Wednesday, May 28, 2008

Unlock the secrets of Internet Advertising

In my travels, I have discovered that there are lots of people that still are clueless about how advertising and the internet work.

After all, it is one of the fastest changing and growing mediums.

On one hand, we have ad agencies that are used to the old traditional media such as radio, tv, print, yellow pages, outdoor, etc.

On the other hand we have the tech crowd that sometimes has difficulty translating tech talk into common language.

(Don't take it personally, I have come to realize every profession has their own language that is sometimes difficult to understand. My wife works as a nurse and she never uses terms like scrape and cut, it's abrasion and laceration!)

So how do we navigate successfully through the world of the world wide web and advertising?

I suggest we do it from an end users perspective, the consumer.
Take a look at how their habits are changing and you'll discover how to advertise and market using the internet!

Are you a service contractor such as a plumber? In the past, you most likely spent money on being in the phone book, where your customers would SEARCH for you when a pipe broke.

Now your customers are looking on line instead of the phone book, so you need to be found by Google when a customer types in plumber and your town. And to increase your chances of being found, you may need to buy text ads from Google too. Google now has more than 70% of the search market.

Are you a retailer that has sales and you have used newspaper and direct mail? The internet equivalent is email and banner ads. You reward your regular customers with special offers and printable coupons when they give you their email address. (Another idea is that you give your customer something free when they give their email to you.)

One of the biggest challenges you are going to have is to get local customers to find your local website.

This is where you may need to piggyback on an existing high traffic local website. Newspapers and Broadcasting outlets often are the most visited local websites since they have nearly limitless promotional ability to draw listeners, viewers and readers to their sites.

Most sell advertising on their sites too. Make sure you get a clickable link that will take people directly to your site from theirs.

Finally today, you must include your website address in all your advertising if your website is worthy of going to. (If your website needs help, contact me and I can recommend website developers that I know personally).

Your print advertising including the phone book, must have your web address. Your broadcast advertising, must have your web address. Your promotional pens, notepads and coffee mugs must have your web address.

See, by applying common sense to this whole internet/advertising equation, it's not that hard after all!

Monday, May 26, 2008

How much is a customer worth?

Like everything else, it depends.

But to help you sort out the variables, I have some examples.

Fast Food Restaurant that serves breakfast, lunch and dinner.

Odds are that they have regular customers at the drive-tru every morning spending 4 bucks a day.

Perhaps they only visit 3 days a week. There's $12 bucks a week.
Let's say they do this 9 months each year. 39 weeks times $12 = $468.00

Do this for just 3 years and we are up to $1404.

Let's say they grab dinner for the family twice a month at $25 bucks, or $50 a month times 36 months and we have another $1800 over three years.

Together that's over $3200.

And these are typical but conservative figures.


$10,000 for a 20 year roof.
Three neighbors also get bids when they see the quality work being done. One of them buys now, another buys in a couple of years.

Average cost was $10,000 or $30,000 total.

Coffee Shop.

Another one of those small but frequent purchases.
5 bucks times 5 days, plus bringing a friend a couple days a week and perhaps another visit with friends over the weekend and that 1 customer can be worth 50 bucks a week times 50 weeks and you've got a new customer value of $2500 per year!

Then let's say this customer refers 4 friends during that first year.
Now by reaching that first customer and earning $2500 in year one, you are now earning an additional $2500 from his 4 friends for a total of $12,500 in year two!

This is how you should measure the true value of a customer!

Friday, May 23, 2008

How to tell if your advertising is working....

There are many things we can measure in the business world, such as income and expenses. But how did we get our income? What part of our ad budget is being spent wisely? What are we wasting?

When I began in the advertising side of media 20 plus years ago in Detroit, we did things differently than nearly every other radio station in town. We wanted to measure actual trackable results. And now that radio station is still going strong 49 years old with the same basic format and same advertising philosophy as when I worked there for 8 years.

They have advertisers on their airwaves that I put on the air 20 years ago that have seen a return on their investment and continue to use that radio station because they believe it works for them.

However, it is truely impossible to measure with absolute certainty, the effectiveness of any one form of advertising unless you are only marketing in one solitary form.

If you have a sign that can been seen without coming into your store, then you have to count that as part of your marketing.

