Will advertising work for you?

Does the size of your advertising budget contribute to your advertising’s success?

One of my clients recently asked me, “Does advertising work?” I wasn’t sure why he asked me this. Our advertising had been extremely successful at raising his sales in recent months so I assumed he knew that it worked. So why the question? It turned out that he was wondering if there was a perfect way to measure the effectiveness of advertising. There’s no perfect way to measure anything but I thought I’d take a look at three key points that may help my client, and you, make more balanced decisions around your ad spend

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Does money influence brand value through advertising?

No. Money isn’t a guarantee of success in any industry. In 2013, Microsoft spent $2.6 billion on advertising, while Apple spent $1.1 billion. Did Microsoft’s bigger budget make them a bigger brand?

The answer is no. According to a 2013 report in Forbes, Apple is the world’s most valuable brand, worth a staggering $105 billion, while the Microsoft brand is only valued at $57 billion. Proof then that having deeper pockets doesn’t make you more successful. Perhaps it’s far easier to advertise, and in turn sell, better brands that are worth more than the sum of their parts? Everyone knows Apple is an awesome brand that makes amazing products, while Microsoft is a lot less remarkable.

But what would happen if you had to advertise a more ordinary product, like cheese or cat food? Well there should be no difference as to how effective your budget is, regardless of whether you’re spending $150k a year or $2 billion a year. You have to ensure that the basics are done right, that your creative execution is smack bang on brief, and that your media buying is as effective as possible. While I’ve never worked for Apple, I’m sure their basic advertising processes are similar to Microsoft’s. The same can be said for Toyota and Ford.

Does the size of your advertising agency contribute to your success?

David Ogilvy wrote in his autobiography, “Confessions of an Advertising Man”, that size wasn’t necessarily relevant unless you wanted it to be. He wrote about the time the head of a mammoth advertising agency solicited the Camel Cigarette account and promised to assign 30 copywriters to it, but the head of R.J. Reynolds simply replied, “Why can’t you just give us one good one?” Makes sense to me.

However, if you’re the kind of person who needs to delegate everything, then 30 people working on your advertising is what you need. If you’d prefer to be more hands on and in touch, then perhaps you only need two people working on your advertising. In some cases the very business model that you’re trying to advertise might be so flawed that no amount of people can fix it. Take as an example the recent demise of The Good Guys. Could a huge number of advertising folk have saved them? No. The Good Guys were about being cheap and boring but in New Zealand, you don’t get anything cheaper or more boring than Harvey Norman. The boring slot was already taken and no amount of advertising or money could change that or save The Good Guys.

Caveat emptor - “Let the Buyer Beware”

What is the most important contributing factor to the success of your advertising? It’s you. Think of your advertising in the same way as if you were buying a new car. You can try out as many different brands and variations as you’d like until you’re happy, but how much you pay for it, what marque you buy, what colour it is, how many extras you get – these are all decisions that you make. Sure the salesman and the brochure may sway your thinking, but you, and only you, get to say yes or no to the final purchasing decision. This responsibility carries on throughout your ownership, as all the decisions you make as the owner are yours and yours alone.

Let’s face it – you’re the one making the decisions when it comes to your advertising. Whether you choose a campaign that’s going to challenge the status quo or whether you wimp out and go for something mundane that pleases the board of directors, you made those decisions, you gave the instructions and approved whatever it was that lead to the end result that the advertising delivered. The success of any advertising will always rest with the person who signed for it.

Is there truth in advertising?

Last night I was in front of the TV watching the news. During the advertising break the Mad Butcher’s advertisement popped up about his latest chicken offer.

He said he was having a special on Tegel Chicken, which he declared is “New Zealand’s Favourite Chicken”. That got me wondering how Tegel and Sir Peter came up with that claim.

I went onto both the Tegel and the Mad Butcher’s websites and couldn’t find much to substantiate their claim. Perhaps they got to this conclusion based on how much chicken they produce and sell but having a monopoly on chicken production doesn’t make you the country’s favourite. That’s like claiming that the Northern Motorway from Albany into Auckland is New Zealand’s most popular road just because of the huge volume of traffic on it every day. Highly illogical. 

Add into this that Tegel is not a New Zealand owned company (they are owned by an Asian-Pacific company called Affinity Equity Partners) and it seems highly dubious that they are indeed “New Zealand’s Favourite”, given how much fuss us Kiwis kick up when it comes to foreign ownership of our land and businesses.

