Developing an advertising strategy

Growing businesses need to plan how to promote themselves to existing customers and how to attract new customers. A scattergun, or 'spray and pray' approach to advertising, seldom achieves a good return on your advertising investment. Your advertising is likely to be most cost effective if you do the necessary groundwork and research, and develop an appropriate advertising strategy for your business.

On this page:

• Clarify your objectives
• Selecting the right media
• Establish a budget
• Developing your strategy
• Measuring effectiveness
• Next steps

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Clarify your objectives

Before deciding to advertise, stop and take the time to clarify what you are trying to achieve. It's likely that your ultimate objective is to increase sales. However, you'll probably also have other objectives such as increasing market awareness or building your brand.

You might want to:

• Develop a reputation as the market leader, to allow you to increase your prices and win long-term contracts.
• Build brand awareness for a product to make it easier to sell and easier to launch new products.
• Change customer attitudes to your products or services to boost sales.
• Convey a specific one-off message to your market by informing people of a special offer or a particular benefit of your product.
• Address your existing customers to increase top-of-mind awareness so that they are likely to think of your business first when they want to make their next purchase.

Always be specific about who you are trying to communicate with.

Is advertising the answer?

Consider whether advertising is the most effective way of achieving your objective, or whether other forms of promotion would work better.

• Who are you trying to reach? What common characteristics define your target market? For example, consumers in the same geographical area or individuals from the same socio-economic background.
• Which media will best reach your target market? Advertising is only cost effective if it reaches a readership or audience that significantly overlaps with your target audience.

You should also consider whether advertising will work within your timescales. Preparing an advertisement for publishing or broadcasting can take time, depending on the media. If you need quick results, you may need to explore other options such as:

• Direct mail to a mailing list that matches your target market.
• Personal selling to build relationships with high-value customers.
• Merchandising, packaging and point-of-sale materials for consumer purchases.
• PR or trade exhibitions and conferences.
• An e-newsletter that drives traffic to your website.
• Using social media such as Facebook, Twitter and LinkedIn.

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Selecting the right media

Advertising through some channels can be expensive. It is important to spend time identifying the market segments you want to target, and to find the best way to reach your target audience.

Ask a selection of people from your target market what they read, watch, listen to, and which websites they visit. You can also learn from competitors by studying where they advertise. If you have the budget, you could also consider using an agency that specialises in media buying.

Once you've narrowed down the media options to those that reach your target audience, ask their advertising departments for information on audited circulation figures, or audience sizes, and their readership or audience profile. In addition, ask about advertising rates for different sizes and types of advertisements and different positions or time slots.

• How many members of your target group read a particular publication, visit a certain website, or watch or listen to a certain channel, and how often?
• Does the publication, site or channel have the right image for your advertisement?
• How much will your ad cost to produce?
• How much will the ad cost to run?

Smaller media (such as local papers and trade press) are usually more open to negotiation. For instance, you might get a big discount for taking unsold ad space or time at the last minute, or you might negotiate a larger ad or a better position for the same price. Repeat advertising will usually gain you a discount.

Narrow your selection based on affordability and your expected return on investment (ROI). The cost of the media does not always equate to its potential power. For instance, a simple entry in a local phone book or online directory can generate a lot of enquiries.

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Establish a budget

Deciding how much you should spend is not an exact science. It will depend on how much money you have available, the size of your budget in previous years and the sort of advertising campaign you are planning for the year.

It will also be influenced by your competitors' advertising campaigns. For example, if a new competing product has been launched, you may need to fight off the competitive threat.

If you are launching a new product or investing in building your brand, you might need to spend heavily to achieve customer awareness. On the other hand, if your product is already well established, you may only need a few advertisements to maintain top-of-mind awareness.

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Developing your strategy

Your marketing objectives and your target audience will influence and shape your advertising strategy. It is important to remember that your advertising campaign is just a part of your marketing strategy. It should fit in with your general marketing message, and be appropriate for the product or service and your target customers.

Some tips:

• Plan well in advance. Some publications get booked up many months ahead - for example, magazines printed in the lead up to Christmas.
• Consider the timing of your campaign. When are your target customers likely to be most receptive to your ad?
• Try to base your strategy around promoting a single, solid benefit. It is not enough to say 'the best' or 'free'. Identify what motivates your target audience, and make your message stand out.

Advertising agencies

If you have the budget, you may prefer to have professionals design and place your ads. As a rule of thumb, consider using an agency if you plan to spend more than $30,000 on advertising.

Look for an agency that has experience in your industry or with your type of business. An agency that also deals in other forms of promotion, such as public relations (PR), is preferable because advertising may not be the only form of marketing you need, and this will help to make your budget go further.

Select several agencies and ask them to prepare a proposal for your business, based on your brief explaining what you are trying to achieve. They should be able to suggest:

• Where you should advertise.
• How much you should spend.
• How to evaluate the success of your advertising.

Ask them if they would pass media-buying discounts on to you.

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Measuring effectiveness

If you don't measure your advertising, you will not have an accurate gauge of your return on advertising spend, or how much money you might be wasting on ineffective ads.

Measure the effectiveness of your advertising in terms of your objectives. If your strategic objective is to raise the profile of the company, you will need to carry out market research to find out if customers' awareness of your business has increased or if their attitudes have changed.

If your aim is to create sales, most sales advertising can be monitored simply and directly. For example, always ask how they heard about your business, or use coded advertisements. If you ask customers to quote the code when they respond to your ad, you can trace which ad generated the response.

Another tactic is to use reply coupons. You will be able to trace the source of the coupon and obtain information on the potential customer. Using free phone numbers can be a decisive factor in increasing call volumes, and the call statistics will show you which advert performed best.

Your return on investment (ROI)

To calculate your ROI, total all the costs of your campaign and weigh them against the response. Make sure you have allowed for all the likely costs. For example:

• The cost of buying advertising space.
• Design costs, including print preparation.
• Brochures and other literature.
• The fulfilment cost (goods, postage, delivery, employee costs).

Some ads may generate many responses but only a few convert to sales. If your conversion ratio is poor, something is going wrong. In all advertising, remember that the response rate and conversion rate of enquiries into sales will not be effective if it is not backed up with trained staff, brochures, adequate stock levels and the ability to deliver on the promise in the advertisement.

Be ready to sell

Even a simple matter such as not having sufficient phone lines can cause potential customers to lose interest or take their business elsewhere, so make sure you can respond quickly and effectively.

When your conversion rate is poor, your cost per sale becomes very expensive. If this happens:

• Review your brochure or follow-up literature - it might not provide enough information or live up to the promises made in the advertisement.
• Check the employees who are handling the response. Telephone staff may not be sufficiently trained. Using proven sales scripts for phone calls and direct contacts, and standard response templates for emails and written responses, will ensure your staff convey the essential messages, which in turn will improve your sales conversion rate.
• Re-examine your offer and price structure. The deal or the price you are offering might be unsuitable for your target market and could need adjusting.

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Next steps

• Decide on your advertising objectives and target market.
• Research your target market and match the media you select to advertise in with their listening and reading habits, and ensure it matches your market and the image you want to project.
• Measure the return on all advertising so you can continue what works and discard what doesn't.
• Consider using advertising professionals and media buying specialists if you have the budget for this.