Which of the three types of advertising is right for you?

If we never advertised, we’d never sell anything.  Right?

Perhaps right, but there are three major types of advertising, some requiring large outlays of cash, some not.

First, you can advertise your brand so that people recognize it when they see it in later materials.  Second, you can make a call to action, using an ad to bring people to your place of offer, buy your services or product, or take advantage of a special incentive.   And third,

Advertising

Happy Holidays from Dave & BERKONOMICS!

you can invest in direct response advertising.  Here you make a pitch with a price attached and ask the target to respond immediately to take advantage of the offer.

There is a vast difference in the way we can measure the results of our advertising. For example, direct response ads yield precise statistics, and the pay–off is easily measurable.  Yes, you might have made a more attractive offer with better results; but you can test direct response ads with various offers and price points to determine that optimum level.

[Email readers, continue here…]  With a call to action ad, you have a more complex measurement problem, since people can come to an event or buy the merchandise by finding out through any of several sources other than the specific ad.

And with brand (or lifestyle) advertising, there is no way to directly measure success.  It is this kind of ad which must have prompted John Wanamaker to state, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

We angel and venture investors look to build brand and enterprise value, sometimes at the direct expense of profitability or even revenue.  A good manager of a business should work to create value the old fashioned way, by working IN the business, not ON the business (as investors are prone to do.)

You should not succumb to the investor’s prodding unless there is plenty of money in the bank and an agreed upon time to seek a sale.  Advertise to build the business’s revenue and profits whenever possible.

 

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1 Response to Which of the three types of advertising is right for you?

  1. Dave, thank you for sharing. The mistake most people make is that they spend so much time and money on acquiring new customers that they forget the same principles hold true for their existing customers and the exercise you went through above should be done “again” for all existing customer relationships. Call to action and direct response can be made that much more effective by delivering and ensuring customers receive timely and relevant messages that either encourage their existing behavior or provide incentives that alter undesired behaviors.

    For instance, when you look at the overall customer lifecycle, there are different stages you need to market to that customer (or prospect): acquisition, retention and recovery. When looking at your article from above, the challenges you addressed exist primarily with acquisition (or prospect) marketing.

    If done right, you should be able to track and measure all ROA (revenue on activity) regardless if they are call to action or direct response; and best of all; since it is done right, it is all automated as well; because managing those “campaigns’ one off is an absolute nightmare.

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