Advertising in a Soft Economy01/27/2014
We're at the conclusion of a brutal and extended recession with the quantitative data 90 days ago pointing to flat job growth and wobbly consumer confidence. The working generation is very much in uncharted territory—unprecedented in our lifetime. Ad people expect to hawk the benefits of advertising in a difficult market, but for those who have been in the advertising and interactive world for the past 10+ years, there are times when we support curtailing advertising expenses. Sometimes it makes sense to store your powder and lead for another fight. 2014 is not one of those years.
If the economy sucks so bad and is going to continue to flutter, what are marketers to do? Should we reduce head count, curtail system upgrades, sit on our cash? Well, that depends on your risk tolerance and how well you've managed through the good times and the past 4 years of bad. One thing is certain: your competition is likely plotting your demise. We here at Dirigo expect 2014 to be a pretty solid year. The ad industry is a leading indicator. We're on fire!
There is plenty of business out there and this is a good time to give your company an advertising makeover. Smart advertising right now will not only maximize your share of available market, but will make it clear you are in business to stay; something consumers need to feel confident about in these turbulent times. According to Ad-ology® Research, close to half of US adults believe that a lack of advertising by a retail store, bank, or e-business during a recession indicates the business must be struggling.
Your first priority is to bullet-proof your current business portfolio. Weed out unprofitable work or business lines and concentrate on profitable work. Get rid of bad profits, those earned from anything that diminishes customer loyalty. We've all heard that your existing customer base is the best source of future growth. The concept is to get your customers to buy more, return more often, or bring you more referrals by word of mouth (WOM) advertising. If you can somehow improve the relationship between your business and your customers a tad bit, revenue will certainly follow. Research proves that for each 10% increase in loyalty, revenue increases 5%. Loyalty comes from a series of positive transactions, ongoing communication, and doing something unique–setting your business apart from the competition.
You've got to maximize the impact of available dollars and leverage every marketing expenditure to its fullest value. During a downturn and in the immediate upturn thereafter, shoppers behave differently. Bargain hunting has increased coupon use. Consider offering coupons or discounts. If you already do, distribute coupons more broadly or increase their value. Offer mobile coupons. Nearly 60% of Americans have smartphones and many are using them to shop for deals.
Evaluate your creative strategy. Instill confidence in the buying public that your organization will be in business for a very long time. Downturns are not the time for generic pandering. Don't waste valuable ad space on platitudes. It helps to talk about how long you've been in business or how many years key employees have been with you, but that should not be the core theme. Instead, extoll the many great reasons and benefits of making a purchase now, sooner rather than later. Explain why you are in an excellent position to offer an exceptional value. Use testimonials and product ratings as much as possible.
Interest rates are at an all-time low making capital expenditures or big ticket purchases ideal. Hunt where the where the buffalo roam. The wealthy are still wealthy and they cannot resist great bargains or deals on luxury items. Point your advertising dollars at affluent zip-codes or metropolitan areas. Google AdWords and Facebook have targeting ability and so do the other online advertising networks–hunt with precision.
Even though the Internet has exploded in lead generation over the past few years, there simply may be fewer people searching the web because so many folks have temporarily backed out of the active shopping phase. I have. My personal household spending is down. Your media focus should be on those channels that provide the greatest reach of potential customers. The more real and virtual doors you can knock on, the greater the chance for engagement of some sort. Print, direct mail, radio, and TV are powerful tools to use in concert with your Internet efforts. Our friends at Flyte recently put up a blog post titled: Traditional Marketing Loses Traction. We're here to tell you that offline is alive and well. Create the sizzle with offline, that will bring interested shoppers to your website to explore offers in detail. Pay-per-click marketing and remarketing/retargeting is your best digital buy. And Facebook is a pretty good deal with its practically infinite demographic, psychographic, and geographic segmentations.
Social networking pages, such as Facebook, Twitter, and Pinterest should be used as social proof that your brand is powerful. These social sites are not for selling (e.g. not within the posting real estate). They're for listening and having a conversation with your pals. Post your ads or promoted Pinterest pins on YouTube, Facebook, and Tumblr. Encourage your salespeople to post ads on their personal social media pages. When you sell the salespeople, they'll sell your customers.
There are no slow years, months or weeks, just slow people. Let go of your slow people and replace them with folks who have ideas, dreams, and inspirations. That's what we've done here at Dirigo and it shows. You'll be amazed with the results. If someone is looking to buy a good or service, they'll eventually find a way to get what they want. So, why should anyone else have the pleasure of making that happen? Think you've come to the right place and let's get you the deal you deserve. Make it easy for the staff to close deals.
