Marketing 101: Advertising, or “The Wishing Well”

As I noted yesterday, promotion for a product should not begin too far in advance of the product’s availability. And yet many publishers begin promoting their products years in advance of the product’s scheduled release.

I see this all the time in the comic book industry, where publishers form and announce books years before they actually manage to get them developed. In fact, I’ve been guilty of the same thing with my upcoming book, Minus World, though I have at least only talked about the book and not gone to the trouble of advertising it, as many publishers do!

I would suggest that it is best to begin promoting a new book no more than six months before it is available, and even then only if it is a title with a certain release date. It is not wise to promote the product as soon as the first chapter or page is turned in unless it’s something exceptionally popular (like Harry Potter or the comic book adaptation of Stephen King’s The Dark Tower) and warrants the interest. Of course, there are always exceptions to the rule, but when a product is new or unknown, publishers generally enjoy more success promoting the item as “the latest, greatest thing that came out of nowhere” than as “the little engine that could.”

One area where many publishers are wishy-washy comes in the realm of advertising. I’m not sure why; anyone who has been in marketing for even a short period of time knows that advertising simply does not work for most products, regardless of how much money is put into it. People who sell advertising for a living will tell you that it works, but in my experience, putting money into advertising is like standing in front of a wishing well and shoveling money inside”” and it generates about the same result.

“But advertising works!” you might be saying. “I know it works! I’ve seen it work!” As have I, for certain types of products:

Advertising seems to work very well for convenience products, like fast food sandwiches, candy bars and toothpastes, where people are always looking for something new to shake up the monotony of their daily routines.
Advertising seems to work well for niche products featured in niche sources — a line of premium hiking shoes in a backpacking magazine, for example, or a set of extra-durable wheels for rollerblading enthusiasts.
Advertising seems to be quite successful for self-help pharmaceuticals, snake oils and remedies, generally because people know very little about these products and feel more confident about them once they are “informed.”
Advertising also seems to work for those “get rich quick” schemes or any other time that someone can convince you that you’re going to save money by spending money (such as eating off McDonald’s value menu, shopping at Wal-Mart for “Everyday Low Prices” or buying a camcorder on sale at Best Buy).

You will notice, however, that I’ve excluded at least 90% of consumer products and services from the list because, quite honestly, advertising does little or nothing to help those products sell. Few people watch a Coca-Cola or Pepsi Cola commercial and immediately rush to consume that product; that decision is made at the point of purchase, and it will be made more on the basis of price and availability than it will be made because of advertising. Likewise, I suspect that few people who watch car commercials are persuaded to go out and buy a new car just because they saw a slickly produced commercial for it. In fact, unless the car has some distinguishing feature, most people won’t even remember the content of the advertisement beyond the name of the manufacturer.

“Concept” commercials for retail chains like Wal-Mart, Home Depot, Target or Macy’s, which promote the quality and/or value of the retail chain, are likewise ineffective unless they can point to some specific promotion or event that will draw customers in. Commercials for chain restaurants will have little effect on consumer behavior unless they are promoting something of value, like a high quality meal for $7.95 or something else that spurs customers to consume. Rather, the business trends in retail chains and restaurant chains are influenced by factors outside of the realm of promotion, like location, customer service, quality, and value.

Print advertising, like coupon sheets, sales sheets and direct mailings, can be effective, if consumers actually read them. But newspaper sales are constantly declining, and most consumers regard direct mail ads as “junk mail” and immediately discard them. And once again, these ads must offer something of value in order to entice consumers; advertising regularly priced products will not entice consumers to spend money unless those products are difficult to obtain. Again, price and availability are the key factors.

Note: Coupons, sales sheets and direct mailings actually fall under the category of “sales promotions” and not advertising, if you want to get technical. I included them because consumers perceive them as advertising. Marketers actually classify them differently because unlike advertising, they can be tracked.

