Ads don't usually get results overnight. Focus on creating a consistent image that will gradually penetrate customers' consciousness
The other day, a client asked me what return on investment he could expect if he spentto spend an incremental half-million dollars in advertising. The answer I gave him was what any professional advertising person would say: I don't know.
Ask a financial adviser how much return you could expect on your 401(k) and instead of an answer, you're likely to get a series of questions. Over what time period? Based on what level of risk? With what liquidity requirements? Many factors go into calculating return on a financial investment, and a marketing investment is no different (see BW Online, 10/5/05, "Stocks Battered by Inflation, Growth Fears"). In fact, in the financial industry you always get some sort of required-by-law disclaimer about past performance being no guarantee of future results.
Would that there were a law requiring the same sort of disclaimer on marketing investments. However, they include just too many variables that affect how things will pan out. Here's just a handful:
Ad content. Show me a commercial that's wildly successful, and I'll show you another that stinks. Results are based not simply on the fact that you're saying something, but what it is that you're saying.
Creativity. How you say it is as important, if not more important, than what you say. If your creativity isn't hitting the mark, your results won't either.
Media strategy. As with a financial investment, where you invest your marketing dollars matters. If your message is running in the wrong place or time, it won't do any good.
Media costs. The media market is like the stock market, with prices changing by the minute. When you buy is as important as what you buy, and two companies can pay vastly different sums for the same 30 seconds of airtime.
The economy. No one can fully predict what the economy will do next month or even next week (see BW Online, 10/12/05, "Interest Rates: Still a Way to Go"). Response to your marketing efforts is partly a function of what's going on in the larger economy.
Industry performance. The performance of your marketing investment should be compared to similar companies. If your competitors are all experiencing double-digit losses, it may be that your 1% increase is fabulous.
Competition. If you're facing tough competition, you may need to aggressively market just to stay even. That may not look like a good return on the surface, but try the alternative and see what happens.
Beyond being subject to these variables, marketing investments have one more layer of complexity that financial investments do not. When someone invests $1,000 in a company's stock, it's easy to see one year later what the value of that investment is. The market offers a well-defined way to keep score. Not so with a marketing investment. Often there's no telling when it will pay off.
Let me give you an example. A few months ago, my home computer crashed and I needed it fixed quickly. Not being familiar with any computer consultants, I turned to the Yellow Pages and picked the first company where a human being answered the telephone.
It was a disastrous experience. Not only was my computer out of commission (and out of my hands) for a week, when it came back, many of my files and even some of my software programs were gone. I lost time, money, and some of my data -- a valuable learning experience.
Since that time, quite naturally, I've begun noticing the advertising for other computer-service companies. One, in particular, stands out. I see them advertise in community newspapers and circulars. I hear their ads on the radio. I drove by their store one day and saw some sort of event going on in the parking lot. And just this morning I saw their brightly-colored truck pass in front of me at an intersection.
I haven't called them yet because I haven't had the need. But they look stable, successful, and trustworthy, and I plan to call them the next time my computer crashes. In other words, their marketing worked. They just don't know it yet.
The fact that this company may not capture my business in their current fiscal year is a minor detail -- unless the outfit's goal is to measure return on investment based on some arbitrary time period. In that case, they may come to a conclusion 180 degrees from reality.
PATIENCE IS A VIRTUE.
Think about your own consumer behavior. When was the last time you saw an ad for the first time and took immediate action? Life just doesn't work that way.
Mostly, people need to be exposed to a variety of messages over a period of time before they can be convinced to give something a try. And in categories where the purchase is higher risk -- such as infrequent purchase occasions (electronics, appliances) and high-priced purchases (vacations, cars) -- the length of time for effectiveness to become apparent may be even longer.
That's not to say that you shouldn't see an uptick in results if your marketing efforts are working. You should -- and in most cases, fairly soon after the campaign is launched. After all, somebody's always in the market for what your company does (see BW Online, 11/25/03, "Talking Turkey about Pop Culture").
But to try and calculate a hard-number return on investment based on a fixed time period overlooks the accretive nature of effective marketing -- each ad building on the previous one until action is taken. And it completely neglects the value of marketing as purchase reinforcement, keeping customers coming back that you otherwise may have lost.
Marketing is an investment. Like any investment, its effectiveness should be monitored and continuously improved. But if you give into the temptation to try and quantify its return too narrowly, you may make a mistake and never even know it.
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