Advertising Principals to Jump-start Your Business
by Richard Nodine
copyright 2006 Pacific Print Media, all rights reserved.


For over 40 years I've had the pleasure of working with some of the finest talent in the sales promotion industry. We served both national accounts and local merchants alike. I've learned that promotions, carefully crafted with an appreciation for the basic principals of advertising, seldom fail. Unfortunately, during the same time, I've seen otherwise bright, sophisticated entrepreneurs shovel vast fortunes down the black-whole that is “amateur advertising”, simply because they failed to understand the underlying principals. This report outlines 12 principals that commissioned media salespersons and agency front-men will usually never explain.

You can hardly blame them, after all, they are under intense pressure to close every sale and show significant increases week after week. I think you'll soon understand why most admen (and women) believe that sharing their knowledge with clients could make those goals unattainable. Because you had the good judgment to stop on this site I will share these principals with you.

Principal #1. NEVER RUN AN AD. Yes, that's exactly what I mean. My worst days begin with a clients who comes to my office and asks for my help with an ad. Mind you, I have nothing against advertising. I've devoted most of my life to it. It's the singular form of advertising that scares me. A single ad or mailing or broadcast spot or brochure is virtually useless. Effective advertising is an ongoing process not an event. The best studies we have indicate that the average prospect must be exposed to your offer seven times before they make a decision to buy. As an advertiser, this means you need to find a way to make seven presentations before you make one sale. This is not nearly as grim (or expensive) as it seems on the surface. A presentation may take many forms including point-of-sale (in store) exposure. The point is, advertising must be planned to impact the prospect several times with a very similar message. Those who expect to close a sale with one ad are destined for severe disappointment.

Principal #2. FAILURE TO PLAN IS A PLAN FOR FAILURE. I'm always amused by the entrepreneur who spends weeks planning a new store. They travel all over the country finding the most desirable merchandise. They burn the midnight oil meeting with their architects, fixture contractors, bankers, commercial real estate brokers, display trimmers and carpet suppliers in an effort to ensure that every detail is perfect. Then, usually at the very last minute, they think, “oops, perhaps I should run an ad”. This is when they usually make the worst mistake of their careers; they call the “media consultant” from the first publication that comes to mind, usually their local newspaper.

Guess what that consultant really is. We all know they are really commissioned sales persons paid to sell ads in that specific paper (or magazine or radio station). Perhaps it's the right place for your ad, perhaps it isn't. Perhaps there are a number of other ways to spend your sales promotion dollars more effectively. You'll never hear it from the media consultant. Sure, they'll give you great placement (the first time) and a discounted rate and free design service (the first time). But, will your ad be any part a well conceived, integrated campaign? Probably not.

The point is; advertising costs are as integral to a business plan as finance costs or rent and occupancy costs or labor costs. They deserve their own line on the business plan and should never be lumped in “miscellaneous expenses.” The Small Business Administration guidelines call for the expenditure of 5% of a business’ annual gross receipts on advertising. Like all other generalizations, this one is wrong more often than not. You need to budget what is needed to achieve your unique promotional objectives, no more, no less. I've worked with large companies who spent a fraction of one percent (of gross receipts) on advertising and those who have spent 30% in a dramatic effort to gain market share. There is no correct percent, only well planned projections designed to achieve a specific goal.

Principal #3. BUT I GOTTA HAVE A FORMULA!
I know, you are devastated by the prospect of having to plan an entire six month season of promotion just so you can plug a number into your Excel spreadsheet. OK, try this one, its called the “Lifetime Customer Value Formula,” (or LCVF) and its about the most effective way of planning advertising expenses I've encountered.

Instead of relying on a flat percentage of gross sales our formula asks you to project the average annual volume you expect to gain from each new customer you acquire, then multiply that by the average number of years you hold customers. Even the best managed business looses customers to death, relocation, dissatisfaction or competition. Next, project the number of new customers you can reasonably service within your facility and budget constraints and multiply that number by the average lifetime value each will contribute. Once you have a figure that reflects what all new customers represent in gross volume over the lifetime of their patronage you can reasonably assign a percent of that volume to advertising.


*Some businesses will be more conservative than others. For instance, if you are a gift store you will probably be able to service many more new customers than a beauty salon. The gift store just needs to order more merchandise and find a way to move it in and out efficiently. A beauty shop with six chairs and operators is stuck with a finite number of hours it can sell. Very few people want their hair colored at 2:00 AM. For this reason, the beauty shop will budget for fewer new customers than the gift store.

** The 5% guideline reflects a broad average of all industries and may be totally inappropriate to yours. A supermarket with a 2% to 3% gross margin will hardly want to devote 5% to the acquisition of a new customer. On the other hand, a high-margin manufacturer may be willing to devote a far higher percentage. There are even cases when businesses in a highly competitive environment may deliberately spend extraordinary sums to “buy market share.”

