Anyone who knows me knows I tend to warn small businesses not to spend their scant marketing 'budget' on advertising. ('Budget' is in inverted commas, as most small businesses don't have a marketing budget.)
So when I read a report that says 'everything we think we know about how advertising works is wrong' my attention is guaranteed.
What I'm referring to is Les Binet's paper The dangers of common sense in the June 2009 issue of Market Leader. The crux of the piece is not that advertising doesn't work, just that the way we think it works just isn't the case. I thought it was worth summarising the main points of the article (which also contains charts and stats to back up the claims). I've added my thoughts about what this means for the small business.
Advertising works by increasing sales - no
Campaigns that focus on generating sales don't do particularly well. The best thing to focus on is reducing price sensitivity. 'Using ads to firm up prices is almost twice as profitable as trying to increase sales'.
Comment: In my experience, small businesses are more likely to try cutting prices rather than bolstering them. A sobering thought.
Advertising works by increasing brand loyalty - no
Brand loyalty hardly ever changes, and it's not something that responds to advertising. Focus on increasing market penetration, however, and your campaign is likely to be three times as effective as trying to increase brand loyalty.
Comment: small businesses need to nurture brand loyalty, but it won't happen through advertising.
Awareness and image are the keys to a strong brand - no
Here, Binet is adamant. What you really want to aim for is fame. Fame means people are thinking about and talking about your brand. 'Fame is the real key to business success, and in particular word of mouth seems to be crucial,' says Binet. 'It seems we're willing to pay much more for the brands that everyone's talking about.'
Comment: word of mouth, fame... these are not the sole preserve of global brands. With social media on the up, even small brands can make the big time, look at Moonfruit for example...
Advertising works by communicating brand messages - no
Oh dear, another lovingly-held tenet bites the dust. Forget the strategic messaging, says Binet. Emotion is why people buy. 'Ads that simply aim to generate pure emotion turn out to be twice as profitable as ads that use emotions to support a rational proposition.' So what about those ads that make you want to chuck a shoe through the TV? Surely they won't make me buy? No, you have to like it...
Comment: I love this idea! No seriously... as they say - 'people may not buy what they need but they always buy what they want'.
Advertising needs to stand out to work well - no
'According to our data,' says Binet, 'what matters most is not how well the ad stands out, or communicates, or persuades, but how much people like it.'
It's a thought-provoking piece. If you want to read the original it's available here.
What do you think? What's the relevance of this kind of research to small businesses?