If you have business cards that you hand out, then you have to count that as part of your marketing.

If you spend $5000 a month on Radio Ads for 12 months, then you have to count that as part of your marketing.

If your Yellow Pages bill is $3000 a month for 12 months, then you have to count that as part of your advertising.

See, the reality is that each part of your marketing is supporting another part and all the parts together add up to the sum total of your marketing efforts.

I may drive by your place 5 days a week, without a second thought until I have a need for what you sell. Then hopefully you will be on my short list of places to contact to take care of that need.

Can you track your advertising? Sort of.

I had a restaurant that asked customers at the cash register what radio station they listened to and asked them to put a check mark on a list that was taped to the counter.

I liked it when my radio station was ahead one day. But three days later when I went in for lunch, nobody asked and only a few people took the initiative to answer the in house survey.

Tracking coupons is flawed too, because there are customers that see your coupon and never use it, but spend money with you because you have branded yourself using coupons. And there are the customers that only visit you when they have a coupon, but shop your competitor when you don't have coupons.

Ideally, your various advertising and marketing efforts are reaching you ideal customer repeatedly so you become a good habit and your loyal customers create positive word of mouth.

That means your advertising messages are coordinated to eliminate confusing or conflicting images and brands. This is not easy. It's why ad agencies are hired and media buyers are used, so you can run your business, and leave the marketing to the "Professionals".

But I told you that I would tell you how to tell if your advertising is working.

Here's how.

Look at your gross income for the 12 months before you started advertising. Compare it to the next 12 months that you did advertising. Did more money come in the door? Then whatever you did differently probably had an effect on the positive result.

Here's another way. If you spend $10,000 in advertising over a certain period of time, what do you need to earn that money back, in Gross Profit? Did you at least break even? Then given the unreliabilities of tracking, you probably made money.

One last question for now... Do you know how much a customer is worth to you?

We'll talk about that in the near future.

Thursday, May 22, 2008

Why You Have To Advertise

I have been marginally involved in the planning of two of my kids weddings. Mostly writing checks.

There are many, many things that had to be done before the wedding took place. But one of the most important was to send out the invitations. Otherwise, all the planning, buying, and preparing would have been silly. After all, most people, including my kids wanted to have friends and family attend their big day.

But let's say you are getting ready to launch a retail business. You have gone through all the steps including ordering inventory, stocking the showroom, setting up the displays, hiring employees, etc.

And now all you need is customers to come in and buy from you.

Did you invite anyone?

Did you send out the invitations?

Did you advertise?

If you don't invite people to do business with you, through advertising, then it's like having a party but not sending out the invitations.

Next, we'll take another look at advertising, and relate it to another aspect of our social lives.

Stay tuned!

Wednesday, May 21, 2008

Raising the Bar

Before I worked on the advertising side of broadcasting, I worked on the programming side of this business.

I recall 25 years ago when the radio station I worked for started doing 30 minute commercial free music sweeps, and promoted them that way on the radio to our listeners.

In hindsight, it wasn't the best way to get listeners to listen longer.

It implied that commercials are bad, music is good.

Granted, the reason people tuned in was to hear their favorite songs, not their favorite commercials, so it made sense that this was a way to market the radio station that rewarded our listeners for sticking around.

So what's wrong with this?

In traditional media, it's the advertising that pays the bills.

So if you imply to your listeners that commercials are the bad guys, then you are also implying that the businesses that advertise are bad too for interrupting your music.

In reality, commercials are not bad. But there are some pretty bad commercials out there on both radio and tv.

It's the bad ones that are a tune out.

What's a bad commercial?
The screaming car sales commercial, the lame save 10% sale commercial, the generic commercial that is filled with cliche's that are meaningless.

Bad commercials are forgettable.

Good commercials are remarkable.
They add to the programming of the radio station and television program.
They add value and reward the listener/viewer for sticking around and paying attention.

When I first made the switch to the advertising side of this business, the air personalities had the power to reject commercials and advertisers that were not up to snuff.
We had to produce good, remarkable, rememberable commercials.

Very few broadcasting outlets have these standards anymore.

But let's go ahead and raise the bar, to create advertising campaigns that listeners want to hear and viewers want to watch.

