Look Big Spend Little Advertising On A Budget By Tom Balek

As consumers, we sometimes hate advertising. Other times, like Super Bowl Sunday, we love it. We all know advertising is absolutely pervasive, totally unavoidable, and becoming more so every day. So mostly we use what we want and try valiantly to ignore the rest.

As business people, we know that advertising is essential to success. Stuart Britt said, “Doing business without advertising is like winking at a girl in the dark. You know what you are doing, but nobody else does.” Large businesses devote substantial resources — people, money, and creativity — to their advertising programs. Of course, they have the resources to do it. It raises the question: are they big companies because of great advertising, or do they have great advertising because they are big companies?

Actually, I’m not too concerned about the big companies. They seem to be doing fine. But as a small business owner, I know how challenging it can be for the rest of us to advertise effectively, without the benefit of trained marketing staff, bulging budgets, and — most of all — the time it takes to manage it all. So you big guys, it’s okay if you skip ahead to the next article. This one is for us little fish in the big automotive sea.

How much advertising is enough?

Operating a business is all about bringing more dollars in the front door while controlling the dollars going out the back door. That makes the advertising budget decision about as difficult as it gets. Advertising always shows up in the expense section of your profit and loss statement, never in the revenue section. And for the most part you will never know how much revenue is a direct result of your advertising.

It’s tempting to set your ad budget based on what you feel you can afford, or perhaps as a percentage of revenues. But if you are a newcomer in your market, the survival of your business may depend on aggressive advertising spending — perhaps even more than your stomach says you can “afford.” It is one of the risks a new business takes in a highly competitive environment. On the other hand, a business with adequate market saturation or limited production capability can squander profits on unnecessary advertising. A more productive approach is to determine the specific needs and opportunities of the business first, establish goals, and then direct advertising spending toward meeting those specific goals. Occasional “institutional” advertising featuring your entire business or product line is good, but ad dollars targeted at a specific items are usually most effective. Plus, it’s easier to measure advertising performance for specific goals. If the goals are soon met or exceeded, you can be pretty sure your ad dollars were well spent. If not, a quick adjustment is in order.

Why is advertising so expensive?

Because you don’t get instant gratification from buying advertising, it always seems expensive. When it comes to buying ads, I agree with Mick Jagger: “You can’t always get what you want.” Those glitzy, professional productions on prime time television are just not a business reality for all of us. But, like Mick says, you can “get what you need.” It is surprising how far ad dollars can be stretched with a little effort, planning, and negotiation.

Here’s a secret your local ad salesman won’t tell you. Unlike most of us, media companies don’t have a lot of direct costs associated with their product. When they sell another advertisement, it doesn’t necessarily increase their costs by any set amount. Every publication can add another page, or make room for another ad. Every radio station can find time for one more commercial. So every dollar of advertising sold is incremental to their profit. And that makes some media companies quite negotiable.

For example:

My local newspaper offers a very inexpensive ad program to new advertisers for a year. When my first year expired, I was not about to continue the same program for more than double the rate, so I cancelled. A short while later, I helped my account rep understand that my first year’s ad contract, even at a reduced rate, was surely more profitable to the newspaper than the big goose-egg they would earn for the second year. I’m happy to report that I am still paying the “newcomers” rate.

I became increasingly unhappy with a radio station as the frequency of my news group “rotation” ads diminished, driving up the unit cost. Each time I complained, the station responded by proposing a different ad package at an even higher cost. Wanting to stay in that radio market, as a last resort, I wrote a letter to the station owner/manager: “To continue advertising on your station I will need this many ads, at this price in these time slots” (less than half the cost of his proposals). He agreed without hesitation.

Knowing that ad production is the primary direct cost in media advertising, I demand (and receive) discounts on print and radio ads for doing my own production. More on this later.

You must be careful buying discounted advertising. Sometimes the best source is just going to cost more. If it isn’t worth buying, any price is too high.

A significant cost containment tool for retailers is the use of co-op funds. Accessory manufacturers are anxious to have their products promoted on a local and regional basis, and are more than happy to share the cost. Unfortunately, in many cases warehouse distributors are charged with administering ad co-op programs, and they are sometimes not interested or skilled in marketing. Better results are obtained when retailers and manufacturers work together closely. If you are a retailer, try calling your top five manufacturers today and ask about co-op advertising. It may be the most profitable activity of the day. And if you are a manufacturer, please consider stepping up your co-op programs.

Getting It Right

It takes time and effort to direct an advertising plan, even for a small company. Busy owners and managers sometimes delegate advertising planning, design, and other decisions to an outsider, often the ad salesman. Occasionally this works okay, but I have seen too many disasters to encourage this dereliction of management duty. I recently had the unhappy task of informing a business-owner friend that a print ad for his upscale store had been running for three months with the tag line “Say you seen it here.” I wonder if students who fail fifth-grade grammar are automatically enlisted as ad sales people. One local radio station is especially challenged when it comes to creative ad copy. It makes me shudder when I hear five or six consecutive ads pitching “for all your needs” (for all your plumbing needs, for all your insurance needs, for all your hardware needs, etc.).

That said, I don’t believe it takes a master’s degree in marketing to produce an effective advertisement. You know your business, customers, market, and products better than anyone else. You know the purpose of the advertisement in the context of your business plan. With that knowledge and a little creativity you can produce very successful ads on your own. Here are some tips to make the task easier:

Keep it pithy — viewers will not spend their valuable time reading a lot of copy. A picture is worth a thousand words. Use bullet points rather than sentences, and direct customers who want more information to your Web site.

Don’t offend — remember that your audience includes all genders, ages, ethnicities, abilities, and personalities. Humor is great in advertising, but be careful.

Repetition is good — your logo and tag lines must always be the same. Stick to specific color schemes, fonts, or audio clips to reinforce your identity with your audience. Brand and logo awareness and reinforcement is key - even my dog demands an ice cream stop whenever we drive by a set of golden arches.

Variety with repetition is even better — I believe in using a “shell” for both print and radio ads, where some content is always the same, but other content is always fresh. This provides the reinforcement value of an institutional ad along with the freshness of a “what’s new” ad. Using a variety of media types, locations, markets, and programs is a little more work than sticking with the same old routine, but there is a definite payoff.

Do-It-Yourself Ad Production

Remember when the cost of preprinted forms was a major item in every company’s administrative budget? Computers have made the use of preprinted forms largely obsolete, at a significant savings. And the same can be true of advertising production costs. You or someone in your organization probably has the computer skills necessary to produce your own print and radio ads. Not only does this entitle you to discounts, but it also gives you much greater control over the content, quality, and timeliness of your ads.

Using Photoshop (or similar) art software, you can create and save an ad “shell” featuring your logo and repetitive business information. Then for each new ad you fill in the specific information, size the image appropriately, save the file in jpg or pdf format, and e-mail it to the publisher or printer.

The same approach can be used for radio ads. It’s incredibly easy to write a script, plug a microphone into your computer, and record your own ad. You then just save the file in mp3 format and e-mail it to your radio stations. I’m a weekend musician, so it was simple for me to record and mix my own background theme music — you probably know someone who could do this for you. I use a “shareware” audio program to record new ad scripts over the background music to make polished, professional-sounding ads in minutes — and at no cost.

Greasing the Skids

Love it or hate it, advertising is not going away. It’s a necessary component of our daily business lives. The truck and SUV accessories industry is still quite young, with a big story to be told.

Leo Kelmenson called advertising “the lubricant for the free-enterprise system.” And those of us operating small retail and manufacturing businesses can sure use a little less friction!