Is It Worth Advertising?
McDonalds Still Advertises - Is It Worth Advertising?
A client called me on the phone to complain about his lack of sales. I asked him, “when is the last time you ran an ad campaign?” He told me around 6 months ago. I asked him about the results of that campaign? He told me his adverts work well but he can’t afford to run them. Now I understand and I hear what he is saying but if an advert works well my question is, how come he can’t afford them? Lets look at this in a little more depth. His adverts were costing him £450 each month in local newspapers.
So to get his money back he had to pull in sales of around £450. I would always add more to that number because frankly I have seen businesses that create their own adverts spending weeks and even months creating the smallest adverts so … £450 plus man hours!
So on the consulting session I asked him …
When you get a new customer how long do they stay with you?
He replied around 4 years. I asked him over those 4 years what would you expect them to spend? He replied, “the actual average is around £3,900”
I said ok lets do some math here.
- £450 for the advert
- Advert brings around 5 new customers
- Each customer spends on the day around £100
- The total sales from the advert is £500
“Yes” he replied “I make just £50 from the advert.”
Interesting reply don’t you think?
I said to him lets do this again.
- £450 for the advert
- Advert brings around 5 new customers
- Each customer spends on the day around £100
- Each customer stays with your business for around 4 years
- If each spends on average around £3,900 that means the advert actually pulled in…
- £19,500
His eyes nearly fell out of his head!
I never thought of it like that he said to me. So what is my problem here then?
The problem is you don’t have a long-term strategy for your marketing. You are doing what most businesses do which is try a little, play around a little, heavily invest in staff, in office equipment, in time creating things but have no strategy for marketing and advertising.
So the lesson here is clear.
If you have ads that succeed – you must have a strategy for the long term. DON’T EVER ignore this. Ignore this and your business will die – no question.
Do you have a strategy? Do you need help creating, designing, building and crafting the layout of a strategy that makes your business highly profitable?
Lets look at the above example again.
If he runs the advert for 12 months that means he has created a potential new sales of £234,000. That is from just ONE strategy. Imagine if he expanded a strategy that is working into new areas. There is no reason whatsoever that he cannot create a new windfall of at least a million plus in new sales! The truth is there is no reason why one successful strategy cannot be expanded time and time again.
Do you see your advertising as a cost? If you do you need ask yourself a couple of very honest questions.
1. Does your advertising work right now? 2. Do you understand the art and science of advertising for your business 3. Do you have a strategy in place for your advertising?
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Read more on marketing, budget and costs here:
One in Ten Direct Marketing Principal
Stupid World, Stupid Marketing