Everyone wins when we do this.

Monday, May 19, 2008

The Secret to Networking

Recently I was talking to a couple of local business owners that were "dropping out of networking".

As we talked, I wanted to learn why they were soured on the local networking scene and I learned some very valuable information that confirms what I have witnessed too.

In Fort Wayne, Indiana, there was at one time a list of over 100 different networking groups of various sorts. They ranged from weekly meetings with no formal agenda, to monthly meetings where you stand up and give a 1 minute talk about yourself, to service clubs, and social clubs.

When I was looking for a fast start when I returned to the radio business, I ended up joining a B.N.I. group due to the organization and the people.

It is by far, one of the best business networking groups around because they follow a principal that many other groups have not figured out yet.

That principle is "Givers Gain".

If you try and sell your goods and services to the people in the room at the networking group you are attending, then, for the most part, you are doing things backwards. Instead of being a Giver, you come off as a Taker.

Stop trying to sell the other members that are in your midst and instead, listen to what they have to offer and think about who might benefit from getting to know this person. This is referral based networking and this is what has worked for generations.

Referral Based Networking is simply a form of Word of Mouth. For example, if I ask you who you would recommend as a dentist, and you liked your dentist, then you would give me his/her name.

B.N.I. is a referral based networking system that offers members exclusivity and requires regular attendance. They also have a system for passing and keeping track of referrals.

Unfortunately, most of the other business networking groups fall short of being a referral network, and this is why I sometimes hear negative comments on the concept of networking.

There are differences in each B.N.I. group, and I believe that the one I was a member of for three years is one of the best around.

There are other ways to network, including using the web and free services such as to stay in touch and meet others.

Remember that networking is about building relationships and that you want to be a giver, not a taker. Help enough other people and you'll be helped in return if you are honest, trustworthy and "referable".

That is the Secret to Networking.

Friday, May 16, 2008

Nothing New Under The Sun

A couple of years ago I worked for a manager who said, "The best ideas are all ready out there. Look for them, steal them, rework them and make them your own."

To which I partially agree. Which means I partially disagree too.

Lately I have been reading two books, one by Harvey Mackay, another by Seth Godin. Harvey is old school and his principles are often universal. Seth writes about change, and in the book I'm currently reading, he talks about how mass media is dying.

Since I work in a mass media field, I am interested in his thinking and I understand where he is coming from.

The truth is that there are changes in the way consumers act and react to media, advertising, marketing and technology.

The changes are due to the changes in technology. So the challenge is how to take the unchangeable and apply them to what changes.

Remember that it is human beings, with thoughts and emotions that will determine your success and the success of your product, service, promotion or business.

It doesn't matter if you use traditional media such as radio, newspaper, magazines, or television, you must remember that you want to reach the emotions of the person you want to have buy your product or service.

Same thing with the new media, such as the internet, social media, mobile web, and whatever is coming next. You have to reach the emotions of the person you want to have buy your product or service.

This means they have to feel good about giving you the order, their money, their commitment.

And there are lot's of old ideas that worked in the early days of mass media that still work today, only modified by technology.

Here's a couple of examples:

Newspapers would put out a special edition if there was a significant breaking news story. Today we expect updates 24/7 from the news websites.

Request lines used to be the lifeline between a radio station and the station listeners. Now we also have email, text messaging, and webcams at the stations I work for.

These two examples work because they keep the human being and emotions in the equation.

It is just as thrilling to have the disc jockey play your song, or mention your name on the radio because you texted as it was to call on the phone.

What ideas have you forgot about in your marketing that you can update, re-work, freshen up, and make work again?

