A Very Costly Mistake

Introduction by John Callaghan

When I first started working as a professional marketing consultant, over 15 years ago, I was shocked by how many companies were wasting a ton of money on advertising because they were using the wrong style of advertising. You didn’t know there was more than one style? Read this MYM newsletter….it’ll save you a small fortune if you follow the advice.

Note: I went through some training with MYM many years ago and have rights to their newsletters. I’m posting the ones to this blog that I believe will help any company make the transition from being “product driven” to being “customer driven”.

You’re Not General Motors, McDonald’s or Coca-Cola, So Don’t Emulate What They’re Doing by MYM

The key to their success isn’t necessarily based on how good they are (inside reality), but rather on advertising repetition. General Motors, McDonald’s, and Coca-Cola advertise for the sole purpose of building distribution and BRAND awareness. They do image advertising – their ads attempt to marry a lifestyle feeling to their product so you’ll get that same feeling when you go to buy.

In 1997, Pepsi spent $1.24 billion in advertising, while Proctor & Gamble spent $2.743 billion. McDonald’s spent $1.041 billion and General Motors spent a whopping $3.087 billion! That’s why GM can hum a tune “like a rock, like a rock, like a rock” and it works. If you spend over a BILLION dollars, you’d get stellar results too! Here’s a stat that will surprise you: Do you know how many billboards Coca-Cola has along American roads? A thousand? 10,000? 100,000? Try 300,000! Along with 20,000 building walls painted with their logo, over 5 million soda glasses with their name printed on them, and over 400 million newspaper and magazine advertising impressions…IN 1930!  See, it takes time and money to really build that kind of brand awareness…and it can work great for your advertising and marketing IF you are fortunate enough to have a marketing budget over $100 million a year.

99% of advertising is nothing but a huge jumble of hyperbole, fluff and unbelievable platitudes with black-hole nothing words: cheapest, professionalism, service, quality, speedy, convenient and best. You’ll hear a lot of commonplace phrases and one of the most popular ones is We’re Number One. Well, whoop dee doo. Number one in whose eyes? These mindless words and phases do absolutely nothing to communicate why you’re the best deal, why you’re an exceptional value, why or how you solve the problems that nobody else solves. But most businesses go on year after year spewing these verbal platitudes that do nothing more than get their name out there…if that. Why would anyone want to waste marketing dollars that hardly say anything to anyone? It’s because the majority of us have been obediently trained from the wrong sources on how to advertise.

We now have three types of businesses that give people what they want. Level ONE business, surprisingly, is the biggest provider of services and products in this country – our government. Some of us would adamantly argue that our government has taken over our education system, transportation, safety & protection, our savings for retirement, and distribution of food and clothing for over 15% of our population. Even many of the medical and legal services are closely controlled/provided by our government. Average business owners cannot compete in these markets, which control as much as 40% of our gross national product.

Level TWO businesses are what we call the Fortune 5000, which includes the top 1 to 5 thousand companies in the country. They are comprised of premier global majors with diverse growth portfolios such as ConocoPhillips, ExxonMobil, General Motors, McDonald’s, and Wal-Mart. Some of the top Fortune 5000 companies have portfolios of high quality assets, capabilities, and financial strength to generate enhanced value for its shareholders. We’ve been indoctrinated by years of advertising and social acceptance to buy from these companies. Any product or service that can be standardized and distributed to 80% of the population without changing the design or concept has been converted to a national brand name over the last 50 years. They have the financial resources to advertise all over the place…a million dollars here, half a million there. It takes a lot of money and time to build that kind of brand equity.

Level THREE businesses include everybody else. Everything from start up businesses and mom and pops, all the way up to companies that do hundreds of millions of dollars in annual sales. Level 3 companies cannot rely on broad-based repetition-oriented advertising that builds brand awareness. It’s not that Level 3 businesses can’t or shouldn’t build brand awareness. And it’s not that they can’t spend a lot of money on advertising. They just can’t do it nationally on ABC, NBC, and CBS at $50,000 to $500,000 per 30-second spot. Level 3 businesses need to be more frugal with their marketing budget in order to create successful action-oriented advertising.

Because of the integration of advertising into our daily lives, we are constantly exposed to Level 2 advertising. And everyone assumes, based on years of passive observation, that’s how marketing and advertising are done. That probably explains why so many people consider themselves to be advertising experts. People say, “Hey, I’ve been submersed in it my entire life, so I certainly must know something about it.” If you go to college and learn how to do advertising, they’ll teach you Level 2 business advertising. That’s fine if you’re working for a Level TWO business. But here’s the problem: most of these folks who graduate with all these degrees in advertising and marketing don’t know how to make money in the real world. If you stick them in one of the Fortune 5000 company’s marketing department, they might do okay, but if they don’t have the 20, 50 or 100 year history of the company backing them up, along with the multi-million dollar or billion dollar advertising budget, they don’t know how make money. They don’t know how to get prospects to take action. And for you, that’s what’s crucial – getting the prospect to get past the confidence gap, to realize that you offer a superior value, and to take action.

What you need to be able to do is craft your business and then advertise where prospects can take action that will lead to a purchase. That action could be anything. Maybe it’s to call in and place an order or to request an information kit. Maybe you want the prospect to send in a reply card, call a toll-free hotline or visit your website. That’s different than Level 2 advertising where you’re trying to create a feeling/lifestyle and attach it to your product. You’ve got to manipulate your advertising so the prospect will take ACTION!

The bottom line is that you have to spend your marketing dollars more intelligently than level 2 businesses. The way you do that is by using action-oriented advertising. There are many benefits to this type of advertising. The main one is that you know almost instantly how profitable or unprofitable your ads are…based on the number of inquiries, orders, hits or leads you receive DIRECTLY from the ads. You’ll hear a lot of people in the advertising industry say you can’t quantify the results of your advertising like that…and in some cases they’re right. But that’s only because many businesses don’t understand the fundamentals of how to make their advertising make money. Some people will bark that you can’t do action-oriented advertising in certain media. Again, you can, IF – and only if – you know how to do it properly. There are a lot of factors and components that will affect your response. You’re not General Motors, McDonalds or Coca-Cola, so don’t emulate their advertising.

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