Selecting the Most Effective Advertising Media

How can you tell if your ads are reaching the right audience and generating the best response?

Q: Where can I get reliable response rate statistics for different advertising media?

A: I'm wagering you'd like to calculate your own, personal answer to the age-old question: "If I spend this much money on advertising, what can I expect to see as a result?"

A few years ago, a team from the Wharton School of Business at the University of Pennsylvania in Philadelphia set out to establish the definitive answer to that very question. Pepsi, Frito-Lay, Colgate-Palmolive and a host of other big companies collectively invested more than a million dollars so that Wharton might track the return-on-investment experienced by several dozen small business as a result of advertising. These businesses were scientifically monitored and measured for seven long years. The final report filled more than 2,500 pages. Only three conclusions were reached:

1. There is no direct correlation between dollars invested and results gained. In other words, how much you spend and what you can expect to see in return are not directly linked by any kind of mathematical equation.

2. Results are inextricably linked to the message. Two advertisers invest the same amount of money reaching the same target audience. One succeeds brilliantly and buys the mansion on the hilltop. The other fails miserably, receiving no response whatsoever. The difference between these two was in the message of their ads.

Ads that speak to the heart of the customer and touch a nerve are the ones that turn little companies into big companies. But few people know how to write such an ad. Most business owners approach advertising with the goal of merely getting their name out. But there is no evidence to suggest this will help you in the slightest. The Wharton study indicates that everything hinges on the message you attach to your name. Is your message predictable and, consequently, boring? Is it believable? Is it relevant to the perceived need of the reader/listener/viewer? Tempt a dog with a bowl of rice, and he'll ignore you. Put a steak in the bowl, and you'll have his undivided attention. Your prospective customers are no different. What have you been putting in their bowls?

3. Results increase with repetition. When you've identified a message that generates a positive response and you deliver that message consistently, business growth in year two will be approximately twice the growth of year one. Growth in year three will be approximately triple the growth of year one, with growth measured in dollars, not percentages. But following year three, anything can happen. Your business can explode exponentially, or it can flatten out as though hitting an invisible glass ceiling. I've seen clients grow to 70 times their original size, and I've seen clients slowly grow to only double or triple their original volume and then flatten out. The difference is in the clients, not in the ads.

The follow-up question I'm sure you're dying to ask is, "OK, let's assume we've found a message that works. Now which medium is going to give me the most for my money?" Again there's no simple answer, but I'll try to give you a frame of reference. These are the major media, with some more expensive than others. The one that's right for you depends entirely on your business.

• Outdoor advertising/billboards: These reach more people for a dollar than any other media, but are limited to a picture and no more than eight words.
• Radio: Reaches the second most people for a dollar, but cannot be targeted geographically and can only be loosely demographically targeted. But if people will drive significant distances to buy your product, or if you're selling a "we come to you" service, this is likely your best bet.
• Cable television: Offers the impact of moving images as well as spoken words. Can easily be geographically targeted. But your ad will likely look homemade.
• Broadcast television: Big prestige. Big bucks. But able to target psychographic profiles. Buy specific shows; never buy a rotator.
• Newspapers: Reach customers who are in the market to buy today. Unfortunately, people not currently in the market for your product or service are less likely to notice your ad than if it had appeared in another media.
• Magazines: Expensive, but high-impact with tight targeting. Little waste. Weakness is infrequency of repetition.
• Direct mail: Highly targeted, all the way down to the level of the individual. But shockingly expensive to do right.
• Yellow Pages: Essentially a service directory for the customer who has not yet made up his or her mind. Very foolish for retail businesses.

Building a Successful Advertising Plan

Before you can advertise effectively, you need to answer these important questions.

Q: What do you think is a better advertising plan: $2,000 in direct postcards reaching roughly 3,500 people, or $2,000 in a newspaper ad reaching 750,000 readers?

A: It depends entirely on what you say in your ad. If your impact quotient is high enough, your best bet will be the newspaper. If the direct postcards are delivered precisely to "the perfect target" (which is not very likely), then the direct-mail route is preferable.

Based on the fact that I don't know the answers to either of these questions, my guess is that neither the direct postcards nor the newspaper will work for you. My advice is that you keep your $2,000 in your pocket until you come up with an actual plan. These are the hard questions you need to answer:

1. What do you have to say that matters to your customer? I'm your prospective customer. I know you want my business, but why should I care? What's in it for me? Most ads are written under the assumption that the reader, listener or viewer has a basic level of interest and is paying close attention to the ad. But customers tend to ignore all ads that do not speak directly to them. Your first task is not media selection; it's message selection.

