The Brand Landscape

Advertising: Which Half is Which?
By now everyone has heard the saying, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Most people attribute it to a friend or business associate, but the comment was originally made by retailer John Wanamaker, a marketing pioneer in the early 1900’s. I guess the reverse is also true…half of the money we spend isn’t wasted…it actually generates a return on investment (ROI) that builds sales and builds the brand. The real question is—how do you know which half is which?
• I just visited PF Chang’s for the first time in a long time. What made me do it? I saw their “20 Lunch Combos for Under $10” TV spot. After seeing it enough, I just had to go. But I didn’t go for lunch; I went for dinner. In other words, the advertising moved me even though I didn’t go for the deal. The PF Chang’s spots do a great job of making the case for the brand and the product and use the ‘deal’ to merely ‘punctuate’ the ad, not as its centerpiece. It’s not about the deal…it’s about the brand, with a big coupon exclamation point at the end of the sentence.
It reminded me that years ago I read that including a coupon in an ad increases readership by 90% (almost double) even if people don’t redeem the coupon. This makes sense…especially when you consider that redemption rates on coupons average 1-2% and are often redeemed at a rate of less under 10%. People are paying attention to the ad and responding to it, even if their ‘response’ is a non-coupon visit. I recently spoke with PF Chang’s president who confirmed that they have experienced lift at both dinner and lunch because of this promotion.
Lesson: the law of ‘unintended consequences” can also work in your favor. Be sure to factor that into your ROI.
• Having recently been at a board meeting discussion where the accountants looked at 5-10% coupon redemption rates as modest and questioned whether it was ‘worth doing.’ Interestingly enough, there was a positive ROI on the promotion, but the accountants questioned whether they might have gotten an even higher ROI doing something else…the grass is always greener. My take on this is that the ROI is the low end of what the promotion achieved when you consider the overall awareness it produced and the energy level it created in the restaurants during what would otherwise be a slow time ) like PF Chang’s). And all we know the best promotion is a busy restaurant.
Lesson: Don’t be distracted by someone else’s green lawn.
• Advertising is like the pill you take to make the symptoms go away. Once the symptoms have gone away, you might think you are fine and decide you don’t need the pill. Nothing could be farther from the truth. There is a “Cumulative Effect of Advertising”—a number of years ago it was found that only 60% of the impact of an advertising initiative is felt in the first year, 25% is felt in year two, 10% in year three and 5% in year four. If you keep advertising year after year, it will build and build until year 4 where you will finally realize 100% of the benefit of the campaign. If you do the same thing the next year, you will get the same 100%. This will make it appear that sales have flattened, but the truth is that the base has moved. A certain level of marketing simply ratchets up the base.
Lesson: Stopping your advertising loses the residual impact and sets you back years building sales. Ultimately, you need to “up the ante” to get bigger impact. Stops and starts rather than a consistent year after year approach leaves money on the table because of the lost impact.
• Reach & Frequency, the traditional measures of advertising in a mass media world, are giving way to Impact & Engagement, the watchwords in a social media world. It’s not an either-or choice. A full marketing approach includes both Reach & Frequency and Impact & Engagement. Anecdotal information that reflects how much powerfully guests respond to your brand is almost as meaningful now as the ROI.
Lesson: Advertising that doesn’t Reach enough people, doesn’t reach them Frequently enough, doesn’t have Impact or is not Engaging, is probably in the half of your advertising that doesn’t work.
• The expression “Go Big or Stay at Home” is as true of marketing as it is in general. Not spending enough may just cause a promotion to fail whereas a little more money would give the program enough to break through and be a success. Years ago, I tested two ad campaigns. One featured a “buy one, get one free” coupon and the other featured “buy one, get one for a dollar” coupon. Our managers thought they would save a lot of money not having such a high coupon cost, when in fact, the number of people coming in for the less compelling deal was so much lower, it didn’t even generate enough revenue to pay for the ad whereas the BOGO with the free offer actually generated a lot of traffic and made lots of money.
Lesson: Go Big or Stay at Home.
So here are my simple rules:
1. It’s important to measure sales gains not only against last year, but also against a realistic assumption of what sales would be if you had done nothing. Ask, for example how your competition is doing. If you are doing better than they are, your advertising is working.
2. Make it about the brand, not the deal. People will seek out the deal…you’ve got to expose them to the brand on the way. That gives you impact today and tomorrow.
3. About the time you are getting sick of your advertising, your customers are just beginning to pay attention to it…the promotions that are working are working because you stick to them.
4. Continuously evaluating your efforts and eliminating the things that aren’t working, and doing more of the things that are, will build the half that works and eliminate the half that isn’t.
Until next time, I’d love to hear your thoughts.