To make things even worse for the world of advertising, since the 1980s, consumers have begun to increasingly develop what is known as “advertising blindness,” where they learn to selectively block advertising messages, particularly in print and online media. Most people, when reading a newspaper or magazine, only read an advertisement if it catches their eye, and many will stop reading it as soon as they realize it’s an ad. That’s why ads have to be big and bold, with skimpy content and flashy imagery; it’s the only way to ensure that consumers actually pay attention to it. On the web, “nuisance” ads, moving/flashing ads and deceptive text-based ads have sprung up because they are the only effective way to distract readers’ attention. And only a small percentage of these ads are legitimately clicked through by consumers.

Why do companies spend so much time and money developing ads if they do not work? Once, there was a time when advertising really did work, hitting its peak in the 1940s and ’50s as mass media became prevalent. During that time, people weren’t used to being bombarded with information and entertainment, nor did they have dozens of products available for every conceivable category. Advertisers were quite successful not only at promoting products, but also at convincing people that certain brands were superior to others. Advertising was, at the time, probably the most practiced activity in the marketing process, and many media sources appeared to take advantage of the high demand for ad space.

But time has moved forward, and things have changed. The mass media no longer reaches a mass audience. Media has become diversified and specialized thanks to things like specialty magazines, cable television, and the Internet. 50 years ago, everyone watched network television, because that was all there was to watch. Now, network television is struggling to stop the bleeding of viewers over to basic cable and premium cable, and television watching in general has declined among the population because so many other alternatives (home theaters, video games, online video, and so forth) exist. This is wonderful for advertisers who want to reach a niche market, but it’s tough for advertisers who want to reach the mass market. Advertisers are also greatly worried about DVR technology, since it allows consumers to skip commercials.

Many advertisers believe that they have a special power to influence consumers with their advanced skills in persuasive communication. But they don’t. In fact, most new products fail, despite the fact that they are heavily advertised. Examples abound, but one that sticks out most in my mind happened about 15 years ago, when Pepsi decided to introduce a clear cola called “Crystal Clear Pepsi.” Pepsi has a crack marketing team, and they put together an amazing ad campaign that hit every level of media. They were praised by critics for the excellent way they pushed the product. And yet once the buzz died down, the product vanished off shelves because consumers didn’t want a clear cola. All that advertising, as good as it was, was a colossal waste of money.

Advertising today has to go to extremes to gain consumers’ attention. So, it either tries to shock (with risquÃ© or blaring material), annoy (by being flashing, repetitive or ugly), deceive (by making ridiculous claims or by showing things unrelated to the product) or entertain (often with well-crafted humor). A good example are the commercials for the product “Head On,” a questionably effective topical pain reliever with an ad that repeats the phrase, “Head On, apply directly to forehead” over and over. This ad was despised by consumers, but lauded by critics for being one of the most effective pieces of advertising ever produced. Analysts suggested that though the ad annoyed people, it got the product stuck in their head so that they were likely to give it a try.

The truth is, there is no proven, consistent correlation between advertising and sales. It is impossible for anyone to say that for x dollars spent on advertising, y products will sell. There’s not even a way to create a model for this, because what works for one product generally does not work for other products like it.

So, how do advertisers determine that their ads are successful? For the most part, they don’t! Many companies follow one of the following systems:

Believing that “market share equals mind share,” firms examine their current market share and their current advertising budget, and increase their budget proportionally to match their desired market share.
Firms track what their competitors are spending on advertising and set their advertising budgets to meet or exceed the competition. (This begs the question, of course, of whether any of the companies actually know what they’re doing or if they’re all simply upping the ante on one another!)
Firms set a flat rate of their production budget for advertising. So, if a firm spends 10% of its production costs on advertising, it allocates $100,000 for every million dollars spent on production.
Firms set a completely arbitrary budget for advertising (say, $2.5 million) based on intuition alone.

Notice a common thread in all of these practices? None of them are based on reasoning; all of them are based on the idea that advertising needs to happen, and there just needs to be some way to determine how much to spend. None of them offer any qualitative system for tracking the effectiveness of the ad campaigns, and none of them are based on generating “y” returns for “x” dollars. And sadly, nearly all of these systems are being used by major companies who should know better.