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Tegel’s advertising “claims” are nothing new. There are hordes of similar ones out there, from the biggest companies to the smallest. British Airways claims to be “The World’s Favourite Airline”.  Carlsberg Beer jokingly claims to be “probably the best beer in the world” (at least I think they’re joking). Quilton Toilet Paper claim to be "New Zealand's favourite toilet paper" which asks so many questions, especially " how does Quilton know?" Who honestly submits their bum to market research? Who would sit on a loo and test various grades of toilet paper for $15 an hour? Quilton's claim is the most empty of the all the brand promises you're likely to find from now until the end of the world.

The problem is that companies and their advertisers are not obligated to be 100% honest with consumers and there are some that really go out of their way to be dishonest. Sure there are certain controls put in place by the advertising industry but in reality, it is you, the consumer, that has to be 100% certain you believe them. If you’re unhappy with advertising then you shouldn’t support that brand and you should definitely complain, it’s the only way your voice will be heard. However, make sure you complain at the highest level possible. The poor sod working behind the counter for $12 an hour most likely wont give a damn (after all, this isn't his real job) so you need to climb the ladder. Find the Muppet with the Land Rover and let him know what you think. The truth is he/she (if they care) should be happy for the feedback you give them, after all, you can learn so much more from the customers who complain than from those who don't.

Getting the perfect advertising agency.

Let’s face it, if you’re involved in the marketing of your business, it’s highly likely that you’ll have to deal with an advertising agency.

There are hordes of advertising agencies out there, and the truth is they’re all pretty much the same: clones with only the slightest imperfections differentiating one from the other. They all have access to the same computers, the same software, and the same media info. They even all have the same swanky offices and fast cars. What really differentiates an advertising agency is its people. So how do you know you’re getting the right people? Here’s some valuable insight to help you make what can be a difficult decision.

Ditch the “pitch”.

If you spend large sums of your money on advertising agencies, and if your profits are dependent on their efficiency, it is your duty to take great pains to find the best possible advertising agency. 

Amateurs do it by cajoling a group of advertising agencies into submitting free campaigns on speculation. This is called a "pitch", and it’s a complete waste of time.

Let’s put the “pitch” into another real-world example. You decide to go out for dinner. You head to the nearest mall and choose a restaurant at random. Once seated you tell the waiter you’d like a glass of water and some meat. The waiter is stunned and replies “What kind of meat, sir? We have a number of different dishes, all of them equally delicious.” To which you respond, “bring me something that I’ll like and if I don’t like it I’m leaving and I refuse to pay for it.”

Now that’s guaranteed to get you thrown out (and hopefully beaten to a pulp) and that’s why no one orders a meal like that. It’s rude and just plain stupid – how can you possibly get what you want? And that’s really the advertising agency “pitch” summed up quite nicely: a pack of hyenas chasing a slab of meat.

The “pitch” is perhaps the biggest misrepresentation of the capabilities of any advertising agency.

The advertising agencies that win these “pitches” are the ones that use their best brains for soliciting new accounts, which means they relegate their existing clients to their second-best brains.

This is because everyone (and I really do mean everyone) in advertising knows it’s way easier to keep a client than it is to get a new one. It’s a guarantee that the genius intellects you see at the pitch will rarely be seen once the agency gets your signature.

David Ogilvy was in complete agreement, and he said, “If I were a client, I would look for an advertising agency which had no new business department. The best agencies don’t need them; they get all the business they can handle without preparing speculative campaigns.”

The sensible way to pick an agency is to employ a marketing manager who knows enough about what is going on in the advertising world to make an informed decision. Ask him to show you the work from the three or four agencies he believes to be best qualified for your account. 

Once you have your shortlist it’s time to call some of their clients. This can be particularly revealing. Be completely honest when you call and see how these clients respond to your probing. Do they feel threatened that another (perhaps bigger) company might be coming onto the client roster? Ask them who they deal with on a daily basis, and what they’d change in the relationship if they could.

Go back to school.

Once you’ve done this, it’s time to break out some old school thinking. Invite the head honchos from each of the leading contenders to bring two of their key people to dinner at your house. Loosen their tongues. Find out if they’re discreet about the secrets of their present clients. Find out if they have the spine to disagree when you say something ridiculous.

Observe their relationship with each other; are they professional colleagues or quarrelsome politicians? Do they promise you results that are obviously exaggerated? Do they sound like extinct volcanoes always harking back to their glory days, or are they alive with possibility and endeavour?

