General Advertising Principles

Ads primarily create product awareness, sometimes product knowledge, less often product preference, and more rarely, product purchase. That’s why advertising cannot do the job alone. Sales promotion may be needed to trigger purchase. A salesperson might be needed to elaborate on the benefits and close the sale.

What’s worse, many ads are not particularly creative. Most are not memorable. Take auto ads. The typical one shows a new car racing 100 miles an hour around mountain bends. But we don’t have mountains in Chicago. And 60 miles an hour is the speed limit. And furthermore I can’t remember which car the ad featured. Conclusion: Most ads are a waste of the companies’ money and my time. Most ad agencies blame the lack of creativity on the client. Clients wisely ask their agencies to come up with three ads, from mild to wild. But then the client typically settles for the mild and safe one. Thus the client plays a role in killing good advertising. Companies should ask this question before using advertising:

Would advertising create more satisfied clients than if our company spent the same money on making a better product, improving company service, or creating stronger brand experiences?

I wish that companies would spend more money and time on designing an exceptional product, and less on trying to psychologically manipulate perceptions through expensive advertising campaigns. The better the product, the less that has to be spent advertising it. The best advertising is done by your satisfied customers. The stronger your customer loyalty, the less you have to spend on advertising. First, most of your customers will come back without you doing any advertising. Second, most customers, because of their high satisfaction, are doing the advertising for you. In addition, advertising often attracts deal-prone customers who will flit in and out in search of a bargain.

The advertising agency’s mantra is: “Early to bed, early to rise, work like hell, advertise.”

But I still advise: Make good advertising, not bad advertising.

How should you develop your advertising? You have to make decisions on the five Ms of advertising: mission, message, media, money, and measurement.

The ad’s mission can be one of four: to

• Inform
• Persuade
• Remind
• Reinforce a purchase decision

With a new product, you want to inform and/or persuade. With an old product, like Coca- Cola, you want to remind. With some products just bought, you want to reassure the purchaser and reinforce the decision.

The message must communicate the brand’s distinctive value in words and pictures. Any message should be tested with the target audience using a set of six questions (see box).

The media must be chosen for their ability to reach the target market cost-effectively. Besides the classic media of newspapers, magazines, radio, television, and billboards, there is a flurry of new media, including e-mail, faxes, telemarketers, digital magazines, in-store ad vertising, and advertising now popping up in skyscraper elevators and bathrooms. Media selection is becoming a major challenge.

A company works with the media department of the ad agency to define how much reach, frequency, and impact the ad campaign should achieve. Suppose you want your advertising campaign to deliver at least one exposure to 60 percent of the target market consisting of 1,000,000 people. This is 600,000 exposures. But you want the average person to see your ad three times during the campaign. That is 1,800,000 exposures. But it might take six exposures for the average person to notice your ad three times. Thus you need 3,600,000 exposures. And suppose you want to use a high-impact media vehicle costing $20 per 1,000 exposures. Then the campaign should cost $72,000 ($20 × 3,600,000/1,000). Notice that your company could use the same budget to reach more people with less frequency or to reach more people with lower-impact media vehicles. There are trade-offs among reach, frequency, and impact.

Next is money. The ad budget is arrived at by pricing the reach, frequency, and impact decisions. This budget must take into account that the company has to pay for ad production and other costs. A welcome trend would be that advertisers pay advertising agencies on a pay-for-performance basis. This would be reasonable because the agencies claim that their creative ad campaigns will increase the companies’ sales. So pay the agency an 18 percent commission if sales increase, a normal 15 percent commission if sales remain the same, and a 13 percent commission with a warning if sales have fallen. Of course, the agency will say that other forces caused the drop in sales and even that the drop would have been deeper had it not been for the ad campaign.

Now for measurement. Ad campaigns require premeasurement and postmeasurement. Ad mock-ups can be tested for communication effectiveness using recall, recognition, or persuasion measures. Postmeasurements strive to calculate the communication or sales impact of the ad campaign. This is difficult to do, though, particularly with image ads.

For example, how can Coca-Cola measure the impact of a picture of a Coke bottle on the back page of a magazine on which the company spent $70,000 to influence purchases? At 70 cents a bottle and 10 cents of profit per bottle, Coke would have to sell 700,000 additional bottles to cover the $70,000 cost of the ad. I just don’t believe that ad will sell 700,000 extra bottles of Coke.

Companies must try, of course, to measure results of each ad medium and vehicle. If online promotions are drawing in more prospects than TV ads, adapt your budget in favor of the former. Don’t maintain a fixed allocation of your advertising budget. Move ad money into the media that are producing the best response. One thing is certain: Advertising dollars are wasted when spent to advertise inferior or indistinct products. Pepsi-Cola spent $100 million to launch Pepsi One, and it failed. In fact, the quickest way to kill a poor product is to advertise it. More people will try the product sooner and tell others faster how bad or irrelevant it is.

How much should you spend on advertising? If you spend too little, you are spending too much because no one notices it. A million dollars of TV advertising will hardly be noticed. And if you spend too many millions, your profits will suffer. Most ad agencies push for a “big bang” budget and while this may be noticed, it hardly moves sales.

A major limitation of advertising is that it constitutes a monologue. As evidence, most ads do not contain a telephone number or e-mail address to enable the customer to respond. What a lost opportunity for the company to learn something from a customer!

Article added at: 11.08.2006 by Emanuel Julo