Marketing Domination On A Shoestring
Posted on April 21, 2010 by Bill Hansen
Most small and mid-sized local businesses have had to make all kinds of tough decisions since the Recession began. According to American Express, only 20% of these firms have been able operate profitably without major cut-backs in staff and operating capital.
Marketing is an obvious target for most budget cutting. The only problem with chopping the marketing budget is its damaging impact on sales. According to numerous studies over the last 80 years, firms that eliminate their marketing decline rapidly during tough times. Those that even cut back modestly lose significant market share to the few firms that don’t cut. They also tend to miss significant gains in the first 2-3 years of recovery.
So how do you make a tough budget decision that preserves your near-term viability without causing an even greater long-term problem? Simple: cut your marketing budget to the bone, but spend your remaining dollars to dominate an audience – no matter how small that audience may have to be. It’s a principle that smart advertisers have been using for decades, through good times and bad, but one that proves essential for every firm when funds run tight.
Penny-Wise, Pound-Foolish Marketing
At the peak of an economic cycle, the marketing budgets of most successful businesses are also at their peak. Firms are investing in numerous marketing channels to capture as many customers as possible. A small retailer might be simultaneously using cable TV, print, direct mail, radio, the yellow pages, online listing services, and other digital platforms like Google Ad Sense and (recently) social media. And why not, as long as customer acquisition continues to grow?
As the economy slows, the tendency for most of these businesses is to reduce spend across the board: fewer TV spots, fewer radio ads, smaller ads in the paper, less mail frequency, etc. If one of these media has been obviously underperforming, it may get cut altogether. But the big mistake that many businesses make is reducing across the board and spreading their dollars too thin.
There’s an intuitive example that helps illustrate this idea. If you had a choice, what would you rather do: use the same marketing budget to reach 1000 people once or reach 100 people 10 times? If you chose the ten-times strategy, you are right. When you get ten times the frequency, you will have a significant impact and get good results, even though it’s a smaller audience. If you only reach an audience once, even a very large audience, the odds of your message having any impact are small. Marketing thrives on frequency the same way plants thrive with water and sunlight.
Getting back to the firms that spread themselves too thin: as they cut back the amount of advertising in any media, they still reach most of the same audience, but their frequency declines significantly and so does the advertising’s impact. It doesn’t take much of an overall reduction to see ad-driven sales fall off a cliff.
The Domination Approach
1) Start with a clean budget:
Eliminate all marketing and non-salary sales expenditures: everything from major media to online listings or yellow books, flyers, customer mailings, etc. Just put a big zero in the marketing line.
2) Now get realistic:
Now, looking at your new the bottom line, what is the bare minimum you can afford to reinvest in your brand’s customer acquisition activity? Assume that every dollar you spend will return more than that dollar (bear with me here). So based on your financial situation, what can you truly afford to invest in yourself, as long as you expect a payback?
3) Pick a media that you can afford to dominate:
When it comes to selecting a media, be careful not to do it based on the results you experienced while spending more aggressively. You’re in a different situation now. If you can’t spend heavily on that media, will it still work for you? Be objective: the goal now is to find a niche that you can truly dominate with your smaller budget. If you’re not sure, do a little online research on the frequency for different media or talk to a media professional. Your goal is to select a media or form of marketing that will allow you to reach target prospects (and current customers) with frequency – lots of frequency.
There is one important caveat here: You must select a media that really allows you sell yourself (your business) in a compelling way. A small web banner that appears every time someone visits a local website won’t do much to sell, no matter how many times in appears on a page. Domination means engaging the consumer – provoking thought and appealing to emotion to convince them to patronize you and not the business that they’re already using/familiar with.
4) Build a message that will cut through and stick:
In much the same way that you can spread yourself too thin across media, you can spread your message to thin within your campaign. This is a time for discipline and focus. Cut out everything that doesn’t support ONE GREAT idea about why your business is worth patronizing. It’s not price, selection, and service. It’s price, selection, OR service (or location, a unique product line, guarantee, etc). The point is that engagement requires a combination of supporting education, problem-identification/solution, and in some cases story-telling. One idea sells twice as effectively as two.
5) Stick to it:
Both the audience that you’re targeting and the campaign itself. Don’t waver if you don’t see results immediately. Every time you change something significantly, it’s like you’re starting over or targeting a new audience!
Does It Work?
Yes. The strategy of narrowing reach to increase frequency improves results. Often dramatically. We see this regularly in our own radio advertising. Occasionally, new clients insist on reaching every members of our large audiences. More people are better than few, right? Well, if budget reality doesn’t allow them to reach those huge audiences often, they don’t see the results that they expect.
Our recommendation is often to focus on just a couple of hours per day (it doesn’t have to be morning or afternoon drive by the way) where they can afford to be heard several times every day – where they can truly dominate. Since the same radio listeners tend to listen to the radio at the same times every day, this has the effect of decreasing the reach and vastly improving the frequency. The ad has a ton of exposure and impact when scheduled this way. Its budget-friendly and it usually generates very positive ROI.
We also have ample evidence that firms can improve results by advertising on fewer media. If you’ve ever heard the phrase, “I waste half my marketing budget, I just don’t know which half” you’ve heard part of this story. In truth, when multiple media is bought with too much reach and not enough frequency, it’s not that one media fails while the other don’t. Instead, it’s more likely that ALL of the media is running at 50% horsepower. Remember, marketing thrives on reach! If you want more info or evidence, just contact your local Cumulus rep for specific case studies or local examples in your market.
