Article Excerpt: “Instead of making budgeting decisions arbitrary based on gut feel, affordabilty or previous decisions, Managers need to set their strategies based on comprehensive past advertising spending analysis and in relation to competitors.”
My thoughts – What competing businesses are doing with their ad activity MUST be a major focal point when determining what your ad spend will be. (This doesn’t mean a local business can not compete with a national company. Keep in mind these large companies are advertising nationally among many avenues of marketing tactics. A small to mid-sized business only needs to advertise locally at a mere fraction of the expenses the national chains are spending.)
Article Excerpt: “The impact of some marketing actions such as advertising can go beyond the current term and last for weeks and in some cases last for years.”
My thoughts – Ad impact doesn’t end when the flight ends and can influence sales over time. It’s important to know when analyzing a campaigns results. A general branding type ad airing over only one week is not going get any results during that one week. A carefully thought out strategy over time will get more results as time goes on.
Article Excerpt: “Smart advertisers consistently kept their relative ad spending above that of their competitors REGARDLESS OF CIRCUMSTANCES. The smart spenders followed a persistent and increasing relative advertising spending pattern when compared to their competitors not only when their revenues surged but ALSO WHEN SALES DECLINED.”
My thoughts – Cutting back on advertising when things get tough is a path to losing market share as those who spend consistently do better in the end. This has shown to be true during all economic downturns since the 1930s.
Article Excerpt: “Unhealthy companies tended to spend less on advertising although occasionally they would increase their advertising budget dramatically but would soon revert back to their low ad spending ways. These unhealthy companies are early quitters who irregularly spend aggressively. When they do, they soon give up before seeing the results of their strategy come to fruition.”
My thoughts – Just like compound interest, many advertisers stop their advertising without leveraging their early ads to continue through their duration to allow it to work properly.
Article Excerpt: “Contrary to smart companies, a poor performing company’s ad budget was contingent upon sales. When sales declined, the ad budget declined. Such a strategy is problematic since it implies that advertising is a function of sales rather than sales being a function of advertising. This is dangerous as advertising can build profitability rather than profitability boosting advertising.”
My thoughts – Many businesses I work with figure their ad spending as a percentage of sales. Those that budget this way are looking through the wrong end of their telescope. The reason is because ADVERTISING IS NOT A RESULT OF SALES. SALES IS A RESULT OF ADVERTISING.
These results were consistent across all industries. There was NO EXCEPTION that unhealthy companies followed ad spending labeled as poor. Not a single unhealthy company followed the smart advertising spending pattern. There are no shortcuts to marketing success. Companies who continue to ignore these findings will continue to under perform.
