Posts Tagged ‘how to advertise’

How much should I spend on my advertising?

Published by admin on November 7th, 2012

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“How much should I spend on advertising to get results?” This is one of the top 3 questions I get from prospective advertisers.  It’s a worthy question.  It’s a moment of truth for any business owner.   Advertising can be a scary proposition.  Business owners know they need to do it.  They’ve seen or heard the results of others in their industry or tangential industries who’ve had wild success with it.  But they’ve also heard the horror stories, that it can be expensive and that it’s difficult to measure its effectiveness or connect it directly to the impact on their business.

So how much should you spend? Many advertising reps will spat off the tired line about “the small business administration recommends that you should spend 5-6% of gross revenue on advertising.”  Who came up with this?

To look at it a different way, substitute the word exercise for advertising.  If someone were to ask you, “How much (effort/time/money) should I spend on exercising to get results?”, what would you say?  A natural response might be, “what do you mean by ‘results’?” Some people consider dropping a few pounds as “results”.  Others consider “results” to be able to do a triathlon or a marathon.  It’s the same with advertising. It’s up to you to quantify what you consider results.

There is no such thing as “low risk / high reward”

In 20+ years of seeing hundreds of different business models, I have come to realize that it comes down risk tolerance, efficiency of operation, and customer experience. The more aggressive you get, the higher the risk and the higher the return.  One of our local clients in the home services category spends 22% of revenue on advertising. He runs an efficient operation and his customer’s experience is phenomenal, (his referral rate is 55%), which means that each new customer earned is like 1 ½ new customers, and those referred customers refer others and so on. His risk tolerance is higher and he fundamentally believes in advertising …aggressively.  One of my real estate clients spends 25% of revenue on advertising.  Nationally, experts estimate that Red Bull spends as much as 40% of revenue in marketing.  Advertising that is well planned and executed is a 100% tax deductible investment in growth.  And if you don’t invest in your brand and tell your story, how do you expect your customers to invest in your company and tell your story?

Instead of asking “How much should I spend on advertising to get results”, do what any good investment advisor would do: assess your risk tolerance.  Ask yourself these questions instead: “What is my risk tolerance”, How committed am I to growing this business? How aggressive can I afford to be?”  Once you’ve done that, do the following:

  • Calculate an annual advertising budget based on 12-months.
  • Create a plan to invest that money.
  • Determine the media that will give the highest and best use of your money
  • Book that media
  • Say NO to all other advertising for the next 12-months

Advertising for 3 Phases of Consumer Behavior

Published by admin on February 24th, 2012


Everything I know about Relational and Transactional customers, I learned from Roy H. Williams, founder of the Wizard Academy  and the those terms should be properly credited to him.   My friend and former co-worker Josh Yudin, president of The Marketing Academy, an Atlanta-based consulting firm, assigned a new meaning to those terms as different modes of consumer behavior in general.   It has occurred to me, however, that there is a 3rd phase, Transitional, that incorporates both the general ethos of Relational or Transactional buyers, and buyer behavior through the sales cycle of any give product or service.  That said…

There are three phases of buyer behavior:

Relational, Transitional,  and Transactional

Relational: The phase customers are in before the need arises for your product. 95-98% of your target. The longer the sales cycle (HVAC, jewelry, cars once every few years, vs. say a restaurant, grocery store, gasoline, etc.), the longer a customer is in Relational phase

Transitional: After an event occurs to move them into the sales funnel (anything from the everyday mundane events like “I’m hungry” to paradigm shifting life events like “my mother broke her hip and now she can’t live alone”). The length of time a customer stays in Transitional mode depends on a number of factors like personality types,  immediacy of solution needed, amount of expense, resources available, etc.

Transactional: After the consumer has had what my friend calls the “Popeye moment” (as in, “I can’t stands no more!”). They’ve done any necessary research and they are ready to pull the trigger on a purchase.The immediate sales funnel. That 2-5% of your target customer that is ready to buy today.

  •  Each phase requires different advertising strategy.  One could argue for exceptions, but generally speaking, it works something like this.

Media Strategy for Each:

Relational Strategy: The “Why”.   Persuade with emotions. Authentically enroll people with the “why” of your company. Details and facts are irrelevant in relational mode because they are not yet in the market for your product.   While emotions can be conveyed in any medium, the human brain is uniquely wired for processing the human voice, thus making intrusive, sound-based media like Radio and TV a prudent choice for not only arresting the attention of an audience, but also telling the “why” story of your company in an emotionally compelling way.

Transitional Strategy:  The “How”.  An event has occurred in the customers life and they are looking for possible options to solve their problem. Articles and blog entries on your site found through a solid SEO strategy.   Social Media conversations on  Facebook/Twitter/Pinterest, etc.  Behavioral Retargeting is becoming more and more effective advertising tool in transitional phase. 

Transactional Strategy: The “Who, What, Where”.    They are ready to buy and they are looking for the details necessary to complete the transaction.  SEM (Pay Per Click) used correctly is a very effective tool in the Transactional phase.  Feedback sites like  Yelp, Angie’s List, Kudzu etc. are also becoming more and more important.  In certain cases print media can allow  a more comprehensive format to fill in the details and facts necessary to complete the transaction.  Search has a distinct advantage in that tools like Google Analytics allow advertisers to track metrics and provide reams of data that print media cannot (save tools like QR codes).

Trying to connect emotionally when consumers are in Transactional mode is too late.  Filling ads with details in Relational mode is too premature.

For more information, email me.