The Catalyst

The Cable Guise

2008-06-05T17:06:00.004-04:00

Craig Reumund

Cable sales teams have lead auto dealers to believe that broadcast TV is wasted coverage and reaches outside their primary trading area. “Why would a customer drive past other same make dealers to my store?”

Here’s why: You ask them to.

A dealer can deliver a believable message that gives them a reason to drive past their competitor’s store to their store, and an efficient delivery system (broadcast TV) to distribute that message to more potential buyers for less money.

There are over 23,000 auto dealers in the US. The average store sells 100 cars per month. The primary trading area is a 10 mile radius. The manufacturer wants the dealer to sell as much of the primary trading area as possible. The dealer wants to sell as many cars as possible both in and outside the primary trading area.

When a customer chooses a dealership, they are selecting dealers for perception of best price or selecting dealers for convenience to service.

If a buyer is selecting a dealer based on the dealer’s convenient location for service, (a very small segment of buyers) the buyer finds the dealer closest to their home or work. The dealer does not need to advertise to bring this customer in. The customer searches and finds the dealer.

If a buyer is motivated to get the best price, as most buyers are, that buyer will travel for the perception of saving perhaps thousands of dollars at a dealership many miles from home.

This is where a destination mindset is critical for the advertiser.

A dealer that advertises only in their primary trading area, will lose the opportunity of luring buyers from other counties outside the trading area. Cable claims it is wasteful to advertise outside the primary trading area. Cable is wrong.

If a dealer wants to grow sales larger than average, i.e., if they have destination mentality, they must use a media that has the following mathematical criteria:

1) Delivers the largest audience within the demographic per dollar spent; i.e. the lowest cost-per-person in the demographic.
2) Has a high reach capability in the demographic.
3) Has the largest geographic footprint in the local DMA.

Broadcast Television is that medium. It delivers the lowest cost per thousand on any major demographic. It has virtually no “glass ceiling.” It has the largest geographic footprint of any local media. Broadcast television is everything a destination store needs to grow their business most efficiently.

Cable has one of the highest cost per thousands of any media, low “glass ceilings,” and smaller geographic footprints. Cable is a perfect media to increase the cost of buying new customers and losing market share. Cable is a great media to use to remain average or less than average in sales (and profit).

How could Lynn Hickey Dodge sell an average of 2,400 cars per month from one store in Oklahoma City? By inviting every potential customer in the Oklahoma City DMA to their store. This would not be possible on cable. Lynn Hickey Dodge was 100% broadcast TV during their reign as the world's largest Dodge store. Lynn Hickey was sold to a consolidator who stopped using TV and drove the store down to 80 cars a month in less than a year.

Auto dealers aren't the only business to benefit from the largest footprint, lowest cost-per-acquisition, highest reach media of Broadcast TV. All destination stores can benefit. Furniture stores, floor covering stores, in fact, most durable goods stores, financial institutions, medical practices, and legal practices can be destination businesses that grow faster and cheaper on Broadcast TV.

Don’t let cable steal your retailer’s growth with bad logic and an inefficient media. Tell them the truth about growing a destination store.

Craig Reumund is a Senior Consultant with ESA & Company. He meets with hundreds of local business owners each year and has significantly changed the fortune of thousands of local businesses over the past 20 years.

The Perfect Retail Storm

2008-04-01T15:20:00.008-04:00

Why Developing a New Concept is More Important Today

Mac McDonald

More stores appear the same to shoppers today.

Since the early 90’s most major retailers have gone for years without developing a new concept. The result was a perceived “sameness” in store offerings, according to consumers. The major chains bought smaller, regional chains, and eventually all their stores began to look the same. Even when a large chain bought an extremely well-positioned smaller chain, the smaller chain would become indistinguishable from the parent-chain to the customer.

For the past 25 years, many major retailers have shied away from significant store innovation. Now, an opportunity is on the horizon. According to shoppers, WalMart is showing signs of weakening. For the first time since their inception, WalMart has shown signs of a decline in their brand strength among shoppers. They are no longer quite the deterrent they use to be.

Is the changing shopper getting bored? It seems that consumers no longer flock to Ho Hum retailers. An increasing number of consumers are becoming less drawn to the Big Box stores, which have dominated the landscape for the past 20 years, and seem to have become less attractive and exciting over the past 6 years. Younger customers expect to be entertained. Older customers don’t need as much “stuff” and don’t see shopping a 200,000 square-foot store as easy, convenient or enjoyable.