One year In the early 1980’s the blue jeans manufacturer Jordache spent 30% of their gross volume on promotion. Most industry watchers thought this was nearly insane. Yet, by the end of the year they dominated their market and had created momentum that lasted several years. Momentum is a principal based on our “heard mentality.” When we see everyone else around us wearing a particular watch or t-shirt, or brand of blue jeans we become far more receptive to that brand. Jordache was competing with manufacturers who owned decades of tradition and customer loyalty. Their bold move broke through barriers and helped them claim a substantial market share.

Bottom line: there is no correct way to compute advertising costs except as a well considered element of an overall business strategy.

Principal #4. WHY SHOULD YOUR CUSTOMER CARE? Never before in history have we had the options today's consumers have. The internet has truly made it possible to shop the world from our armchairs. Why, then, should anyone patronize you? In the process of answering this question you will begin to create your Unique Selling Proposition or USP. The terms was originated by Rosser Reeves (1910 - 1984), one of the mid-twentieth century's most prolific advertising men. A USP is a brief statement explaining why your company is unique. To be effective it must be focused and specific. It should embody a claim that your competition can not make. Here are examples of some of Rosser Reeves more famous USPs:

Wonder Bread helps build strong bodies eight ways.

M&Ms melt in your mouth, not in your hands.

Certs; breath mints with a magic drop of retsyn.

Colgate cleans your breath, while it cleans your teeth.

Only Viceroy gives you 20,000 filter traps in every filter.

Make no mistake, a USP is not a tag-line or jingle, although it should probably become one. It is the very essence of why you are in business. To become a successful advertiser you need only impress it on every mind in your target market at the lowest possible cost.

Principal #5. A PICTURE IS WORTH A THOUSAND WORDS Of all our senses, we humans respond most immediately to visual stimulation. “Seeing is believing.” That is why it is imperative to create a visual image that is inextricably linked to your company and your USP. Call it a logo or corporate image (or whatever trendy euphemism comes along) it must unmistakably evoke the linked USP and your company in a split second. Once accomplished, use it everywhere. Resolve to dominate the public consciousness with your message.

A word of advise; this is no job for a recent art school graduate. This is not an issue of making pretty pictures. A well crafted image that will hold up in several media and project your USP effectively should only be crafted by an experienced promotion designer.

Principal #6. REPEAT IT AGAIN Remember back in secret #1 we discussed the importance of repeated exposure to your message? The other half of this principal is “maintain consistency.” Create your USP, your logo (or corporate image) and an ad format and keep it consistent over time and (as far as possible) across all media. Arbitrarily changing the look and feel of your message weakens the effect.

Does this mean you can never improve your promotions? No, it just means you have to do it judiciously, one element at a time. Every change in your copy or visual presentation should be tested to determine the results.

Principal #7. WHATEVER YOU DO - TEST IT
Sales promotion is part art and part science. The problem is, most advertisers love the art and forget the science. Spending untrackable ad dollars is somewhat like lighting cigars with $100 bills. It's only fun for a short time. Every ad, every mailing, every change of message or offer should be considered a test. This is how you build a solid promotion program that becomes more effective with each effort:

A. With every ad or mailing (the principal is the same) you must include a device to quantify its success (or failure). The most popular way is through the offer of a premium or incentive such as a discount or gift with purchase. To qualify for the offer, the customer must return a coupon or card or mention a code. Alternatively, some businesses assign a specific person, department or telephone extension to receive the prospects response. Whatever technique you employ, you and your staff must be dedicated to recording each response to each ad.

B. Your first ad or mailing is called your “control model”. All subsequent ads or mailing will be tested against this model. In your next ad or mailing you will change ONE and only one element of the promotion. This may be the size of the ad, the list to which you mail, the nature of the offer, the visual image or the copy. As you track the results of this second effort you can compare them against your control model and adjust your campaign accordingly.

C. To speed the process of testing and refinement, many advertisers employ “split runs.” This involves mailing different offers to equal sized segments of the same list and measuring the response from each. This test requires your list to be carefully sorted to ensure that all names conform to the same demographic profile mix.

For instance, a test that was conducted using names of 38 to 45 year old medical doctors who earned over $250,000 per year and lived in Northern California would be invalidated if one group was mailed to urban addresses and the second group was mailed to suburban addresses. All variables must be mixed to create a valid test.

Print ads can also be tested by running two (or more) ads in the same issue of a publication. Caution should be used to ensure that one ad is not placed in a significantly better location in the publication than another ad. If one ad appears in the upper left side of page 50, the second ad should appear in the same position of page 52 or 48.

By never changing more than one element and carefully tracking the results of each ad, you will progressively improve the effectiveness of your advertising over time.

