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Retailers and
manufacturers send me tons of emails discussing the difficulties
they face in the scrapbook business today. Of course, when I
get these messages, I simply call each sender and ask a few
questions. One of my first questions to them is, “How much are
you spending on your advertising as a percentage of sales?” For
both retailers and manufacturers, it takes time to come up with
a figure, but it usually works out to be just over 1%. So then I
ask, “Do you think that is enough to spend on the lifeblood of
your business?” The answer is almost always, “I don’t really
know!”
That’s the
funny thing about advertising. Those who really do it well by
creating great call-to-action ads and by spending enough to get
ample reach and frequency know that it works. But they also say
that advertising is like kissing someone through a picket fence:
You have to do it just right to get the desired effect. The
point is simply that good advertising is not easy and just when
you think you have it right, everything changes.
For
starters, you must have the right merchandise at the right time
for the right price. You then have to select the most
appropriate marketing vehicle with an effective message to
attract potential consumers. That’s six points right there that
have to be on target. Of course, you also have to spend the
right amount of money, have the right store signage and the
right displays. Now we have nine points that must be right for
an ad to pay off big.
Consider
this; advertising is like a Rubik’s Cube. All the sides have to
be lined up perfectly if you are going to solve the puzzle. If
you are a retailer or manufacturer, solving the advertising
puzzle is everything.
For
retailers, advertising is easier than it is for manufacturers.
You run an ad and if it does not work, you know something is
wrong with one or more of the nine points mentioned previously.
Fortunately, if you get half of the points right at least the ad
will produce measurable results. For manufacturers, the
advertising challenge is often harder because so much of the
advertising is limited to consumer magazines. Magazine ads are
not the best vehicles for a call that requires action right here
and now. Consumer magazines offer great ways to build an image,
but are not usually the best media for building revenue.
When
revenues tighten, however, even manufacturers start to question
their ad decisions, often asking, “Is this ad we’re running
increasing our revenues?” If it is not, then it is time to think
about what a call-to-action ad should look like, where it should
run, and how an ad can prove itself through a measurable
response.
If you’re
not spending 5% of your revenues on advertising, your business
most likely is not growing and is probably not profitable. Now,
there are exceptions to every rule, but very few when it comes
to spending the right amount of your budget on ads.
You can
learn a lot about the nature of advertising in your own market
by looking at ads that make you want to buy something yourself.
Look at the products you have purchased as a result of good
advertising. They were the right product at the right time for
the right price, and you were most likely the target customer
for those retailers. To run an effective ad, those retailers had
to do research to find out what TV shows you watch or which
newspaper you receive to put their message in front of you. If
you also committed to something like a “this-weekend-only”
call-to-action ad, it was because everything else was right
about the promotion.
Take for
instance the infamous 40% off coupons. We might not like them
but everyone in this industry knows consumers do. Your consumer
base is looking for good deals and real sales events. They want
the very same thing you do, to get the most out of your money
for yourself and your family.
Unless a
retailer has an incredible store location, which few retailers
can afford, no retail business today can survive over the long
haul on 1% advertising. The point cannot be stressed enough, if
you’re not spending 5% of your revenues on advertising, your
business model is probably not sustainable in terms of producing
real profits. Even successful advertisers must constantly adjust
their messages, media buys and product offerings to reach their
different consumers, and, even more importantly, the kinds of
consumers they would like to have.
Manufacturers and retailers should be teaming together to reach
all potential consumers. Successful manufacturers have examples
of great retail-oriented ads to provide their retailers, which
will move their products within those retail stores. At the end
of the day, the world’s greatest expert on selling a
manufacturer’s products and brands at the retail level is the
manufacturer. For example, Nike is the worldwide authority on
selling Nike products as is GE on GE products, Whirlpool on
Whirlpool brands…Panasonic, SONY, Tommy Hilfiger, Simmons, Levi,
Liz Claiborne, Rolex, Jockey, Armstrong, Betty Crocker, Gerber,
Osh Kosh, Fruit of the Loom…you get the picture.
So, what’s needed now, within the
industry? Manufacturers and retailers need to work together
block by block, city by city, and state by state using
advertising to convert consumers to particular retail stores and
specific brands.
Do you have
a great retail ad that fulfills all nine of the magic points
outlined in this article? Maybe you have an ad that did not
work, and now you know why. Send them to me via email and we
will create a free website for the industry that will highlight
the good and the bad of the ads, making them available as
resources for everyone. Often, we can learn as much from what we
do not execute well as from what we did perfectly. Manufacturers
can also send me the ad programs they have developed for
retailers so I can sing your praises to the rest of the
industry.
I believe the
more we can share with each other, the faster all of us can move
together with greater purpose. Sharing our strikeouts and
homeruns is part of what SMART business is all about!
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