The rewards of higher multiples and greater growth potential has proven to exist via new concepts, rather than the “organic” growth of traditional ones. Since even a majority of “successful” new concepts take 3 years to develop to acceptable profit levels, a great number of premature evaluations are being made, and “strong concepts” are being killed before operational excellence can be achieved. It also should be noted that increasing competition, and decreased product consumption, among key demographic groups results in a more competitors fighting for relatively fewer dollars.

Today’s mistakes and rewards are bigger. It took several of today’s large, iconic chains over 75 years to open 1,000+ stores. Today, successful new concepts can be rolled out at the rate of over 100 per year. The costs associated with:

- rolling out an ill conceived concept
- not rolling out a strong concept, at the right time
to the right target in the right location
- over-reacting to a bad competitive concept
- ignoring a breakthrough concept

… have grown dramatically in terms of both real and opportunity costs.

The worst mistake a merchant can make is to NOT spend resources creating a New Concept Store – BEFORE HE HAS TO. Remember the prophetic quote from Walter Wriston: “Failure isn’t a crime. Failure to learn from failure is a crime.” Following the New Concept development steps of “the best” merchants is expensive, and may even hurt the short term stock price or profitability … but so will going out of business. On the other hand, running a business for the short-term interests of your stockholders, rather than consumers, is what can get you into trouble in the first place.

Over the past two decades, the best new concepts have been developed by merchants who didn’t HAVE TO develop them as a means of survival. They just wanted to exploit the opportunity by moving away from “sameness”. (i.e. Whole Foods, Trader Joe’s, Central Market). But many of the traditional merchants today “WANT TO” because they “HAVE TO”, and that is extremely difficult! They now realize they have been painted into a no-win corner and their time as a future empire is tenuous.

The problems of developing a successful new concept when you HAVE TO are endemic to cultural difficulties in changing course, the short term financial pressures of the times causing a lack of innovation, objectivity, patience and persistence on traditional food retailers – and throw in Levitt’s Marketing Myopia Effect for good measure.

As noted earlier, for the past 25 years, most major retailers have shied away from significant store innovation. However, for the past 3 years, a flurry of “new concept” activity has taken place. However, for “new concept” activity to be considered “innovation” it has to be successful. The idea of In-Store Beauty salons was not exactly a true food store innovation. The only constant we will continue to see is that the largest chains will disappear and new powers will emerge. Not much different from when King Kullen replaced the General Store; A&P replaced King Kullen; Kroger replaced A & P and WalMart replaced Kroger as the dominant player and way of shopping for food. Only today, it will happen sooner rather than later.

The consumer market and competitive conditions that exist today make the chances of success in the development of new store concepts the highest they have been for more than 30 years. It’s the Perfect Storm condition for New Retail Concept Development.

William "Mac" McDonald has worked as a Senior Retail Marketing Specialist for over 40 years, focusing on consumer actions that affect retail tactics and strategies. An advisor to the National Retail Federation (NRF), Mac can be reached at Mac@ESACompany.com.

A Word on Frequency

2008-03-24T10:35:00.007-04:00

Planning the right frequency in a TV buy requires Buying Window knowledge.

Adam Armbruster

Probably the most over-discussed and misunderstood topic in television advertising is the subject of frequency. “Frequency” means the appropriate number of times that a given amount of television viewers will see a specific commercial over a specific amount of time.

Although the television industry prides itself on its ability to reach the masses quickly, repetition of message is what causes a television campaign to actually work. In any given week most broadcast television stations will reach 98% of the local population so today television truly stands alone today as a mass reach medium.

Many years ago of marketing researcher at General Electric Co. named Herbert Krugman developed the classic three-time frequency formula. His argument was that people learn in threes. His theory holds that the first time we see television commercial we identify the commercial and we begin to understand what it is. The second time we see the same television commercial we decide if this message is of interest to us or not. The third time we see television commercial we've or decided that we are interested and we pay close attention and absorb the message in detail.

Krugman goes on further to state that the fourth, fifth and sixth time we see the same message it has no additional value to us and simply serves as a reminder of the third exposure.

So does this mean that a three frequency should always be the goal? Usually not. Please keep in mind that this research was done many years ago prior to the massive explosion in media choices including hundreds of television channels, dozens of radio options, dozens of magazines, millions of web sites, outdoor, mobile phone, and in the daily barrage of direct mail. So it stands to argue that we need to re-examine what the proper frequency is for television in today's age.