Monday, May 12, 2008

Your Advertising Options

Let's take a look at most of your options, starting with Traditional Media:

Newspapers. This is the oldest of the traditional media's for advertising. And it also has been one of the hardest hit by the growth of the internet. Here's why:

  • Newspapers are funded by selling advertising and by selling the newspapers to their readers. The balance of advertising versus news content is determined by what the paper can afford. They usually have local reporters and also buy stories from "national wire services".
  • The reason people buy newspapers is to get the news, to know what's going on, in a convenient, portable, timely and inexpensive manner.
  • The advent of the internet coupled with portable computers (laptops), and wireless internet have disrupted the newspapers business model. Subscriptions have declined, so that revenue has decreased, and as the number of readers has declined, the revenue from advertisers have also declined due to either fall out because of higher advertising prices, or the effectiveness has decreased due to a smaller regular readership base.
  • Classified advertising was once a major source of income for many papers and has been replaced by on-line sites.
  • The speed and 24/7 updates of the internet makes newspapers less important since they have deadlines and any new updates have to wait until the next edition, usually 24 hours later.
  • Smart newspaper publishers have a website that makes up for the shortfalls of the printed page. The challenge will remain to redesign the business model of print and website to generate income to keep the local reporters employed and turn a profit for the owners.
  • Newspaper readers trend older, and traditional.
  • As a side note, it would be helpful for papers to print using a larger font (typeset) to cater to the older readers, but most are doing the opposite to save costs.
Next, let's look at another print medium, the Phone Book.
  • The phone book for decades served us as a directory, a reference. We had the white pages where every family in town had a listing complete with your street address. But the money required to print and distribute the phone book came from the Yellow Pages.
  • The Yellow Pages were a necessity for many businesses. If you didn't appear in the Yellow Pages, you didn't exist.
  • Most communities had one publisher of the phone book, then others saw the opportunity and started rival phone books. We have three major phone books in our town.
  • Consumers don't need more than one phone book for each of their phones. The reason for the additional phone book publishers was purely money driven, not consumer need driven. The second phone book company offered lower advertising rates to the businesses to get them in their book. The third phone book company, really struggles to survive.
  • When there was just one phone book, it was usually tied to your phone service provider, which gave them additional power to make sure you paid your monthly advertising bill. The consequences of not paying your Yellow Page advertising bill was simple, turn off your phone.
  • Again, technology has changed and hurt the Phone Book. Specifically Google is replacing the need for a paper phone book.
  • Changing consumer phone habits have also changed the relevance and reliability of the Phone Book. Landlines (the traditional wired telephones) are becoming obsolete as the growth of cell phones, where each member of a household has their own number and many families are dropping their landlines to save money. Phone books do not list cell phone numbers.
Billboards have remained stable over the years. Except for local communities enacting sign ordinances, not much has changed. Some of the changes that have occurred include:
  • Shared sign space. There are a few signs in our city that have three non-competing advertisers, that each get either 1/3 or 2/3 of the time, (depending on if the sign is visible front and back). The way this works, is every few seconds, the sign rotates to another advertiser. This has it's pluses, (movement creates attention), and minuses, (less exposure due to shared space).
  • Electronic signage. Once limited to store owned signs, some are now taking the place of traditional Billboards.
  • Disadvantage of Billboards is the limited amount of information you should place on the sign. It's not the size of the sign that determines how much you can put on the board, but how long a driver will see the sign as they head down the road. Less on the Board, is Better for your Business is the general rule to follow.
Before I finish this look at Traditional Media, let's touch on a couple other Advertising options.
  • Phone soliciting. I am surprised that some companies still do telemarketing. With the Do Not Call List Registry, a free service that consumers can sign up for and businesses must follow or face stiff fines, I would not recommend this to anyone as a way to generate sales. (There is a difference between telemarketing sales and using the phone for prospecting).
  • Direct mail. Ever since I was a kid, we called it Junk Mail. Unless you commit to it and have an offer that stands out, I would avoid it. And by committing to it, I mean monthly for 2 years, with an offer that is 40% savings or more. The problem is, that you then become known as a discount service or store and it is hard to build loyalty on having the lowest price. Not even Wal-mart gets all the customers.
  • Promotional Products. Calenders, pens, coffee mugs, etc. As long as you use these to enhance the other efforts you are doing, and you include the contact information such as website, address, phone number, etc.; you may want to use these as marketing tools, but not as advertising. Also make sure you get items that reflect the quality of your business. And finally, make sure you give these things out. Don't use them yourself. Get those pens and coffee mugs into your customers hands, not yours.
Now let's wrap up your advertising options using two of the biggest forms of Traditional Media, Broadcasting:

Television is still less than 100 years old. I recently found a promotional piece written in 1947 that mentioned that there are "currently 9 television stations operating" in the United States.

