How much advertising $ is enough?

I recently read a very open-ended question that was posted on a forum. It was simply "How much should I spend on advertising?" That's a good question. But, you can only answer the question in the context of:

• What are your advertising goals?
• Who is your target market?
• Where is your target market?
• How do you enter the conversation with your market?

Is the answer multi-millions, and you are spending like crazy to promote new software (e.g. the Windows XP roll-out a few years back, or the Microsoft Bing roll-out of late), or is the answer almost nothing, and you build through word-of-mouth (e.g. Apple's iPad).

You can't know how much you need to spend until you set your goals, build a strategy and a plan.

The next big question, is what is your return on advertising spend? Advertising should be an investment, not a cost.

Responding to Social Media Buzz - Step #2 ==> Set out your Strategy

Setting your strategy is an iterative process, which goes something like this:

• Listen to the conversation ... Before you jump in with both feet, find and read Social Media about your company and get an understanding of what those conversations are all about. Determine what the buzz is, and how much you need to be involved with it.
• Set some goals ... This is a tough thing to do, given that the metrics on Social Media are few and far between and it is even harder to see an immediate positive benefit to any responses. This is also the time and place to start doing one of the toughest things … drafting your business case. Take a look at the benefits and consider how you’re going to make or save money by responding to Social Media Buzz. Be cognizant that benefits will not magically happen overnight. They will take time to be realized, and consequently you should stage your benefit calculations over several months or years. Also, be careful not to overstate the potential benefits and costs savings. If you state that you will be able to cut your advertising budget by 50% as a result of improved Social Media Buzz, then your CFO will come calling in short order. In reality your benefits have to outweigh your costs only by a reasonable amount. Potential benefits might include:
• increasing positive buzz about your company (thereby driving up the value of your brand, allowing you to reduce advertising costs, and at the same time driving sales up),
• reducing negative buzz about your company (reducing the amount of time you need to spend defending yourself in the media, and the amount of cash you have to spend on PR),
• increasing your Organic Search Ranking by propagating relevant links to your own website (and thereby both driving more traffic to your site (hopefully leading to more sales), and saving advertising dollars), and
• operational improvements driven by keeping your ear to the ground (improving the engagement and brand loyalty of your customers, reducing advertising costs, and improving the utility of your product or service (which likely has a self-fulfilling effect of bringing more customers to your door)).
• Plan for success ... You will need to give Social Media care and feeding - Social Media isn't something you should step into once and back away from. You have to get into and stay in it. That means that once you determine how you will respond to good and bad social media and you will need to set aside time on a regular basis to participate in Social Media. You may even need to have staff in place to keep up with it. Even more, you may need to involve professionals to help you engage in social media. This is the time to draft up the second part of your business case. Now you will start to develop an eye for how much meeting your goals will cost. How many people will need to be involved in listening and responding to buzz? How often will you do it? How often will you need third parties? Be careful not to dig too far into too many details at this point. Focus on the “why” and not the “how”. You probably want to keep your plan to a few PowerPoint slides featuring big concepts, a couple of examples, and your high-level business case. Also, you might want a short-term and a long-term plan. Your short-term plan will look at the immediate future of Responding to Social Media Buzz. This may be a 6-month plan to staff up a team, create a library of responses, and so on. The outcome will be that you are in the game of Social Media. The longer-term plans may include how you may become involved in other types of social media, in creating your own company blog, or in creating your own customer forum. Put your short-term plan on the table. Keep your long-term plan in your back pocket.

Now for the final - and perhaps most complicated step, because it forms your "make or break moment" ...

• Sell the idea ... responding to Social Media as a representative of your company and brand can test your company's culture and its leadership. Before you do the “big sell”, you will need work the slow and soft sell to a variety of individual executives and your peers to ensure that you understand and are cautious of their concerns, and that they understand what you are setting out to do. To do this well means that you must not be married to your plan. You need to listen to the executives and adjust your goals and plan accordingly.

PR is a very important ingredient to building brand value

Research by Text 100 (a PR firm) called "Media Prominence: A Leading Indicator of Brand Value. How Effective Public Relations Contributes to Brand" shows that PR builds brand for complex products better than ads.

