'Half the money I spend on advertising is wasted. The problem is I never know which half'
Lord Leverhulme - Founder of Lever Bros.
Advertising is the
most visible and in the case of fast moving consumer goods can be the
most costly part of your marketing program. Within this single
discipline a number of different specialized functions are found such
as media selection and purchasing, strategy development and development
of creative expressions of the strategy in the form of scripts,
storyboards, layouts and so on.
If the budget is
considerable, say six figures and more it usually makes sense to
appoint an advertising agency with experience in your market category.
This process is complex in itself and it may be worthwhile to appoint a
marketing consultant to assist you in making a choice of agency
appropriate to your needs.
The field is so competitive that many agencies will be prepared to make a speculative creative submission.
There are various
methods of agency remuneration. The most common is through media
commissions (usually around 10 per cent) combined with additional fees
paid by the client (from around 7 to 10% of media billings).
Many advertisers argue
that this method is inequitable, as it bears no relation to the amount
of work undertaken. The straight fee system has become increasingly
popular among advertisers. When a program has been mapped out a
'creative fee' is negotiated based on the amount of work
required. In this method media commissions are rebated to the
advertiser. Often this is accompanied by an additional media placement
fee of a percentage of gross media billings for media planning,
negotiation and placement.
Most money spent on
advertising is wasted. This is because it is either ill conceived or
badly executed or both. But when it is done well, the results can be
spectacular.
The starting point in the creative process is to ensure is that the brief is 'on strategy'.
This requires clarity
in defining the advertising objectives, which are a sub set of the
marketing objectives. You need to define the target market or audience,
the message to be conveyed, the product positioning, the product
proposition, the desired brand image and the net impression you want
the advertising to leave with the reader or viewer.
It is important that
you get this right in your own mind and to commit it succinctly to a
single sheet of paper. When you have done this the task of the agency
is to deliver a creative interpretation of the strategy. A clear and
concise brief will also allow you to evaluate the effectiveness of
'the creative interpretation remembering that the responsibility
for spending the budget effectively rests with you – the
advertiser after all it is your money – not the agency's.
The importance of the
'creative product' cannot be overestimated. A creative
advertising campaign will be far more effective than the same budget
spent on media using less imaginative creative material.
Setting the
advertising budget is another integral part of a marketing plan.
Unfortunately there are no set formulas to follow in doing this but
there are a number of guidelines you should consider. These are:
Allocating an affordable fixed percent of budgeted sales
How much your competitors are spending
A cost estimate of what will be
required to achieve set objectives such as reach and frequency or
target audience ratings points (TARPS) against your target market.
Historical spend levels.
Consideration of each
of these factors will allow you to arrive at a realistic figure.
Another useful tool is the compilation of a 'what if'
spreadsheet showing estimated sales and gross profit scenarios based on
a range of advertising spend levels. These can be based on
'optimistic', 'pessimistic' and 'most
likely' scenarios using historical data to guide you.
All too often an
advertising budget is regarded as discretionary expenditure. When
market conditions are tight the advertising budget is often the first
cost to be slashed.
Yet advertising and promotion is a cost of doing business just as much as production and administration costs.
Do not regard advertising as a discretionary item
You need to regard
advertising as a fixed cost - not as a discretionary item and to
suppress the urge to cut advertising at the first sign of slowing
sales. This is the very time you need to consider increasing your
advertising profile and visibility.
Advertising on its own
will not sell your products or services but used in harmony with the
other elements in the marketing mix, it has the potential to give your
sales a potent stimulus.
Media Selection
Selecting the right
mix of media for your advertising is one of the most important aspects
of advertising. Effective advertising requires not only the right
message but also the right mix of media to get that message across. You
need to be able to make sure that the target market knows about the
product, develops an interest in its features and knows where to buy
it.
You will be able to
narrow the media selection options process down by using the
Advertising Media Pros and Cons reference guide following.
Do not fritter money or effort.
One of the golden
rules to remember in advertising is do not fritter money or effort. It
is better to concentrate your budget in one or two media than to spread
your funds too thinly across many.