Principal #8. HEY, YOU TALKIN’ TO ME? That's how I'm frequently tempted to respond to much of the advertising copy I read. Obviously the rule: “write for your audience - not yourself,” hasn't been widely understood. Here are two examples:

“Our staff of professional technicians will come to your home and clean your carpets and drapes with our state-of-the art equipment.”

“Your friends and family will admire the newfound luster and beauty of your carpets and draperies after a thorough cleaning by our professionals.”

These two statements both promote the same offer but the first one focuses on the promoter. It tells the reader that their staff is professional and that they have state-of-the-art equipment. These are important features but features are secondary in the communication hierarchy. The professional communicator begins by telling his reader why they should listen to him, i.e., he lists benefits. Benefits are the things your features will do for your prospects. Whenever you want someone to do something you must offer them benefits, not features. You might have the most spectacular carpets and draperies in town but they would provide little satisfaction if no one noticed them. The cleaner in the first statement is offering dirt removal. The cleaner in the second statement is offering personal fulfillment. Who do you think will sell more cleaning contracts?

Principal #9. HEY, I SAID, YOU TALKIN’ TO ME? Even some advertisers who manage to focus their copy on their prospects’ needs and desires find it hard to deliver their message to a receptive audience. The most fascinating ad for steam turbines will be of relatively little interest to the average corporate secretary. Be certain your message is received and read by people who are truly interested. Today, the vast accumulation of personal data has made this task incredibly easy, if you know how. Do you define your market as “one armed juggling clowns who specialize in birthday party entertainment?” If you do, I'll bet I can find you a mailing list that will reach them and the publication they read.

First, the mailing list: There are three major types of lists available:
A. The first kind of list is simply compiled information, taken from directories, phone books and motor vehicle records. The most common way of using a compiled list is to buy a geographic segment, like all the residents within a 5 mile radius of your business. This type of mailing usually does not work well at all. Another way is to segment a compiled list is by demographics (that's the fancy term for age, sex, income, race, etc.). This is a slightly better way to target prospects. For example you could specify you only want females, age 50-65, who earn $75,000 and above. But there is an even better way is to combine them using "Geo/Demo" characteristics. You can pick certain geographic areas and certain demographic characteristics that you desire. Think of your ideal prospect, the more you know about them the better targeted lists you can purchase. Comb through your customer records to find common characteristics, like region, age race and sex. If you sell business to business, you should look for common industries or SIC (Standard Industrial Classification) codes. Your goal is to “clone” your best customers!

B. The second type (and much more valuable) is called a direct response list. These are lists of people who have bought or responded to direct marketing. The people on these lists have bought something from direct response methods (mail, print ads, infomercials, etc.). This is the most specific you can get. Go to your local library and ask for the SRDS The Standard Rate and Data Services Direct Mail List Source Directory, usually in the reference section. You can get more information at: http://www.srds.com. The SRDS is a huge, four inch thick reference book with nearly every public list available for rental -- it's the bible for direct mailers.

Just glancing through SRDS you'll find lists of buyers of something similar to what you're selling. You know these people have a high interest in whatever they bought. If you're an accountant, you could rent a list of people who bought tax planning information by mail. If you're a dentist, what better list could you find for a teeth whitening offer than someone who just bought a tooth whitening product from an infomercial? What you want is a "hungry prospect," somebody who has expressed an interest in your offer.

C. There's one more list that almost everyone overlooks. It's literally a gold-mine lying at your feet. It's your own list! If you have not put all your customer's names and addresses into a database you're overlooking an incredible source of added business. This list will be the most powerful and responsive list you can use for any offers because these people already trust you and like doing business with you.

Now for that publication. Remember that massive volume in your public library, The Standard Rate and Data Service’s Direct Mail List Source? Well, right next to it (or very near) you'll find The Standard Rate and Data Service’s Newspaper Rates and Data and The Standard Rate and Data Service’s Business Publication Rates and Data and The Standard Rate and Data Service’s Consumer Magazine Rates and Data and The Standard Rate and Data Service’s Television Rates and Data and The Standard Rate and Data Service’s Radio Rates and Data. Each one contains thousands of opportunities to advertise to virtually any demographic/geographic combination you can imagine. Alternatively, Media Post at www.mediapost.com offers similar data in the comfort of your office. Truly, with this depth of data, there is no excuse for wasting a dime talking to the wrong people.

I can't leave this topic without offering an additional word of caution to small businesses, especially retailers. In all probability, you will be contacted by your local mass-circulation newspaper. They will make a compelling offer and clinch it with a very low “cost per thousand” quote (that's the average cost of reaching 1000 readers in their publication). These publications make perfect sense for commodity merchants who compete only on price. Most small businesses’ ads die in mass circulation papers. It doesn't matter how many people see your ad if a major percentage of them are disinterested for one reason or another. Remember your Unique Selling Proposition. Now find your unique media to deliver it.

