CHAPTER 6
PAID ADVERTISING
By reading and understanding the following quote from Russ
Von Hoelscher's "How To Get Rich In Direct Response
Marketing", you would probably be able to skip the rest of
this chapter and still be better informed about paid
advertising than most direct marketers:
"A great ad, salesletter, etc., is not the result of some
clever writer who has a flair for words. No way! Money-
making advertising is the result of telling people in plain
English, all about the many benefits they will enjoy if they
purchase your service, book, or widget."
It is the mistaken belief of most mail order entrepreneurs
that paying a lot of money to have their ads pop up here and
there guarantees their success. Nothing could be further
from the truth. Advertising is not easy and it is not an
innate skill. It must be learned through study and
experience.
Advertising is any method of reaching potential buyers with
information about your product. The most common way to
obtain advertising is to pay for it. Paying allows complete
control over when and where your ads appear and what they
look like. The only thing left to chance with display and
classified advertising (and card decks, etc. listed below)
is where your ad appears in the printed publication. Even
then, you can sometimes pay a surcharge to have a publisher
put your ad exactly where you want it, to have your TV ad
appear right after a show ends, etc.
BE A BOTTOM-UP MARKETER TOP-DOWN MARKETER: someone who
decides on a product she wants to sell, then goes about
looking for ways to sell it. Top-down thinking is fast
becoming extinct, since no business can survive in a dream
world any longer without going bankrupt. We've all seen the
evidence that size is no protection for a company as big as
an airline or General Motors. Both mega-corporations and
one-man shows are doomed in the 1990's when they think top-
down. The top-down marketer often tries to hammer a square
peg into a round hole, with predictable results. Huge
companies have the necessary resources to exploit free and
inexpensive marketing channels. They also have the manpower
to investigate consumer trends and desires. But some of the
less intelligent big companies are too busy trying to sell
1) what they think the consumer needs, not wants, or, worse,
2) an unmarketable product invented by some corporate
pinhead's nephew.
BOTTOM-UP MARKETER: someone who finds out what current
trends are and what consumers already want (not need) and
what convenient (inexpensive) marketing channels exist, THEN
chooses, creates, modifies or copies a product accordingly.
Bottom-up marketing is the wave of the future. In fact, so
many people now market this way that you're left with little
choice but to do so yourself. We no longer live in an age of
plenty where anyone calling himself a businessperson can
open up shop and make money. Basically what you have to do
is find something waiting to be exploited and then work out
a marketing strategy from the bottom up. For example, some
people are embarrased to buy condoms from a drugstore, but
also don't want the risk of getting AIDS. The obvious
marketing opportunity here is to sell condoms by mail so
that the consumer gets the product he (or she) wants and
also gets privacy. That's bottom-up thinking, and it creates
marketing success.
Bottom-up marketing also has to do with accepting that you
cannot change the way your customers think about you after
they form their initial opinion. Xerox tried selling
computers, but their reputation as a photocopier company
doomed that venture from the start. Lifesavers tried selling
gum; that failed too. Every beer company has introduced a
light beer only to experience no net profit, and decreased
sales of their regular beer. (Note carefully the delusional
fantasy world the top-down marketer lives in. Each beer
company thought that their light beer would be a success,
despite the fact that all the other companies had already
proven that it's a flawed marketing strategy).
Let's clarify this bottom-up, top-down thing with an
example. People want to see other people humiliated or
embarrassed on national television. They also want to see
half-naked women, and programs that portray American
families as dysfunctional losers. They even want to see real
film of people dying or almost dying. (I find it curious
that "snuff" videos sold underground are illegal, but you
can show it on TV). Some smart bottom-up marketers have
given people exactly what they wanted, and created such
successful TV shows as Married With Children, COPS, Candid
Camera, Code 3, The Simpsons, and so on. Meanwhile, there's
a top-down marketer somewhere whining and crying that his
television documentary on the evolution of penguins deserved
more attention than it got. It's easy to see why public
television is funded by philanthropists and wealthy
corporations while network television is carried by the
food-sex-cars-beer advertisers. Food, sex, cars and beer are
what people WANT.It's not a coincidence that these are the
ads you see every day.
The lesson to be learned from this bottom-up, top-down
discussion is to approach new prospects more with what they
want, and less with what they need. And never something you
"want to sell" despite the fact that nobody may want to buy
it. I created the Complete Mail Order Record Keeping System
with full awareness that it would not be a runaway success.
This is because it is a top-down product. Any mail order
dealer needs this product, since they need to get organized.
But what this group of people wants is a magical get rich
quick plan, a better way to advertise, a book that promises
to unveil incredible marketing secrets, and so on - these
are lead items. The record-keeping system is therefore a
follow-up item which merits fewer marketing dollars. This
simple realization saves me money, which is just as
important as making money.
