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I’m always amazed by how often one of the first areas cut when a business is looking to save money is advertising / marketing. Henry Ford perfectly sums up why this is a case of ‘penny wise, pound foolish.’

The problem is that advertising can, and should, lead to more sales, so stopping it runs the very real risk of killing the sales pipeline, leading to even greater problems for the business.

While many people like to quote the 19th Century retailer, John Wanamaker, who said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half,” when justifying cutting advertising across the board, the reality is that a business should know what the results of different campaigns are and be focusing on the profitable areas all the time. In fact, an untargeted approach is more likely to follow the Pareto principle of 80% of sales coming from 20% of the effort (read: advertising).

Successful businesses segment their customers and track their spend (and lifetime value). They understand their Ideal Customer Avatar (ICA) for different segments and target their marketing and advertising at these ICAs, recognising the need for a different approach for each – some will need a clear ‘features and benefits” approach, while others might need something that appeals more to their emotions. Understanding the different characters and responding to their needs not only increases the effectiveness of the advertising and marketing, but reduces overall costs, too, as wastage is minimised.

If costs are still a concern, a business can look to reduce frequency a little, for a time, but should certainly not stop marketing and advertising. Rather, they should focus more narrowly on their most profitable segments, reduce advertising frequency somewhat (not much!) and increase their focus on PR to make up for less advertising – after all, PR is essentially free, apart from any costs of creating the articles.

And, of course, those businesses that have been less involved in the digital marketplace need to look carefully at how to maximise their spend and reach through tools such as social media, blogs, and the like, rather than more traditional channels. Given the digital channels can effectively reach their ICA, this can reduce cost while not impacting reach or returns.

The common response of stopping advertising and marketing can lead to a ‘death spiral’ of reduced sales, further cost reductions, and so on. Focus is key in difficult times – a focus on customers and on the top line to keep those sales as high as possible.


#BusinessFitness #Advertising #Customers #ICA #LifeTimeValue #Marketing #Profitability #Recession #Sales #QOTW 


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