Consider, for a moment, why companies like Best Buy and Circuit City advertise on television. Both companies spend millions of dollars on national television advertising, and both companies advertise their chain, but not specific products. Why? Does seeing a commercial for Best Buy really spike consumer interest in the chain? Unless the advertising is occurring in a market that has never heard of Best Buy, it’s a safe assumption that almost everyone within their target market knows that they sell appliances, electronics and related items. The message is useless, because it doesn’t say anything the audience didn’t already know.

The only reason for the company to advertise this way is for posturing; people in the marketing department can use the campaign as a means of job security by claiming that they’ve worked “to improve awareness of the brand,” and the company can make those same claims to shareholders. Likewise, a failing business like Circuit City can justify an expensive ad campaign by claiming that it’s using television advertising to make consumers aware of its presence and turn sales around. (This mentality is entirely responsible for the high cost of Super Bowl advertising; companies want to be seen, and they think that posturing during such a big event will improve their market share, even when there is plenty of evidence to the contrary.)

But remember what I said a moment ago — there is no proven, consistent correlation between advertising and sales. Consumers do not visit stores because they like the commercials; they visit stores because those stores carry the items they’re interested in buying. The only ads that drive consumers into stores like Best Buy are the weekly sales sheets that are in the Sunday paper, because those ads list the things that consumers care most about — price and availability.

So, how can a company track the effectiveness of its ads? Some might say “with promotions and coupons!” After all, if you advertise a specific promotion or offer a special coupon, you can see exactly who was influenced by the ad, right? Unfortunately, no. All these promotions and coupons demonstrate is the number of people who decided to use them. Some of these people may have been likely to purchase the product anyway, and took advantage of the discount; some might have been informed about the deal by someone selling the product. And often, when money-saving coupons or promotions are offered through retail chains, employees misuse them to make sales or cover theft. This system does not paint a clear picture, and its data can be extremely misleading.

Another way might be to study a company’s rise in sales during the duration of the advertising and watch for an unusual spike. This might seem like a good approach, but it once again ignores external criteria. For example, a store might see a surge in sales because a local competitor shut down, or because customers have been talking the store up to their friends after a good experience. The store might be benefiting from a cultural trend or phobia, like suddenly selling out of survival and camping supplies following a national disaster. A rise in sales might be a happy coincidence, while a fall in sales might suggest that more money needs to be spent on advertising when it likely needs to be allocated instead towards lowering prices and improving customer service.

There are other methods, but the only one that really, truly works is market research. For example, an advertiser could show a focus group a series of ads without identifying the company he or she is working for and determine how much they retained about a specific ad. A company could also survey its target market via telephone to see how consumers felt about various forms of advertising. But the problem here is that so much time, money and energy is being spent on ensuring that the advertising is actually effective that the company may be missing other opportunities to better serve its customers.

Now, what does this mean for a small publisher? It’s very simple. Don’t advertise. Advertising is a waste of money. There are many better, cheaper ways to promote your products than to advertise. What’s key here is to understand that there is a big difference between promoting a product and advertising it.

“Why didn’t you just say that in the first place?” you might be wondering. Scroll back up and you’ll see that I did. But chances are good that you didn’t believe me.

I don’t blame you. What I’m saying goes against the conventional wisdom and practices of the business world, and as a publisher, you’re going to run into a lot of people who will make fun of you or even become hesitant to do business with you for refusing to advertise your products. Some of them will be the people who sell advertising for a living (especially those in the media), while others will be people who could get you ahead in life, like retail buyers, distributor agents, or wholesalers. All of them will share the perspective that you have to advertise to succeed in business.

But if you’ve read this, you know the truth about advertising, and you also hopefully realize that it’s more important to be able to sell product consistently than to spend a lot of money talking about selling product. My advice is to explain to these people that you don’t like to throw money into the wishing well; you like to promote your products with careful, measured activities that guarantee returns without costing you a fortune. You can even do them all from home, from your computer.

Writing Scraps

by Sean J. Jordan