2. Can you say it persuasively? Most ads are ineffective because the writer was trying to say too much, include too much and be too much. Fearful of leaving someone out, these writers write vague, all-encompassing ads that speak specifically to no one. "We Fix Cars" is a terrible headline for an ad.

3. Are you speaking to a felt need? Let's say the "We Fix Cars" auto mechanic has a great deal of affection for older BMW 2002s. He knows that 2002 owners love their cars like few drivers on the road and that the only weakness of the 2002 is its evil Solex carburetor. Every 2002 owner knows this, too. So he writes the headline, "BMW 2002 Owners: Aren't You Tired of Fooling With That Solex by Now?" In the body of the ad, he talks about the fabulous new Weber two-barrel carburetor now available for BMW 2002s, raves about how it dramatically increases performance and reliability, explains that he keeps these new Weber carburetors in stock at his shop, then names the price at which he will install and adjust that carburetor for you. He closes the ad by saying, "You'll rocket out of here in a completely different BMW than the one you drove in." If a list of BMW owners in your area is available for a direct-mail card (such as the list from the local BMW club), then a direct-mail card or flier would be the way to go. But if no such list is available, the newspaper might be a second choice. In either case, you'd want to include a large picture of a BMW 2002 to serve as a recall cue and help gain the attention of your target customer.

4. How long is your time horizon? Some ads build traffic, some build relationships and others build your reputation. If you don't have the financial resources to launch a true branding campaign focused on building relationships and reputation among potential customers, you're going to have to settle for traffic-building ads until you can afford to begin developing your brand. To what degree do you have financial staying power?

5. What is the urgency of your message? If you need an ad to produce immediate results, your offer must have a time limit. This technique will simultaneously work for and against you. On one hand, customers tend to delay what can be delayed, so limited-time offers generate traffic more quickly since the threat of "losing the opportunity" is real. On the other hand, customers have no memory of messages that have expired; short-term messages are erased from our brains immediately. Therefore, it's extremely difficult to create long-term awareness with a series of limited-time-offer, short-term ads.

6. What is the impact quotient of your ad? How good your ad must be depends on the quality of your competitors' ads. A .22-caliber pistol is a weapon against an opponent with a peashooter. But aim that pathetic pistol at an opponent holding a machine gun, and you can kiss your silly butt goodbye. How powerful is the message of the opposition? If your competitor carries a machine gun, don't go where he goes. In other words, don't use the media he uses.

7. How long is the purchase cycle? How long it will take your advertising to pay off is tied to the purchase cycle of your product. Ads for restaurants work more quickly than ads for sewing machines, because a larger percentage of people are looking for a good meal today than are looking for a machine that will let them make their own clothes. Likewise, an ad for a product we buy twice per year will produce results faster than an ad for a product we buy only once a year. Remember, a customer first has to be exposed to your ad often enough to remember it, then you have to wait for that customer to need what you sell. How soon will he or she likely need it?

Not hiring a professional ad writer is often far more expensive than hiring one. If you'd like to read more about this stuff, most libraries and bookstores are full of books on advertising, including three of my own

Word-of-Mouth Marketing Can Bite Back

A lot of reputations are at stake when you give a referral--including yours. Make it count and keep your integrity.

Word-of-mouth is the most effective form of advertising--but it's not the safest. Some people approach referral marketing with an attitude that all they have to do is get to know people and referral business will simply bubble up like spring water. What they don't realize is that once trust evaporates, so does the water.

In word-of-mouth (or referral) marketing, your integrity and your reputation are on the line all the time. You can't hide behind an ad. In the referral process, you're continually transparent; you've got to do what you say you're going to do. You've got to be professional. Any flaw in your integrity becomes instantly visible to everyone you're dealing with.

When you give a referral, you give away a little bit of your reputation. While giving a good referral will enhance your relationship, a bad referral will hurt it. If the person you referred does a poor job or is dishonest, your reputation is what takes the biggest hit. Your relationship with the prospect will probably suffer, at least temporarily, and you may even lose that person as a customer.

For example, even top-flight master networkers can inadvertently pass a bad referral once in a while. I started a new company with two partners--Mike A and Mike B. Knowing that we'd be doing a lot of business printing, Mike A referred one of his clients, who owned a business-printing company, to Mike B. A deal was made, but before long it became apparent that the vendor was charging for services that hadn't been included in the quote. Mike B called Mike A and complained. Mike A called the business printer and complained. The vendor called Mike B and apologized for neglecting to reveal hidden charges in the contract. Mike B told him, "I'll accept your apology, but I think the bigger apology needs to go to my partner, because he's the one who referred you. You've done him a lot more damage than you've done me."

