How to cut your advertising costs by 50% and increase your sales.
By Heatley Gilmore
Nov 18th 2008
It was Lord Leverhulme of Lever and Kitchen who was reported as saying “50% of my advertising is wasted; the only problem is I don’t know which half.”
The truth for many small businesses is that the level of waste may be much higher. Advertising and marketing is a necessary evil for most businesses but when I look at most advertising I know that businesses are simply wasting their money.
I’m not going to go into detail on what makes an effective ad. I’ll save that for another issue, other than to say if you are using your business name as your headline you might want to rethink your approach.
What I will say is that you have easy access to a solution that can improve the effectiveness of your advertising and in turn reduce your advertising spend, or conversely reduce the amount of spend you are wasting. The solution is testing.
People will spend countless hours researching in depth the most cost-effective mobile phone plan or how to reduce their broadband costs or where to get the cheapest printing but when it comes to advertising they will commit to thousands of dollars without even knowing if it will work. I think part of the reason is we have all been conditioned to believe advertising is an imperfect science where results can’t be guaranteed, or that you need to spend money over a long period of time before you can expect results. So we just spend and hope for the best.
Testing removes uncertainty from the results and in fact can virtually guarantee a specific outcome. Wouldn’t it be good to know that you're not going to get a single phone call from that ad you're about run, before you run it? Or that if you made a simple change to your headline it could increase your ads performance by 30%? Testing allows you to fine tune the effectiveness of your ad for little or no cost before you put any significant dollars behind it. Testing takes the uncertainty out of your advertising.
The goods news is testing is very accessible to small businesses and does not have to be expensive, in fact it doesn’t have to cost anything.
So what are some low cost testing options available?
Direct mail
Direct mail is a great low cost method to get some instant feedback. If you read one of my previous issues you would be aware that direct mail is very much a numbers game. If you send out 100 letters and get five responses, then you can be pretty certain if you send out 1,000 letters you will get 50 responses. But you can also take this a bit further. Even though you got 5 responses you could continue to fine tune your letter until you got 10 responses or more.
A good way of doing this is split testing. Essentially this is testing two ads simultaneously but changing one element. For example you may test two different headlines, or change one section of the copy, or even change the colour of the paper. So in this case you might send 100 letters to one group and 100 letters to another. The top performer is kept and the other dropped. Then the process starts again with the aim of bettering the previous performance. If you work hard at this you should eventually end up with a really top performing letter.
Google Adwords
The beauty of the internet is that it is not only cheap but it can also give you instant feedback. Google Adwords provides an excellent low cost medium for testing ideas. Google Adwords are the ads you see on the right hand side of the page when you search on Google. In short you write your ad and then choose the search words where you want you ad to appear. If someone clicks on your ad you take can then take them through to your website to provide them further information.
Adwords measures the number of times each ad is seen and the number clicks on that ad. Therefore you can split test several ads at once to determine which is the most effective. There is usually about a 3 to 4 hour time lag on the information, but within a number of hours you can start to get feedback on your ads.
The good thing about Adwords is that it works on a pay per click basis, so you only pay if someone clicks on the ad. The cost per click varies depending on what parameters you set around your campaign and how popular your particular your search words. More popular words come at a higher price.
One word of caution, Adwords is one of those mediums that can be learnt in minutes but takes a lot longer to master and it can have its frustrations. But once you begin to understand how to make it work for you it can be a highly effective low cost marketing tool.
Existing clients
This method is not going to work in all situations because your client’s reaction to an ad is likely to be very different to someone who doesn’t know you. And most cases what you are seeking is a cold response. It may however be a good starting point to get some initial feedback before you proceed with further testing.
Clients are often a good source of ideas. They may tell you that certain aspects you a promoting in your ad were not true for them or not important in the decision making process. They may also highlight important points you are missing.
The price of a few nibbles and some drinks for a small client focus group could prevent you wasting thousands in advertising.
So in summary test, test, test at least until you are confident that results will be forthcoming. My suggestion is to start small. Test an idea with a few hundred of your target first. If that works then bump that up to a few thousand. And if that works then you know you are on a winner and you can really give it some legs.
The only thing to be aware of is that different mediums can produce different results. So just because something worked as a direct mail piece don’t assume that you will get the exact same result from a press ad. If you have a good idea and want to take it to another medium, apply the same principles. Start small first, get some feedback and then expand it once it’s working.
Good luck!
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