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!

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.

Roofer.

$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!

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.

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!

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.