Principal #10. DECK THE HALLS It's amazing that a merchant can agree to pay the outrageous rents demanded in most major cities without maximizing the visual impact of his shop. The same is true of every business that has a physical location (restaurant, office, clinic, plant or warehouse) that prospective buyers might visit. Instead of plush carpet and tasteful wallpaper, why not infuse the environment with high-energy graphics promoting your products and delivering your USP? Computer-driven ink jet printers have made the cost of these graphics insignificant, particularly in relation to the cost of the walls and windows they cover. Not using your physical plant as a promotion medium is like paying for a full page in the newspaper and leaving it blank.

Principal #11. BECOME AN EXPERT Most entrepreneurs have valuable trade or product knowledge from which their customers could benefit. As long as there is no strategic disadvantage in sharing this information the business person can enrich his customer - client relationship by offering this information at little or no cost. A secondary benefit of free information is the greater ease with which well informed customers can be served. Well presented, useful information is usually retained longer by the customer than mere ads or coupons. Frequently it is filed for future reference, along with the business name and promotional material. Inexpensive information packets can be the most cost effective long term ads you produce. Think of the ways you could fill an eight and one half by eleven inch sheet of paper with important information your customers want:

A. Recipes from a housewares retailer

B. How to Buy a Mattress from a home furnishings store. Make a grid chart of your major styles listed down one side and the major benefits across the top. Place an x where styles and benefits coincide. This works well for any product that is sold in large assortments; stereos, tennis rackets, running shoes, etc.

C. Create a set of flash cards that make a modular pocket reference library. This technique is particularly useful for travel agents who book custom tours. You can provide your clients with a customized packet of 5” x 7” cards listing spots of interest in just those areas they will be visiting. They will appreciate not having to lug heavy guide books around and they'll remember you the next time they travel.

D. A chiropractor could provide a card deck illustrating stretching exercises you can do in traffic or at your desk.

E. A craft shop could provide a card deck illustrating basic knitting stitches.

F. A sporting goods store could produce a reference card listing times and dates of local high school and college games.

Today the internet has made it possible to share your knowledge with your customers at virtually no cost to you. Make your web site the primary authority for information on your specialty. Let your customers provide the printing by allowing them to download reports as PDFs. A secondary benefit of a well stocked informational web site is a higher ranking with search engines.

Principal #12. THE WEB IS NEW MEDIA - NOT A REPLACEMENT FOR OLD MEDIA The pace of change in virtually every aspect of our lives has been accelerated by the internet and it has provided substantial improvements in the way we communicate. Still, it is not an advertising panacea. To be used effectively we must understand the benefits and short comings of this media and integrate it into our promotion plan as just another media, for that is what it is.

Having said that, I believe every serious business must have some representation on the internet, even if it consists of a single page. As a society, we have become so obsessed with the internet that not being on it is often perceived as nonexistence. However, for most businesses, the web merely gives us the ability to provide a depth of information that would be impractical or uneconomical in print. At this writing, the internet has not yet become an effective prospecting tool for new customers.

Yes, I can hear the shrieks of horror that last statement elicited from many techies and new-media devotees. What about paid-search, affiliate programs, banner ads and broadcast e-mail, they lament?

Sitting here, behind a mountain of studies on the subject, I must conclude that, to-date, none of these techniques is as effective as a well designed print campaign at driving prospects to your site. Admittedly, this could change rapidly, but today the most successful small business use of a web site is the delivery of in-depth, sales-focused data to prospects who have been driven there through other media.

The reasons are simple:
A. Paid search is too costly to be used by any business serving a limited geographic area. Consultants who are adept at organizing targeted search are beyond the budgets of most small businesses and a badly organized search results in hits by poorly qualified prospects, thus massive waste.

B. Opt-on lists, broadcast e-mail and banners generate huge numbers of inquiries that demand response. These techniques require constant management and development. Few small businesses can devote the staff to these practices.

Small business can use the internet effectively as the second stage of a two stage promotion. In the olden days, BI (before internet), two stage promotions consisted of a small space or classified ad directing prospects to write or call for more information. To close the sale, a brochure or packet of literature along with ordering information was sent to the prospect. Today, most prospects are totally comfortable receiving that second stage on the internet and even placing their order there (given sufficient security assurance).

IN CONCLUSION
I hope you have found this report useful in planning your promotional activities. At first, I was going to write 10 secrets, but found I needed more. I could go on and on, but for now, I've arbitrarily stopped at 12. I hope you will visit again in the future to see how the list has grown and hopefully profit from my newer observations.

Richard Nodine has been an award-winning creative director for Pacific Print Media for 20 years. His career also includes 20 years in various sales promotion and advertising positions with Macys department stores.


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