Why Brand Advertising Can Make You Bankrupt

There are two forms of Advertising. The first is Brand Advertising. The Second is Direct Response Advertising. So many of us are blinkered on this subject. It’s because we are surrounded by…..in fact totally immersed in the world of Brand Advertising.

Brand Advertising is EVERYWHERE.
Virtually every TV Commercial you see is Brand Advertising. Every poster you drive by is Brand Advertising. Many of the commercials you hear on the radio are brand advertising.

Just to be clear, Brand Advertising is advertising that promotes a brand, that gets a brand name into your head. Coca Cola is an example of Brand Advertising. So are all the TV commercials for new cars. So is virtually every commercial or ad that has semi naked women or men in it. They are using a complex and fascinating neurological process called ‘anchoring’ to get your brain to associate pleasant feelings (that’s the semi naked part) to their product (eg the car) Most of this goes on outside of our conscious awareness. But as a result of the billions these companies spend (yes billions) we all feel drawn towards the brands.

Of course you and I are far too intelligent to be influenced by this type of manipulation, but it works with everyone else, right? By the way, what beer do you drink? What perfume do you wear????

Anyway, branding is a fascinating subject…… It makes total sense for these multi national corporations to engage in it. It is incredibly powerful. The only thing is, it’s got virtually nothing to do with the success of your business.

So What’s the Problem?
Good Question. Here’s the problem.

Mr Smith owns a local tailors. He’s built the store up over 10 years through word of mouth recommendation. Now he’s going to do some serious advertising in local newspapers and in some regional magazines.
90% of the advertising that Mr Smith has been exposed to throughout his life has been the type of brand advertising discussed above. So, not surprisingly he thinks that’s what ‘advertising’ is.

He gets a designer to create an ad for him that has his logo at the top, a picture of some of his best suits…a snazzy slogan because that’s what you do in advertising…he runs his ad for a few weeks. He gets three responses and two of those are from other publications trying to sell him advertising. He calls the newspaper sales rep and says he’s disappointed….. The sales rep tells him not to worry because it’s all building his ‘Brand’ in the community. He soon finds that the bank manager is slightly more interested in ‘cash in the bank’ than ‘brand in the community’ so he gives up on advertising and never does it again.

Mr Smith’s Solution
Mr Smith’s story is very common. The reason I’m going on about this issue is I continue to hear from very well intentioned business people who are in deep trouble because someone sold them into the concept of building their brand.

Mr Smith needed someone to explain to him that he needed to do Direct Response advertising instead. This is advertising that produces a clear, measurable response. Perhaps an ad that tells people that if they come in his store this Saturday with a copy of the ad, they’ll get 25% off their new suit and a bottle of Champagne.

It produces a response…. Five people walk in on Saturday with the ad and three of them buy a new suit. The ad more than pay for itself. Everyone’s happy. Simple as that. But it can only happen if Mr Smith understands the principle of Direct Response Advertising.

But my Business is different
Let me backtrack a little….

One of the other problems with Brand Advertising is it’s very hard to measure. Coca Cola can certainly measure the effectiveness of their advertising across the year in any particular country or region, but it would be virtually impossible for them to measure the effectiveness of one ad in one publication.

That’s fine for Coca Cola because they can afford it and they’re engaged in a totally different activity than a small business owner. Intelligent business people still try and justify why they’re still engaging in brand advertising that’s virtually impossible to measure.

Their argument is that they’re a growing or reasonably large business and that they have a ‘recognised brand’ and that the advertising is helping to promote that brand.

I’m sure it may be. But they’re missing the point.

This is the best bit of all….. but virtually no one gets it. Here’s what they don’t get….

ALL DIRECT RESPONSE ADVERTISING IS ALSO BRAND ADVERTISING

Let’s take our tailor, Mr Smith as an example.

His ad that promotes his offer for people to come in on Saturday and get their discount, will have his address and phone number prominently displayed. It is a direct response ad because it is designed to produce a response that can be clearly measured. People will be rewarded for marching into his shop on Saturday waving the newspaper ad as proof that they read it.

But as an added bonus, it’s also great Brand Advertising. It builds the profile of Mr Smith and his store into the minds of thousands of others who see the ad, but who don’t respond on this occasion. We can’t really measure how useful that is but it doesn’t matter because it’s just an added bonus….the ad has paid for itself through it’s direct response component.

So you can have your cake and eat it…you can have your Brand Advertising but it should always be an ‘added bonus’ once the direct response part has paid for the ad.

What do all the people who want to spend a fortune on ‘Brand Advertising’ have in common?

I have noticed a fascinating pattern of behaviour over the last couple of years, particularly in slightly larger businesses.

I’ve noticed that the people who fight tooth and nail to continue their Brand Advertising all have something in common.

Can you guess what it is?

It’s not their money that’s being spent. That’s right. It’s not their money being spent.

You can always be certain that the people fighting to maintain those expensive glossy ads that are not working, are not spending their own cash.

They’re also not spending their own cash when the advertising agency takes them out to lunch and talks to them about the importance of ‘Brand Recognition.’

Highly successful entrepreneurs and business owners immediately get the distinction between Brand Advertising and Direct Response. Immediately. Why? Because it’s their cash.