The biggest bang for your buck—service—is not even ad centric. Enhance your customer service! The shopping experience needs to rank high. This is especially true for online sales. It is also true for offline. Think about well-displayed items (on a smartphone too), friendly and knowledgeable sales staff, customization, personal shoppers, extended hours, appointments, and receptions. Do these things and customers might believe that you actually want their dollars.
For those advertisers flighting loaded end-of-week TV and radio buys, you might achieve better frequency in the current economic climate by spreading your ads out over drive-times throughout the week. If your budget is small, consider overnight runs on large radio stations. Some of these stations have more folks listening at 2:00 am than the smaller station during drive-time. Higher exclusive cume equals loyalty to a particular radio station. Run fewer spots on high cume stations. A good technique is to float ads at different quarter hours throughout the week. Before I got heavily into the internet, I managed television and radio for 7 years. I adore offline.
Recency is a term coined by media guru, Irwin Ephrim that suggests that it is more important to be advertising at the most likely time a shopper is considering a purchase. Advertisements and promotions are the most effective when they air immediately prior to the time of a purchase decision. Recency contends that folks screen out advertising except for what interests them. If it is not relevant to a consumer at the moment they receive it, forget it. This is why you can never stop advertising.
One good exposure in the seven days prior to a sale is the effective piece of communication. This last in a series of exposures is really the most important one and the one that sells. A willingness to buy is more important than the number of exposures delivered and that willingness is not necessarily triggered by advertising. We have to deliver as much short-term reach as possible, over repeatedly short periods of time. Is it merely being out of toothpaste, too fat to wear last years clothes, told that our website is lame, or frustrated by that crap car that continues to break down that readies consumers. High continuous (redundant) short-term reach sells products. Continuous advertising is your ticket to success.
With paid search marketing, accept a higher cost-per-order (CPO) during economically challenging times, especially if your business has a juicy lifetime value or net present value (NPV). If you're not advertising on Bing, get in the game. Bing often accounts for more than 20% of pay-per-click sales. Mobile is super hot. If you have a responsive (RWD) website, use it. There are more than 15 different mobile ad networks. Turn on remarketing so that you're reminding customers about your brand and products. Your ads don't need to be in the #1 spot; #3, #4, #5, or #6 will do if your ad copy is good. Work on copy that will generate clicks and landing pages that make prospects convert. Be sure to geo-target your advertising to where the buyers live. It's not about CTR, it's about conversion.
Paid is not just about PPC. Sponsored content or 'native ads' are all the rage in 2014. Rather than trying to make advertisements look like content, think about the reverse. Comb the internet for positive mentions by prominent voices and package this content into an ad. Take a look at Outbrain, ShareThrough and some of the newer platforms.
Your best opportunity to eventually convert is to get an email address. Every time I read that email marketing is dead, I chuckle. There is no better tool for building your online community than email. Email marketing is a powerful and vibrant way to connect with people. Email marketing is good old fashioned paydirt.
Ask for more. Expect more from the media. In most markets across the US, broadcast outlets are working even harder to deliver a higher value (measured by sales conversion) for those advertisers who are consistent in their buying habits. Traditional is under siege by digital. Never has there been a better time to negotiate a value relationship with your media partners than right now. Don't just get a lower rate. Go for a well thought out marketing package that helps maximize convertible leads from the investment. Radio, television, and newspapers are giving away attractive merchandising links through their own websites; these links can help your SEO effort. Ask for extras.
Evaluate every line item of your advertising/promotion expense. If a line item is not delivering a measurable return, move the expenditure to media where you have confidence. These days, tracking return on investment is difficult, especially with varied media mixes. At best, tools like Google Analytics are directional. Don't optimize your campaigns to maximum efficiency. If you do, you'll likely optimize your sales lower. Settle for some inefficiency. We like to say: "cast a wide net".
Like the GI generation, the millennial generation has grown up in a time of prosperity, only to face a massive economic downturn just as they were emerging into the workforce. If you are marketing to this generation know that they are adverse to debt and carefully plan consumption. This generation will only purchase items that they truly believe that they need. And they'll seek social proof and the best possible value. Mind you, my generation, Gen-X, is the first generation that is unlikely to exceed the wealth of the group that came before it and will be faced with downward mobility in retirement. Expect consumer frugality to stay for a long time. Don't be discouraged. Use this knowledge to make your advertising work.
A penny saved, at least from a marketing perspective, is probably eventually lost. Think bigger than building a brand, create a movement. Want to get moving again? If your business seeks to create a movement, call us at 207-347-7360 x210. Dirigo is here to help you connect with your customers and grow.