Most importantly, are they good listeners and are they honest? The purpose of this exercise is to find out if you like them enough to give them your money to spend. The relationship between client and agency has to be an intimate one, and it can be hell if the personal chemistry is sour. 

So before you commit, ask any agencies that want your business to show you the five most surprising, challenging and innovative things they took to their existing clients over the past year. A blank look at this point is sufficient reason to usher them out of your home, but a fired up and enthusiastic response showing some really clever thinking – well, that’s a very strong reason to keep chatting.

Once you’re committed to an agency, and your expectations are clear to them, then they need to be delivering everything they promised right from the start. More importantly, they should be exceeding your expectations on a regular basis and they should be surprising you by pushing the boundaries and bringing you ideas that make you a little nervous, that break new ground, that you haven’t seen before.

If you only ever see executions and campaigns that you expect, then the agency isn’t really looking to grow your business as much as it should be.  

What Advertisers Can Learn From Toyota

Many years ago, the American car manufacturing industry ruled the world, but that was only until Toyota came along.

Why was Toyota more successful than General Motors? They both had access to the exact same technology, their products are essentially identical (four wheels and an engine), and their customers are also basically the same. But GM currently has a market capitalisation of $60 billion whilst Toyota has a market capitalisation of $202 billion. Why the big difference?

Toyota had a simple (and better) working philosophy: continuous improvement and respect for people. It’s called The Toyota Way and is essentially an approach that involves the company’s front-line workers in improving their own work. It has much to do with the Japanese philosophy of Kaizen – “perfection in manufacture”.

Toyota’s idea of drawing improvements from the people on the front line is critical to the company’s success and is something many New Zealand businesses would be wise to take note of, regardless of their industry. Companies that push work improvements from the top down usually generate weak front-line enthusiasm, and I think we all know why.  Despite some missteps in recent years, Toyota’s ascent to the top of the auto industry has been due to one reason and one reason only: quality. And the main reasons for its unrivalled quality are worker participation and total focus.

When a problem is discovered on Toyota’s production line, Toyota stops everything to sort it out then and there. Production would actually have to wait for the problem to be solved before continuing. There are numerous legendary stories covering just how precise Toyota was at sorting out even the smallest of hiccups. The story I like the most is this one:

On the Toyota production line, in the days before automated robotics, every worker was given precisely the right amount of tools and equipment he needed to get the job done. Assembling 12 doors? Needing four bolts per door, the worker gets 48 bolts, and that’s it. If some sort of malfunction happened with any one of those 48 bolts (or anything associated with them) the entire production line stopped.

The problem was assessed right there at the production line and solved. And once it was solved it rarely appeared again. This is in stark contrast to the way the Americans did it. Assembling 12 doors? Again needing four bolts per door, the American worker gets a bucket of bolts. If one bolt doesn’t work, throw it out and find another bolt to replace it with! And you better do it quickly before you lose your job. Nothing stops the production line.

At Toyota, everyone’s job description is to improve on what they’re already doing. The company culture encourages front-line workers to suggest improvements to their work and to help make them. Management has a relationship of mutual trust and respect so workers can make suggestions without fear of getting fired. So workers are deeply engaged in improving both the quality of their work and their work conditions and also form a sense of pride and togetherness. Unlike most companies, Toyota doesn’t keep top management away from the field by using suggestion boxes. Senior managers go to the front line and listen, which shows respect to those far from the executive suite. That in turn further energizes workers.

So what does The Toyota Way have to do with advertising and marketing? Quite a lot actually. No amount of marketing and clever TV ads could make Toyotas reliable and well-built. Every single person at Toyota empowered the company’s marketing. This philosophy and the associated principles made marketing Toyotas so much easier.

I’ll be the first to admit that Toyota isn’t the coolest or hippest of the car manufacturers (except for the 86 model) but they’re good, honest cars, and you know that the marketing was thought of way before the car went onto the production line. This is in stark contrast to Nissan, whose advertising is so over the top and so vacuous that they have to put disclaimers on the ads saying, “Fantasy, do not attempt. Cars can’t jump on trains.”

Whilst Toyota didn’t revolutionise marketing, they at least allowed everyone at the company to contribute to it if they wanted to, and that’s vitally important. If you want to make your marketing job easier, then start looking for ways to get more of your colleagues involved. The truth is that they want to be involved whether you like it or not. After all, marketing is a creative field and anyone can be creative (so the saying goes). But we all know that creativity can be extremely hard to measure and understand, just ask Vincent Van Gogh. So rather than taking it all on yourself, get some help from those around you, because marketing is too important to be left to the marketing department.