Key findings from the research were interesting:

• "Media prominence accounted for 27 percent of differences between the brand values of Interbrand’s Best Global Brands.
• "The relationship between media prominence and brand value depends on “product involvement” – i.e., the degree to which customers research a given product or solution prior to purchase. Media prominence was more associated with brand value for “high involvement”products compared to “low involvement” products. Advertising expenditures, however, were a leading indicator only for “low involvement” products, and accounted for very little brand value among “high involvement” products.
• "Media prominence was a particularly important component of brand value for computer-related industries, such as software and hardware manufacturers, as well as computer and Internet service companies, accounting for 48 percent of differences between companies’ brand values.
• "The results suggest that, in general, media prominence accounts for approximately one quarter of brand value, although this value is often higher for high-involvement brands, and particularly so in technology. This underscores the importance of managing and growing brand value through public relations efforts."

I wonder ... the results show that PR heavily influences brand perception, and this result was delivered by a PR company. Hmmm ... Okay, not that I really doubt it, but it is kind of humorous.

I believe that a key important point that needs to be made is that Public Relations is a critical type of communication that needs to be managed by a company as part of its overall media strategy.

Pricing vs. Social Networks: "We Boobed"

It is all over the news and the blogosphere ... an interesting story about pricing and sizing. The gist of it is that British retailer Marks & Spencer was charge more for bigger bras. It makes sense ... more bra, more engineering, more costs, higher prices. Well, okay, it made sense to someone at M&S.

• How did this play out? A group formed on Facebook called "Busts 4 Justice". Sign-ups for this group took off, and the publicity they garnered was overwhelming.
  
• After embarassing itself with bad responses to the campaign, M&S reformed their pricing policy and kicked off a "We boobed" campaign (see creative below).
• The, er, upside for M&S is that there sales have, er, bounced back substantially after all of the publicity.

This experience demonstrates three things:

1. Social Media is WAY powerful. Companies need to pay attention to it and respond to it quickly, with honesty and integrity.
2. Bad pricing is just bad business. Bad PR is worse.
3. You can win when you are up against the wall - if you are smart. Pick a good strategy, put some great advertising behind it, and go win.
   

Advertising Methodology (16) - Measurement

Recalling the old adage of “you can’t manage what you don’t measure”, it is time to focus in on measurements.

Earlier in the Advertising Methodology the point was made that you have to plan and prepare to know what measurements you are going to make, and build tools to make those measurements.

Now that your campaign is in production, measurements are taken, taken again, taken again, taken again, and so on. But the purpose of taking measurements is not just to create pretty pie charts (but, hey, who doesn't like a pie chart). The purpose of taking measurements is to tune the campaign. This may reflect back on changing elements of the campaign plan – including the media, the concept, and the creative itself.

Ultimately, the campaign must achieve its desired results. If everything has been done right, then these results should equate to the goals that were set out at the beginning.

Advertising Methodology (15) - Media Buying

After it is established that the campaign should work, media space is bought. This one small line represents a lot of work. The planning and buying should actually happen much earlier in the process. But, it is at this point in the plan that the rubber hits the road, and the media space must be there. It is also the point where, if the campaign development slips, negotiations will need to be pulled off with the publishers to save the campaign.

Make sure you have a good media planner and buyer that you can trust and treat as a strong ally, and who will negotiate with publishers and other media companies to your benefit.

Advertising Methodology (14) - Testing

After building the creative, it is tested. Depending on the type of creative it may be subject to technical tests. For instance, if a web-site is built, it must be tested to ensure it meets typical technology norms such as functionality, security, performance, and so on. If the campaign is a pull-tab, it must be tested to ensure that you can’t see through it, modify it, or otherwise determine the game piece’s outcome. This test should be carried out by a test team that is separate from the development team.

The next step will be to test the ad in front of Stakeholders. Stakeholders may include employees and customers. Like a review of good art, the test at this point isn’t to see if the ad is funny or well-liked. The point is to ensure that the ad is:

• On-brand, and
  
• That the message is clear, actionable, and memorable.

Again, this test should be conducted by someone other than the team that built the campaign.

Just to reiterate (because it is really important) ... the point of testing isn't to see if people like the ad. A good point here is that it is well documented that advertising that is funny (i.e. well liked) isn't advertising that is easily recalled.

Advertising Methodology (13) - Preparing for Measurement

While the Creative is being built, the Measurement tools also must be built. Measurements may come from a variety of sources including web statistics, sales statistics, customer surveys, and so on. This is the time to dig in, figure out how to measure the results, and build the methods and score-cards to catch the results.

Advertising Methodology (12) - The Creative Process

From this point, the Advertising Campaign enters a Development Realm. The project takes on a distinct creative flare. The Creative Team looks to the strategy work done to date, and brings in previous campaigns and the brand standards to start building the campaign’s Concept.