Another great mail order example of bottom-up marketing is
the success that print&mail dealers and opportunity seeker
mailing list brokers enjoy in the inner circle. People
don't need these services - they need to spend their
marketing dollars on straight advertising instead, for a
better profit margin. But people want these services,
because of the brainwashing that inner circle initiates
receive. You can throw "Find A Need And Fill It" out the
window. "Find A Want And Fill It" or "Find A Widespread
Belief And Patronize It" is more profitable. And a lot of
people have become rich by "Finding an idiot and exploiting
him". Of course, profitability and ethics often clash, but
that's a topic that will have to wait until chapter 8.
* * * * *
Ads and marketing campaigns are 2 different things, and they
fail for 2 different sets of reasons. You've probably seen a
million discussions of why ads fail but little discussion of
why marketing campaigns fail.
Marketing campaigns fail to result in net profits because
- the advertising is not varied,
- is poorly targeted,
- is not repeated enough,
- the paid ads are too small,
- there's not enough free publicity backing up the paid ads,
- poor quality publications were used
- insufficient repeat sales potential
- insufficient profit per sale
Ads, on the other hand, fail (to attract a sufficient number
of sales or inquiries) because
- they do not catch attention with a headline/benefit,
- do not precisely discuss what problem you can solve,
- do not convince the reader to contact you to get closer to
buying your solution to his problem.
- ad is of poor quality in terms of graphics and copy
Most neophyte entrepreneurs would be horrified to learn just
what the actual results of most paid advertising are. The
only "result" usually is that the advertiser has lined some
publisher's wallet. Yes, most paid advertising is a big
waste of time and money. But it doesn't have to be ...
HOW OFTEN SHOULD YOU REPEAT YOUR ADS AND MAILINGS?
For a long time I was very confused about something.
A lot of experts were telling me that only by doing several
direct mailings to people would I be able to convince them
to buy anything. The same, they said, was true for
advertising. People must see my ads over and over again over
a long period of time, in order to develop trust in me.
Then, and only then, a lot of people would respond to my ad
and everything would begin to pay off. This was what just
about everyone I was reading was telling me.
And I ended up with the same belief that most beginners
share: That when you create a successful ad you simply put
it in every issue of the media (publication, TV spot, radio
spot, etc.) that it was successful in.
Soon, I began to widen my quest for mail order knowledge and
started buying books from bookstores, whose authors had
decades of experience in mail order, had generated hundreds
of times more business than the previous experts I had been
listening to, AND WHO WERE, FOR SOME REASON, TELLING ME THAT
ADS AND DIRECT MAILINGS DO WORSE, NOT BETTER, WITH
REPETITION!
Wait a minute.
What's going on?
What was the difference between the two groups of experts?
It's hard to say exactly, because the wide variety of mail
order businesses that exist today cannot be cleanly divided
into a group that benefits more and more from repeated
advertising and mailing and another group that suffers from
it.
The truth, as you may have expected, lies somewhere in the
middle, in a whole lot of details which we need to look at.
I have compiled as many factors as I can to give you the big
picture. I am especially indebted to Julian Simon, the
author of a fantastic book called Getting Into The Mail
Order Business, for many of these points.
1) WANTS VERSUS NEEDS
What people NEED is security, comfort, health (preventative,
not curative), and the truth. But even though we NEED these
things we often do without them because we (and this
includes your customers) don't WANT them - at least not
enough to be bothered ordering them by mail. People WANT
(often) to be sold quick fixes, to be lied to, and to escape
only the most immediate pain. People want get rich quick
plans more than they want honest down-to-earth advice about
building a business. People will buy a cheap $5 umbrella
which must be replaced every 2 weeks because they want to
"save money", when they could buy the umbrella they NEED for
$30 which would last for years. When people want something
they'll buy it fast, so if you take out a full-page ad every
month in Income Opportunities promising to tell people how
to get $100,000 from the government for no apparent reason,
then your best response will come during the first month and
this response will diminish over the following 5 months. A
less dramatic, and maybe opposite, effect will occur if you
sell something that people NEED. Where needs are concerned,
people take much longer to be convinced to spend their
money.
2) REPEATED DIRECT MAIL TO RENTED LISTS VERSUS FRESH INQUIRERS
People who inquire about your products or services will give
you the highest percentage of response that you will ever
enjoy. The second highest rate of response that will occur
is the repeat mailings you do to the list of people who have
inquired and then gone on to become customers. The third
highest rate of response will be from inquirers who have not
yet become customers. And the three worst response rates you
will ever get (in order of lowest to highest), are from
rented compiled lists (people who don't necessarily shop by
mail), rented lists of another company's inquirers, and
rented lists of another company's customers.
