I believe billions of dollars are wasted each year on advertising campaigns.

Most advertising is waged in an effort to create awareness in the minds of a target audience about a certain “positioning.”  Advertisers spend money buying impressions and slathering their tag line all over people’s frontal lobe with TV, radio, print and other media trying desperately to create an association between their company and some succinct concept like cool, hip, value-oriented or sexy.   The success of such a campaign is measured in terms of audience recall, unaided recall, GRPs, Q Scores and top of mind awareness.

This is the essense of brand advertising. Tell them repeatedly who we want them to think we are. When they believe it, they will buy from us.

I would never say this not effective. It’s just weak. It’s a weak form of business communications.

No one runs a business in order to generate unaided recall.  A business runs in order to sell stuff.  The goal is to generate a customer and sell something. Generating awareness comes in the middle. It’s not the end goal.  Now, what if you oriented your advertising around generating customers?

Advertising dollars should be spent to make sales. If enough sales are made and customers created, a brand develops. This branding comes from the consumer experiencing a positive feeling when buying or owning the product. They come back and buy again. They tell their friends.  Branding this way is a whole lot better than tag-lining someone to death.  This type of branding is born of experience.

That brings us back to advertising.  I love great creative. I love a clever tag line and a smart campaign. The great error in most advertising is that it is built and measured around the intermediate goal of awareness instead of the real objective – sales.  The sad reality is that you can create a lot of awareness and still make no sales.  If, on the other hand, we orient, measure and manage all our advertising and marketing efforts around the sales they drive, then we are making the highest and best use of our advertising dollars. When we sell to enough people and they like us- a brand image develops.

Direct Response marketing used to be called “accountable advertising” because all marketing dollars are tracked to their efficiency at driving a sale. The metrics are different. Direct marketers toss aside murky awareness and share of voice metrics and replace them with “cost-per-sale,”  ”cost-per-lead,” and ”ROAS” (return-on-ad-spend).  More importantly, they measure LTV- life time value.  This way they know more than just if a sale was made, but whether a great customer was acquired. 

Great customers who buy from you repeatedly create real brand loyalty. That’s a whole lot better than unaided recall. That’s I’ll open my wallet and buy from you again recall. 

Many people dismissively think direct response advertising is relegated to infomercials and direct mail. They think- “build the awareness and the customers will come.”  That is what wastes the billions of dollars. Direct Response is not a media type, it’s a philosophy about advertising. It’s a firmly held strategy that mandates that the creative, the offer, the media and the campaign should drive sales. It’s advertising with a profit & loss statement attached. Isn’t that what business is about?

Cheers,

~kr

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7 Responses to Brand Advertising vs. Direct Response

  1. Great article Ken, and a good review of the value of a concept that many medium to large businesses forget to stop and think about. (Small business does it more because with them, it is ALWAYS about the bottom line). Although this is certainly not my niche core competency, I have noticed that it seems to be a “hop on the bandwagon” concept that drives many campaigns. They think if other brands are entertaining the masses, then they should too! Although I too enjoy many of these advertising initiatives (especially the over priced off the wall super bowl ads), if the dollars spent promoting this type of hip factor/brand awareness were actually focused on driving sales, many businesses would not be in the trouble they are in today. In other words, in my opinion… you are right on target. Good job!

  2. Harry Joiner says:

    Great post. Very “John Caples.”

  3. Sorry to disagree. I don’t think you’d find much agreement either from Harley, Ipod, Disney, Volvo, Target, Apple, Nike and many many other strong (and profitable) brands who do a lot of what you refer to as awareness building advertising. Brand advertising’s function is a lot more complicated than the way you describe it. It’s about impacting attitudes, perceptions and beliefs, not just awareness. It’s also about giving people a reason to buy without having to do it through price or promotion.

  4. Andreas.wpv says:

    Love it.

    Brand has its role and it is important, but the short term effect is very low. Still, brand often helps to get an easier entrance in the ‘awareness’ phase and higher recognition in the ‘interest, desire, action’ phases – but not nearly as much leverage as the spend would suggest.

    Brand marketing, campaign elements are easy to sell in some companies, especially where you have no direct connection from marketing to sales – other then eCommerce. Someone needs a legitimization for a big spend… well, look at Apple, dear CMO. Still not making sales? That is another department, don’t blame marketing.

    If you really want to find out what is working and what not, better be prepared. You have to define target groups, personas perhaps, scenarios online and offline, and you have to measure what they are doing and then connect that with sales data.

    In many companies that is completely impossible, in other companies very difficult and a lot of persistence is needed. Even when you work through it and get the results, some people will not be happy with the results – most likely the ‘branding’ fraction. Do you have the standing, the position and the cover to do so?

    Branding is great, but it does not need to take a big part of the budget and here as much as in other areas analytics are essential to effective marketing.

  5. freddie says:

    “This is the essence of brand advertising. Tell them repeatedly who we want them to think we are. When they believe it, they will buy from us.” I don’t agree with the above statement. Brand advertising/marketing is not about ‘telling’ anyone anything and hoping they will believe it. That might have been true back when I ran around with a runny nose all over the streets of KTM. Today, it’s about learning from the customers and letting them position the brand as they wish – a personal customizable brand, if u will, is the best brand. Also, as customers gain more ‘power’ via twitter and friendfeed, and brands are forced to go into this area, it is no longer about simply creating sales. Online conversations (social media) has make brand advertising even more important. It is not about getting ur twitter followers to buy your product again and again, but rather to maintain ur brand position in their good-books. As for getting them to buy and re-buy, that is ‘behavior’ no one can control – not even Direct Response

  6. Kim Basciani says:

    Amen to that. I’ve always said that branding is the byproduct of a great customer acquisition strategy. I can recall back in the early days of e-commerce, meeting with Yahoo, Lycos, AOL, etc. for online distribution deals. They’d start with a CPM pitch which always ended with ” You’ll get SO much branding”. My canned response was “Branding is what you get when your campaign didn’t work”!

  7. kirk says:

    This is awesome stuff. I Love it.

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