The Concept will be vetted with the client. This is often a very passionate moment for the client and the Advertising Agency. If the Concept survives this trial at all it may be chewed up and spit out as a sad semblance of its former self. How do you avoid this trauma? There are two tasks that the Advertising Agency has. First of all the Concept shouldn’t be a surprise to the client. The Agency must socialize the Concept with the client throughout its development. Secondly, the Agency must constantly evaluate the Concept against the Advertising Plan and everything that went before it.

The Creative Build may be a relatively long and complex process, and can include everything from writing copy, to shooting & editing commercials, to animating banner ads, to setting up landing pages, to building interactive games, to recording voice-overs, etc., etc., etc.. If the creative involves integrating with a client’s systems – like their web-site, transactional systems, CRM systems, and so on – then the appropriate IT or similar teams from the Client should be closely involved in the development of the system.

Advertising Methodology (11) - The Advertising Plan

Having done all of this research you develop a deep understanding of the company, its products, its customers, and its brand. You also understand the consumer, how they perceive the brand and learn about the product, and how and where shop. Most of all, you get a really good understanding of the bottle-necks and challenges that will prevent a campaign from achieving its objectives. This should lead you to be able to put together a really good first draft of the advertising plan, which will include:

• What are the goals? What does the company need to say to the customer? What is the message?
• How will we reach those goals? What will we do, and what will it cost?
• How do we measure results? How do we determine whether we have accomplished our goals?
• What is the media strategy? What is the best “place” to reach the target market?
• In addition, the Advertising Plan should include the “Plan B”. That is, once the Campaign is in market, and measurements start to pour in, the “Plan B” reflects actions that may be taken if the Campaign is not achieving its objectives.
• Note – by describing the brand, target market, etc., the plan will recognize the expected campaign media but should not dictate the creative. While there may be some assumptions about the creative, the plan should not limit the creative (other than by budget and other practical or relevant dictated constraints). The plan frames the brand, the goals, and how to reach the target market.

Advertising Methodology (10) - The Message

At this point you can define the message that the company is trying to deliver to the customer. This isn’t anywhere near the copy of the ad. It is an important input to the creative process. You have to know that the creative team is getting excited to go crazy with ideas, and this message is a key ingredient to ensuring they head off to do the right thing. The message needs to be a concise and objective document that the creative team can use to understand the salient points you have learned about the company. In that light, the message must include:

• The brand expression
• The audience
• The information the audience needs to hear
• The action that the company wants the audience to take

Advertising Methodology (9) - Purchase Channels

So, now you know what you are selling, who the customer is, how they shop, and what their options are. Now you need to understand the point where a customer drops their money on the counter and buys the product.

• What are the channels?
• How do the channels perform (sales, profitability)?
• What responsibilities does the company have to represent or support 3rd party channels?
• What responsibilities do 3rd party channels have to support the company?
• How or what advertising are the 3rd party channels doing?

Advertising Methodology (8) - Competitive Analysis

Now it is time to understand the competitors. What options are available to the Target Market?

• Who are the direct competitors?
• Are there other substitutes?
• What are their strategies and brands, strengths and weaknesses?
• What are their market shares?
• Where and how are they advertising, and what are their campaigns?

From this you can determine what the sweet spot is to advertise against your competitors. How and who will you pick a fight with? What is the unique thing that you can claim your product / service is the "only" one?

Advertising Methodology (7) - Media Influences

The next step in conceiving and creating great advertising that works is to learn about where the customer looks for information. If your ad is going to get the prospect’s attention, generate interest, make the prospect desire the product, and get the prospect to take action to buy the product … then your ad better be where the prospect is going to be looking. In that light, you need to learn:

• What media does your prospect spend their time with?
• What media does the customer turn to in their purchase funnel? Who or what media do they trust?

From this you may find that your best ad is no ad at all. Maybe you learn that your new strategy should be an email to existing customers, a viral campaign or something else.

Advertising Methodology (6) - Purchase Funnel

Closely related to the Target Market is a need to understand how the consumer buys the product. How do they choose the product they are going to buy and where do they look for information? Looking at a simple sales funnel model, it is important to understand how a member of the target market moves from being a prospect to a customer.

• What is the purchase cycle for this product?
• Who is involved in the purchase cycle?
• How long is the purchase cycle?

You might even consider a trip to a point-of-purchase to observe the shopping behavior.

Advertising Methodology (5) - Target Market

It is now time to learn about the Target Market. Who uses the company’s product, how, and why? What is the benefit to the consumer? Who is the consumer? How do you find the buyer?

• Digest all the research that the client can provide you
• Look for additional research from 3rd parties
• Consider performing additional research

Can you ever really know too much about the Target Market? You don't want to spend your entire project learning about who buys the product and how they use it. But be sure you spend enough cycles on this so that you are communicating with the right crowd and doing it the right way.

