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BUSINESS MANAGEMENT

Advertising That Works
How much should you invest in advertising . . . and why?

by Steve Wishnow

Whether you spend $3,000 or $300,000 a year on advertising, the challenge is to get the most out of your investment and drive more leads and sales for less money. It’s an endless task. Questions arise such as: What day of the week will provide the greatest impact for my newspaper advertising? What is the best ad size? Should I use inserts rather than display ads?

These are just a few of the issues window coverings business owners must find answers to. Finding the answers is oftentimes as painful as the questions themselves. As most of us have learned, everyone we turn to is an expert, each with his own opinion, leaving us more confused than when we started.

As an advertising executive with one of the largest retail organizations in the country, I would like to share a number of ideas to help you make the right decisions for your business and to strip away much of the confusion.

WHY ADVERTISE?

Consumers today have little or no loyalty. They face endless choices in products and have little time to find the best one for their needs. They look to advertising to make a purchasing decision. If you are not advertising on a consistent and frequent basis, building minimal levels of awareness for your products, your services and your company name, consumers may go to your competitor.

You must create an ongoing, consistent presence that develops name awareness and recognition. There are only two alternatives. The first is word-of-mouth, which takes a long time to develop and is limited to a small audience. The second is to spend the right amount of money on advertising, choose the right medium and execute your advertising to insure that you grow your own business—profitably.

HOW MUCH SHOULD I SPEND?

Once you have made the decision to advertise you now must decide how much to spend. For a window coverings retailer this is one of your toughest decisions. Many view advertising as an expense—a drain of profits. Another way to view advertising is that it is an investment. By advertising you can grow your business, contribute to the overall value and profitability of your company.

For a business with sales less than $100,000 the decision is clear-cut: no media, use only brochures, flyers, door hangers and perhaps minimal yellow page advertising. Internet Web pages and e-mail can give you big-store credibility, if affordable.

If you are an independent home-based operator with sales ranging from $100,000 to $500,000, you should plan on spending five to eight percent of your sales on advertising. If you are a larger business with sales in excess of $1 million with a store location, look to spend four to five percent of your total gross sales on advertising activities.

WHAT MEDIA SHOULD I USE?

If you have a business that can sustain advertising expenditures greater than $10,000 per year, begin by avoiding the single biggest mistake: spreading your advertising dollars too thinly. Avoiding this trap is all about setting priorities and sticking with them.

Before you consider a second or third media choice, be sure that you have allocated enough money in any one medium that enables you to make the right impact and to build the two most important concepts in advertising: awareness and retention.

Start with the yellow pages directories, which can be a high cost, but is essential to your business. Try to hold expenses down to $30 to $100 per month. Next on your list should be a Web site, a must have for every business owner. Recent research shows that over one half of all consumers in the United States will go to a Web site before making a purchase. The third category is the essentials in our business: flyers, door hangers, neighborhood mailers. Have money left over? Go to newspapers as the next logical choice.

Why did I pick newspaper over radio, television or direct mail? Newspaper is a medium that is read by consumers who have a medium to high income, are heavily female readers and are in the age group of 35 to 50 years—essentially your best prospects. It is a logical choice given the high cost of direct mail and television.

If you are a larger window treatments business, radio is a great complement to newspaper. The key advantages of this medium are your ability to target your best prospects, low production costs and high levels of frequency.

CONCLUSIONS

In summary, the basic guidelines to follow are deciding whether to advertise, deciding how much to spend and making the right media choice. To make these critical decisions so they fit your business:

• View advertising as an investment rather than an expense.
• If you are a small business owner, plan on spending five to eight percent. If you are a larger business, with sales in excess of $1 million, plan on spending in range of four to five percent.
• Using the right media is all about setting and sticking to priorities.
• Avoid at all costs spreading advertising dollars over too many media choices.
• Pick the most important medium or activity; satisfy yourself that you have used this to your best advantage and then go on to the next choice.
• Newspaper is the first logical choice, followed by radio.

Advertising does work and will be a major component of your growth and success. Follow these guidelines and you will see immediate and positive results.