Some hypothetical figures should clear this up. Let's say
that a mail order dealer sends his introductory direct
mailing package out to people on a day-by-day basis to fresh
inquirers and gets a 10% response. He also does mass
mailings 3 times a year to his in-house list (the total list
of all people who have asked for more information) which get
a response of 2.5%. Now as far as rented lists go, if this
same dealer had the right to remail to THE SAME rented list
5 times his response would start off probably very low and
climb slowly - let's say .5% on the first mailing, then .7%,
.8%, 1.1% and finally 1.4% on the fifth mailing. These are
of course hypothetical figures intended to show you the
pattern you can expect.
3) DIRECT SALES ADS VERSUS INQUIRY-GENERATING ADS
Those with experience and expertise in buying display ads in
large circulation magazines and newspapers, say that
response drops off for both inquiry ads and for direct sales
ads (keeping in mind the other factors discussed here). But
the sheer number of responses generated by an inquiry-type
ad may remain very high even after a drop-off occurs, and so
may remain worth running.
4) EFFECT OF SIZE OF AD ON REPETITION
Small ads can be run more frequently than can big ones. A
full-page ad repeated within 1 to 3 months will usually pull
25 to 30% less than the original insertion. A third
insertion within a short period will have a response usually
45% to 50% of the original insertion's response. You usually
have to wait 6 months or more before the repeat insertion
will do as well as the first insertion. Note that these
estimates apply to identical advertisements only, not
different ads for the same thing (and certainly not
different ads where you've changed your offer even in the
slightest).
The same small ad can run month after month in some media
and continue to be profitable whereas with bigger ads it's
difficult to find a media you can use over and over with
great frequency. One exception is the alarmingly expanding
television "infomercial"; most a half hour in length are on
several channels every night. And remember, even classified
ads can suffer a dropoff. You have to keep ALL of the 9
factors in mind.
To quote Julian Simon, "It is easy to understand why big ads
should suffer greater dropoff than small ads, if we consider
the difference in the number of people who "notice" the ads.
About 4% of the readership of Popular Mechanics will
"notice" a 1 inch ad, while anywhere from 20% to 60% will
"notice" a full-page ad. The second month it runs, the small
ad can put itself before the eyes of 96% of the prior
audience who never saw the ad before, and almost 4% will
again "notice" it (assuming no change in readership). But
the big ad has used up a very substantial chunk of its
audience.
Furthermore, except for completely subscription magazines,
far more than 4% of the readers of any issue will not have
read the previous issue. (But keep in mind that the people
who "notice" an ad are not a random sample of the
readership. Rather, they are those people who have the
highest perception for a product and the greatest likelihood
to buy.)"
5) SUBSCRIPTION VERSUS NEWSSTAND CIRCULATION
Dropoff is greatest when you have the same people reading
each issue of a publication than if there is a turnover of
readership. The more newsstand copies sold, the greater the
turnover, and hence the less the dropoff. This effect will
be greater upon big ads than upon small ones, of course.
Many mail order companies use the following repetition
intervals for small ads: every issue in monthlies that are
largely sold on newsstands; less often in all-subscription
magazines.
6) NUMBER OF MEDIA USED
The magazine-reading population is huge but not infinite.
If you put a big enough ad often enough in enough magazines,
you can certainly reach the point where the returns will
decrease. This overlap also involves other forms of media
which your target group is "tuned into", such as television,
radio, newsletters, etc. Once again, a reminder that this
effect is smaller for small ads, such as classifieds and 1"
display ads.
7) COMPETITION
Competitors will move in on you the minute they suspect you
have found a profitable marketing system that they can
duplicate. If a lot of competitors copy you and spread their
ads around thicker than molasses, they can kill your
business.
But competition (a necessary and inevitable aspect of
capitalism) does not mean you should just forget about being
a direct marketer. Companies do have a tendency to run each
other into the ground in direct marketing but not moreso
than in any other business. Sometimes competitors will try
to copy you and fail and leave you alone. They may not have
your patience, they may not understand how to properly run a
business, or (and I believe this is the most common reason)
they might just misunderstand what you're doing once you
receive inquiries and orders from your ads. Or they may
simply not affect your business too much because your ads
and introductory direct marketing package is better than
theirs, even though you're selling and doing basically the
same thing.
8) REPEATABILITY AND "FORCING THE MARKET"
The term "forcing the market" refers to advertisers who put
a lot of hype into something people don't really need, like
pet rocks. Once you force the market its potential becomes
quickly exhausted and you have to wait several years before
you can "force" that product again. Forced products are
usually sold with a burst of advertising. This sort of "one-
shot" direct marketing is best left to people with even
temperaments and healthy blood pressure who don't mind
losing money.
9) HOW PROFITABLE IS THE AD?
Once again I'll quote Julian Simon, who says it best: "Just
as with classifieds, you should repeat a very profitable
display ad more often than a borderline ad - despite the
continuing drop in returns to the profitable ad. Your own
profit will be greater and you will be more likely to keep
the competition away, who may experience an even greater
drop-off problem and (you hope) become discouraged and
quit."