Advertising Methodology - (4) Goals / Objectives

Now that you know the brand, you can learn and understand the campaign that you are being asked to run. What are the goals or objectives of the campaign (e.g. brand, retail, communication, etc.)? What does the client believe they need you to do? As part of the overall Strategy exercise, you might find that you need to help them learn about better objectives as you proceed through various iterations of this method:

• Who are they trying to communicate with?
• What are they trying to tell them?
• What do they want them to do?
• What is the time horizon for them to do it?
• What’s the urgency that a customer should respond to?
• Why?

As you learn more about the company, the brand, and their objectives, you may need to ask each of these questions several times (of both your client and yourself) in order to understand the branding, retail, or other communication goals of the upcoming campaign.

Advertising Methodology - (3) Understanding of business strategy and brand

The old adage of “you can’t manage what you don’t measure” is an important one. We’ll come back to that, but we’ll start with a new adage, “you can’t advertise what you don’t know”. What does that mean? Start at the top. Understand what the company is all about:

• What’s the overall business strategy? For instance, Porter’s generic strategies include: Cost Leadership, Differentiation, & Segmentation
• What is the brand all about? What are the marketing and brand plans, and how do they align with the business plan? What do Senior Management believe the company stands for? What does the company stand for in its constituents' eyes (customers, employees, suppliers, etc.) and how do they believe the company supports the brand promise?

Get to know that, and you're over the first hurdle to creating great advertising that works.

Advertising Methodology - (2) A "V-Model" for Advertising

The “V-model” for Advertising represents how strategy must be considered as a critical part of creating and executing an advertising campaign. Of course, depending on the Client, the campaign, the available budget, and so forth, this methodology would be customized for the Client. To that end, there may be fewer or additional steps to take throughout the Advertising Campaign method.

So, here it is ... the "V-model" for Advertising:

Weaknesses with Advertising usually happens before the Creative process takes place. So, over the next several days I'll focus on the things that happen up to the point that an Advertising Plan is created. Watch for:

• Understanding of business strategy and brand
• Goals / Objectives
• Target Market
• Purchase Funnel
• Media Influences
• Competitive Analysis
• Purchase Channels
• Message
• Advertising Plan

Advertising Methodology - (1) Introduction to the "V-Model"

Most advertising campaigns pull at a subset of activities that allow an Advertising Agency to produce a TV commercial, a newspaper ad, a banner ad, or some other “media insert”. Imagine if you will the conversation between the Advertising Agency and the Client,

• Client: I want more people to know what I sell, … I want a TV ad, … and my budget is $x.
• Advertising Agency: [pause on a brief consideration of the stated goal. Then, toss out easy or crazy creative first, second, third idea, etc.. Concepts that could win awards. Concepts that could change their world. Then ... Make a leap of faith at a Concept and heads for the Pitch.]
• Client: [Salivating] Let's do it.

After that, all that is left is the actual production of the creative and some media buying. No one ever measures the results. So, the campaign must be working.

Hmmm … There must be a better way!

There is, and it starts with a "V-Model". A "V-Model" is a representation of a project that aligns "Responsibility" for activities horizontally on the diagram. At the same time, as you step through it from left to right (i.e. from top to bottom on the left side of the "V", and the bottom to top on the right side), you get a clear representation of the steps necessary to deliver the project. Here's what a simplified "V-Model" might look like.
In this diagram the train of events for a project is simply:

1. Senior Management has a vision of what they believe they need to achieve results
2. Middle Management boils that concept down and provides instructions to their teams on what to build and potentially how to build it.
3. Workers (be they knowledge workers, laborers, or a combination) set out to design and build the "thing".
4. Workers (preferably other workers than those who designed and built the "thing") subsequently test the "thing" - perhaps by editing it, running it through a formalized test (e.g. a focus group or systematic IT testing) with the goal of ensuring the "thing" works or fails, and then getting the Builders to fix it as necessary.
5. Middle Management reviews the results of the test and makes the decision that what was built actually works as it was supposed to, is what they asked for, and more importantly, will deliver on the vision. They sign-off to put the "thing" into "production".
6. The "thing" produces results which either are satisfactory to the Senior Management or are not. If they aren't then the Senior Manager failed at any or all of (a) the vision, (b) ensuring a good system was in place to communicate the vision and requirements in order that the right "thing" was produced, or (c) creating, uniting, and aligning a great team that could produce.
   

... Next up in this series, we'll look at a "V-Model" for Advertising. Stay tuned.