“Getting the Most from Your Print Advertising Dollar”

Lord Leverhulme, who founded Unilever Corp. and Lever Brothers, once declared that he knew that half of all the money his companies spent on advertising was wasted. His problem was that he didn’t know which half. While his multibillion-dollar company could afford to waste some of its huge advertising budget, you probably have to be a lot more careful with your ad dollars.

We can’t guarantee that the steps outlined in this Quick Read will remove all the waste from your advertising budget. But what you learn here will help you make your ad dollars work as hard as you do.

In this Quick-Read you will find:

• Tips on how to establish an advertising budget.
• How to select the media to carry your advertisements.
• How to create a budget for your ad program.
• How to track the effectiveness of your ads.

SOLUTION [top]

When planning your advertising, ask yourself three questions. What is the message you want to communicate? What audience do you want to reach? What are the best mechanisms to carry your message to your target audience(s)? Knowing that, how can you budget for it?

1. Articulate your message. Often this will be the headline of your ad, brochure, or direct-mail piece. A mistake commonly made by small businesses is to focus on the function of the product or service they are selling: "Now: Two Megaflop Capacity!" It’s almost always more effective to spotlight a user benefit: "Now: Clean Twice As Fast, With No Scrubbing!" Identify the "unique selling proposition" that makes your product more appealing to your customers than your competitors’ products, and focus your message on that unique selling proposition every time.
2. Identify your audience. Think about the characteristics of your customers. What industries are they in? What part of the country are they in? Are they early or late adopters of new technology? Who makes the purchase decision? Do they buy direct or from a distributor or retailer? Do they buy your product routinely or because they have a problem? Are they price sensitive? Are they familiar with your product or service, or do you have to introduce it to them?

   Do you have a means of identifying past customers? Satisfied customers are hot prospects for future sales.

3. Select your delivery method. What media do your targeted customers follow? If your target audience regularly reads industry magazines or other publications, print advertising is a logical option to consider. If your product must be demonstrated, exhibiting at trade shows might be more effective. If your message is lengthy, or your target audience can’t easily be reached through space ads, you may want to use direct mail.

Look at what your competition is doing. If they regularly run ads in a given publication, or appear at trade shows, it’s probably because those tactics work for them. Place your ad in the publications where your reader expects to see it. Computer ads, for example, work best in magazines that carry other such ads.

Three methods for setting ad budgets

1. The most widely used is to allocate a percentage of sales or profits — either past or estimated future results. Paint retailers typically spend 2.3% of sales on ads, while health services average 12%. If you have access to a business reference collection at a college or public library, you can find ad/sales ratios for many industries and individual companies in Advertising Ratios & Budgets (Schonfeld & Associates, annual in June).
2. Budget a fixed sum for each unit of product or service you sell, such as $1 per case, $6 per ton, or $4 per billable hour.
3. The most difficult method is to identify your objective, such as "increase sales to new homeowners within a 15-mile radius by 25%," and estimate what you will have to spend to accomplish this.

   Caveat: Tying your advertising budget to the rise and fall of sales could tempt you to reduce your advertising when sales are down, an action that may cause sales to fall even further. Keeping your advertising budget strong when others in the industry are pulling back, may boost your market share when the customers start buying again.

You may have to spend more than average for your industry if you are launching a new product or company. You may also discover that the budget you want to spend is more than you can actually afford, so you must trim your advertising "wish list."

Crucial to managing your ad budget is tracking the success of your ads. "Key" each ad with a code number or other identification. Offer a discount to customers who bring in the ad or provide the code, or have them reply to "Department 17" or "extension 12," changing the number for each ad you run. Make sure your sales people and receptionist ask customers where they saw your ad, and keep a simple spreadsheet to track response rates.

If an ad works in one publication but not another, drop the nonperforming publication. If ads with one headline or offer generate more response than another, drop the less productive ad. Use both tracking and experimentation with different publications and ad copy to continually refine your ad program and to maximize the return on your ad budget.

REAL-LIFE EXAMPLE [top]

Werner Woods is a Chatsworth, Calif.-based manufacturer of teak garden and yacht furniture. It distributes nationally, through retailers that specialize in patio furniture and marine equipment.

Joe Werner, the company’s president, and Monica Werner, his daughter and the company’s director of marketing, advertise only to dealers, not to consumers. "Our dealers are vital to our success," says Monica, "and we want them to know we are totally behind their success. That’s why all of our advertising is directed to them." Even the company’s Web site, www.WernerWoods.com, reinforces this theme. Consumers who request information online are referred to a specific dealer. The Web site does not list Werner Woods retailers, she explains, because that would encourage consumers to shop among several for price.

The company carefully researched the trade publications read by its two categories of retailers. It selected three in the patio furniture market and two in the marine field. It ran a series of test ads; each keyed so Monica could track the responses. After analyzing the results, the company funneled most of its ads into one publication in each market, with seasonal ads in a second patio furniture magazine.

Trade shows are important for Werner Woods; they help the company renew ties to existing dealers and meet new ones. Monica does pre-show mailings to build booth traffic, carefully collects leads, and follows up with calls, catalogs, and literature.

Werner Woods has carefully honed its advertising message — quality furniture and a dedication to its dealers — and continually refines its selection of advertising media. The result, says Joe Werner, has been "dramatic growth year after year, far beyond our initial projections," on an advertising budget much smaller than that of its mass-market competitors.

DO IT [top]

1. Think carefully about the audience for your advertising and the unique selling proposition you want to communicate. Emphasize the benefits of your product or service in your ad.
2. List the characteristics of your audience. Aggregate them by location, demographics, industry, interests, and so on.
3. Analyze the ways you can communicate your message to your audience. Magazines, newspapers, Yellow Pages, or other media are a logical choice, but consider direct mail, a Web site, e-mail, press releases, trade shows, and other options.
4. Study what your competitors are doing. Emulate their best ideas, and learn from their mistakes.
5. Calculate an ideal advertising budget, and compare that to what you can afford. If you know which media have the highest likelihood of success, put most of your money there. If not, test several approaches, and then make your decision. Remember that ad rates may be negotiable. Ad agencies can provide valuable advice and service at no cost if you buy ads through them.
6. Key and track each ad, direct-mail piece, and trade-show lead to see which ones pay off for you. Fix or cut back on those that don’t work, and use more of those that work well.
7. Don’t get complacent, and don’t stop experimenting. Ads that work today may grow stale and have to be modified or replaced. Reserve a portion of your budget for new ideas. Test different ad copy, new designs, different media, new customer categories — anything that can expand your customer base or generate additional business from your present customers.
8. Look for an advertising partner. Retailers and wholesalers often share ad copy and costs.
9. If you’re not marketing on the Web, get started with ideas from the Quick-Read "A Few E-Commerce Strategies."

RESOURCES [top]

Books

Advertising Manager’s Handbook, 2nd edition, by Robert W. Bly (Prentice Hall, 1999).

Internet Sites

"Small Business Marketing: Evaluating Your Advertising Results," excerpted from Managing a Small Business: A Comprehensive Guide and Toolkit to Profitably Manage Your Business (Liraz, 1997). Bizmove.com.

"Advertising," by Edmund A. Bruneau. U.S. Small Business Administration, 1994?.

Plan Your Advertising Budget. Canada Business.

Marketing Strategies for the Growing Business, by Frederick H. Rice. U.S. Small Business Administration, 1991.

Data Center. Advertising Age.

Writer: Alex Auerbach