As a child of the 1960's and 1970's we had 3 choices, ABC, CBS, and NBC. Later we added a local PBS station and then an independent station that is now Fox. 5 stations. The numbers of people watching were tremendous. Now we have Cable, Satellite and Fiber Optic Networks that pump hundreds of channels into our homes, if we pay for them.

I have about 30 channels to choose from with the cable subscription we have in our home. The options for consumers such as myself to watch TV have multiplied six-fold, even though realistically, I watch maybe 12 at the most each week. Let's look at your Television Options:
  • Local Broadcast television news still grabs a large audience. Hit Shows on the Local Broadcast shows still grab a large audience. Not as large as 30 years ago, but still worth checking into, IF you have the money and you spend it wisely with reach, frequency and a strong message.
  • The downside to Local Broadcast television is that in February, 2009, all of our traditional television sets will be obsolete when the F.C.C. forces Local Broadcast television stations to turn off their analog broadcast and switch to digital broadcasting. Steps are underway to get converter boxes to consumers through a government program that consumers can use to help off set the cost of the box.
  • Also, the method of receiving Local Broadcast television varies depending on each community, but in our city, I've seen numbers showing that between 75% and 85% of us subscribe to a cable or fiber optic network, so we will not be affected by the switch to digital, since we don't get our television signals "over the air waves".
  • Advertising on television offers you many choices and they are priced accordingly. Make sure you understand what your options are.
Radio Broadcasting has also changed over the past nearly 100 years. It was the for-runner to television. Many of the early television shows were versions of old radio programs, except now you could see the performers, not just hear them.

Many thought radio would die, but instead it reinvented itself as a music and information source. Radio stations were previously programmed by networks, the way most television is today. With the growth of Television, radio became local with newscasters, reporters, announcers, personalities, disc jockeys, and local celebrities.

When I was growing up, there were no more than 7 or 8 local Fort Wayne Radio stations, the biggest being 50,000 watt WOWO which folks could listen to not only locally but all accross the eastern United States.

At one time 75% of the local population listened to the morning show on WOWO. Again, changes occurred by the F.C.C. Ownership rules relaxed. When I started working in radio in the 1970's, a company was allowed to only own one AM radio station, one FM radio station, and one television station in each market.

Today, the rules are different. Our company had 5 FM stations and one AM station until about two years ago. Most stations in town are co-owned with other stations. And now instead of 8 local stations, we have over 20 "local" radio stations. Those extra stations were around before, licensed to outlying cities, but the F.C.C. allowed them to upgrade the strength of their signal and become a part of the larger Metro.

For example, WNHT is licensed to Churubusco, WGL-FM is licensed to Huntington, but they are broadcasting out of our studios and offices in Fort Wayne.

Studies show that between 80 and 95% of Americans listen to a radio at least once a week. This figure is higher than Newspapers, and Yellow Pages.

What does this mean for you in terms of advertising options on the radio?
  • Each station has a core audience that has a loyal following. This audience has a certain profile which you can use to craft and target your advertising message to reach.
  • Each station also shares their audience with at least one or more other stations so you don't need to advertise on all the stations to reach "everybody".
  • Radio listening is growing for stations that are taking advantage of technology such as the internet. All three of my stations can be listened to from their website. This means you can listen at your desk at the office, or from ANYWHERE in the world that you have an internet connection.
  • In the future, local radio will face competition from the internet, once cars have internet "radio's" as standard equipment. The key to local radio survival is similar to local television survival: Local content, such as news, weather, sports and traffic.
As I wrap this up, you will notice that I said very little about the internet as an advertising option. Here's why:
  • We still have not come up with a way to advertise locally on the internet alone without tying it into one of the local options mentioned above.
  • There are rapid changes in what works best. Banner ads used to be the way to go, then Search Engine Optimizations. Right now we are on the cusp of the Social Media revolution and coming soon the mobile web which is growing and evolving.
You need a home on the internet, but you also need to tell people how to find you on the internet.

Saturday, May 10, 2008

Perspective from the past.

It is good to take a moment and reflect on your past. I will occasionally take a look at some of the things that were going on as recent, (or as long ago) as three years ago when I started writing regularly.

