’s audience. There’s no way around it.

Question: On which of the listeners is the advertising “wasted?”
Answer: Any that won’t be exposed to our ad three or more times.

Somebody Tell Lord Leverhulme We Have His Answer.

We’re going to reach quintile one, quintile two, and about half of quintile three. We’re going to “waste” our ads on the other half of quintile three, and all of quintiles four and five.

However, some good news: the light users of one radio station tend to be the heavy users of another. And the average listener tunes into 3.6 stations per week. Find stations which share the same cume listeners, run 21 ads per week on each, and start getting spectacular results – assuming, of course, that your message is compelling and your offer is appealing.

Oh, and one final caveat. Depending upon the purchase cycle, as few as 2% of those people will be “in the market” on any given week. You’ll need to run this schedule next week to get the people who are ready to buy next week. You’ll need to run it the week after that to reach the people who are ready to buy that week. You’ll need to… well, you understand. You’ll need to run it every week that you intend to keep fishing for customers.

Your Guide,
Chuck McKay

Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

Got questions about your optimum advertising level? Drop Chuck a note at ChuckMcKay@ChuckMcKayOnLine.com. Or call him at 304-208-7654.

 


 

 

* All figures based on Radio’s New Math, © 1978 Group W Radio.


 

 

** Program Directors HATE ads which run in double digits daily. Of course, Program Directors also know that about the time the Disc Jockeys say that they’ll puke if that song plays again, the listeners are just learning the words. Through the nature of their jobs Disc Jockeys have long Times Spent Listening.

Read More