Since that time, we've done no business with that business printer and would never consider referring him to anyone we know. It was later learned that the vendor had cheated other people Mike A had referred him to and that, like termites, the damage to Mike A's reputation stayed hidden until it came to light in his own business referral. In the end, Mike A greatly mitigated the damage by contacting and apologizing to each of the people whose business had been harmed by the unscrupulous vendor he'd referred them to. In this way, he was able to minimize the damage to his own networking relationships.

As you can see, the biggest risk in this referral was to the referral giver's reputation and business relationships. Many people hired this printer without a bid process because of Mike A's reputation and clout. That's why referral marketing is dangerous, and why the referral giver owes it to himself and others to know as much as possible about the vendors he's referring to others. Take the time to get to know the people you're referring. Make sure they have integrity; if they don't, your reputation is at risk. Here's another important point: Never give good referrals to people who don't want them or can't handle them with integrity and professionalism.

Similarly, if the person being referred assumes he's got carte blanche because he's a referral--a friend of a friend--he can do himself permanent damage by performing poorly or dishonestly. When your business depends on word-of-mouth, you can't hide behind a mass advertising campaign and bank on plenty of new customers replacing used-up, disgruntled ones. Word-of-mouth is always working--if not for you, then against you.

The same thing goes for the prospect. If you're expecting to get a break--say a special price or a freebie--or if you try to take advantage of a situation in which a friend referred you to a vendor she knows, there's a strong chance you're damaging the vendor's relationship with your friend by making her look bad. Rather than refer other vendors to you and risk damaging those relationships, chances are the referral giver is going to avoid you in the future.

As you can see, everybody in this three-way referral relationship is in a fishbowl. Everything you're doing or communicating, everything you're displaying, is part of your word-of-mouth message. Dishonesty, incompetence and carelessness quickly become apparent to all. In traditional advertising, a graphic designer can create your image--your brand. In word-of-mouth marketing, your image is not only what's been created for you, it's also the way you come to the table--even the way you behave in roles outside of business. For example, if your child's Little League coach is timely, well-behaved, professional and a good leader, you'll be favorably disposed toward giving him your business when you learn he's also a respected attorney. His professional demeanor outside of business is likely to win him clients. Taking a similar approach in life is likely to win you business, too.

Even for someone who's honest, skilled and dedicated, word-of-mouth marketing may not be the best choice. If your business can ring up plenty of sales based on your customer service reputation alone, if you're uncomfortable spending the face time needed to maintain good networking relationships and if you don't want to do marketing yourself--traditional advertising probably should be your choice of marketing strategy.

Remember, word-of-mouth is always working; it's just not always working for you--especially if you're a jerk

Finding a Competitive Advantage

Other companies like Veritas Prep have taken on established industries:

Apple: The iPhone fused the mobile phone with the computer and forever changed the marketplace, dethroning Motorola's RAZR as the coolest phone ever (though it's still the all-time bestseller).

Beatport: This little-known but visionary retailer, which sells dance music online, quickly distinguished itself by offering CD-quality WAV files of songs without the digital rights management sharing and burning restrictions found on iTunes.

Forever 21: This young women's discount emporium has become adept at taking runway fashion and street trends and turning them into easy-on-the-pocketbook looks. Dance-music filled, display-happy retail spaces make shoppers feel more like they're on Rodeo Drive than in a Kmart.

Google: Google is supplanting Microsoft as the globe's software leader, and it's doing so with free applications such as Gmail and Google Docs, stored in the web's "cloud." Google offers freedom but at the cost of privacy.

Netflix: This web-based upstart took on brick-and-mortar video rental stores such as Blockbuster and won with its no-penalties policy, low monthly fees and quick mail-based turnaround.

Pinkberry: Though the concept was a copy of an overseas trend, Pinkberry was the first with the flavor in the United States. It has helped revive a moribund frozen yogurt retail scene that hasn't seen this much action since the 1980s.

UFC: Ultimate Fighting Championship's successful take on rough-and-tumble mixed martial arts wasn't always a cash cow. UFC's owners didn't see a dime until the 2005 debut of reality show The Ultimate Fighter. Now MMA is challenging boxing as America's favorite bout.