In 2005, I thought I was having a heart attack. I drove myself to the hospital about a half mile away after finding no one at the fire station next door to where I was, when I was going through these tremendous pains.

It turns out my heart was healthy, but I had pancreatitis and ended up spending about 10 days in the hospital, then another 10 days at home before returning to work.

After being off for three weeks, I dived back in to work and wrote the following on an old blog, which I'm reposting here:

After a couple of weeks back on the job and getting back in the swing of things, I've noticed a couple of things that are almost worth writing about:

1. The more people you have in your company, the more likely you will have a higher rate of employee turn-over. This is especially true if you have a sales department.

2. Try not to prejudge anyone. I have found it pretty amazing some of the companies that have said yes to a special marketing presentation that our company is offering next week.

3. And I have been surprised at the closed mindedness of some companies (or at least those individuals that I spoke with) How can you say no to something that you have no idea what it is?

4. Remember sales is a lot like batting at a baseball. A 300 average is pretty decent.

5. You are in control of your own success, God willing. Excuses get you nowhere.

Tuesday, May 6, 2008

The Power of Search

I was going to write this last week, but I'm greatful that I waited. Because I have a second dimension to add to what I originally was going to talk about.

This is about the internet and how it has changed over the last few years.

When I first got online a dozen or so years ago, (with a dial-up connection), Yahoo, AOL and MSN were the big boys.

Advertising on the internet involved pop up ads, banner ads and it seemed like everyone was trying to outdo each other in trying to get our attention.

Then two things occurred.

First, Google simplified the internet with an extremely simple and clean looking web page that was also very good at helping us find things on the WWW.

The flash and pizazz went mainstream with customizable MySpace layouts, and YouTube that gave everyone a chance to claim 15 seconds of video fame.

The way we as ordinary people use the internet has changed. Google is how we find something, anything, everything. And the advertising on the sides of the page... our brains have learned to tune them out.

Instead, we may click on a sponsored text ad on Google to get more information.

But it all starts with the search. And that's not really new.

Before we had the internet, one of the popular activities was a trip to the mall. You may have wanted to buy a gift for someones birthday, and you may have had a couple of ideas but you went into lots and lots of stores.

You may have gone into stores and looked for something totally unrelated to the original reason you went to the mall. But there were things that caught your eye, and pulled you into the store.

This search idea is not new.

When you go to your favorite restaurant, odds are that you will choose one of 5 items, no matter how many items are on the menu. But despite the fact that you are predisposed to a very limited selection, it is still highly likely that you will open and read the menu, even if it is the same menu you've seen every time you've been to that restaurant!

This is the Power of Search, we as humans are looking for possibilities, not advertisements.

This is why the Google format has worked so well, because it is compatible with the way we think and behave.

So, as you try and decide how to build your website, keep in mind that it's not flashy banner ads, or having all the right keywords built into your page that will make you successful, it's most likely tied into the Power of Search.

I have two examples that I'm going to wrap this up with.

Starbucks Advertising. Type those words into Google today, or any day in the past 90 days and at least one if not two or three of my blog posts on my Collective Wisdom site would be on the first page. For awhile, I had the top two links. And I did not pay for these links either.

So I decided to update the posts with more information, and everyday, there is at least one new visitor thanks to the Power of Search and Google.

The other example is how people rely on Google to get information even when it's not available yet.

Back in January 2008, I reported on a story that I read in our local business paper about a longtime Chevy dealership that was abandoning it's family name (DeHaven Chevrolet), and switching to a more generic name.

I spoke against them dropping a name that was familiar in our community for generations, and throwing away the DeHaven brand, which includes a catchy jingle that still rings in my head.

About two weeks ago, people were Googling DeHaven Chevrolet, or Jack DeHaven, and they were landing on what I wrote a few months ago.

It turns out the reason they were looking for Jack DeHaven was that he was ill. I searched for anything regarding the subject and came up empty until yesterday.

It turns out that Mr. Jack DeHaven passed away at the age of 42 at the end of April and his friends were looking for information which was not available online until his obituary appeared in the newspaper over the weekend.

The Power of Search works both ways.

People have come to rely on the internet for answers and they will use Google to find what they are looking for.

You, in turn need to have the information they are looking for available for them to find on the internet.