I grew up in a home where the daily newspaper was considered a must read, but now with two teenagers I see how they refer to the newspaper as a dead tree medium….They look at newspaper as yesterday's news. So why discuss newspaper considering the topic of frequency? Because anyone who buys print advertising those that multiple exposures of the same ad is required to generate impact and sales results.

In our work across the country with thousands of advertisers we've learned many things about television, not the least of which is how to design the proper frequency into a television plan so that the advertiser in generating immediate and measurable sales results.

A good rule of thumb is that when planning a television campaign in an extremely competitive category is a 4 or 5 campaign frequency recommendation. A higher frequency can help your message overwhelm the messages of the competition and strike a chord with the viewer faster.

In contrast, if you're consulting a client who stands alone as the only television advertiser in their category in a specific market then they can be adequately served with a high reach and a basic 3x campaign frequency. In other words this client has the luxury of reaching out to more people less often since they are not competing directly with another similar television campaign.

A few examples of frequency done right are as follows:

The Macy one-day sale plan targets several hundred targeted rating points of television over a 30 hour time period. Macy's will air 4 to 6 television commercials in each hour of programming across three or four television stations. This generates a powerful result since this approach combines the power of classic “road-blocking” with hyper frequency. The net effect of the Macy one-day sale is massive reach along with massive frequency. It's no wonder that when you shop a Macy's the day of one of these events you will see the store filled with buyers.

WebMD.com is another example of a television advertiser who distinctly understands their buying window. In a recent conversation with the folks at Web M.D., we discussed the role television in their plan. As a dot com business their singular goal is to generate massive inquiries on the web site on the same day as their television campaign airs. WebMD.com focuses on Sunday advertising as Sunday is often the number one most popular day for health-care research online. Knowing this WebMD.com dominates Sunday afternoon sporting events with a very high frequency plan over a limited time.

Let's get down to what it takes to do this right.

First is the need to understand the buying window of the product. For example a car dealer advertising a television is a very different buying window then say, a furniture store. A car dealer needs to motivate massive amounts of car buyers very quickly over a 15 day buying cycle. In contrast, a furniture store needs to generate frequency over longer buying cycle since many people will shop for furniture for weeks instead of days.

For example, how do you design the appropriate frequency into an auto dealer campaign? For many retail automotive dealer television campaigns we will design a plan to generate a 3X frequency over 72 hours. That means we will plan to reach about 35% of the entire population 3 times. Now, several things are factored into this frequency recommendation including competitive dealers, competitive nameplates, and used car dealers. All of these play a role as a competitor to an individual dealers’ television campaign.

Only by understanding the actual buying window for each specific advertiser are you able to make appropriate frequency recommendations. In the end, making the right frequency recommendation of television plan is not so simple.

So first do your homework. Discuss with the client the actual buying cycle for their product. Then, anticipate this buying cycle by one or two days prior so that your television commercials have achieved the recommended frequency by the time the actual buying cycle begins. This is necessary because of what we now call Internet lag. Internet lag is the process with which people see television commercials and then go to the advertiser's web site before they actually contact the advertiser. This is a phenomenon has occurred over last 10 years and was not factored into the original three-time frequency model.

In the end the right frequency factors many things into the final equation. Massive sales and profit increases await an advertiser who embraces the power of television with the massive reach and the right frequency.

Adam Armbruster is a senior partner with the retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Company and can be reached at adam@esacompany.com.

TV Central in Mixology of Multimedia

2008-03-02T23:26:00.001-05:00

Adam Armbruster

Are you a media multitasker?

You are if you need to watch the TV news at the same time you read a newspaper. Or if you can’t drive your car without checking e-mails on your BlackBerry. Or if you’re compelled to surf the Net on your laptop while you’re on the phone.

Gary Drenik, president of BIGresearch, says 41.2% of people who watch television commercials are surfing the Internet simultaneously. “Consumers seem to be seeking information from digital platforms, while TV has traditionally been viewed as a brand-building medium,” he adds.

Why are we doing this to ourselves? Another recent study from the folks at BIGresearch, called the Simultaneous Media Survey, says the only way people can keep up with the amount of media pumped into their world is to blend their own “media mix” and monitor several media sources at once.

Mr. Drenik says, “Media that can target, be timely and deliver value to consumers, such as coupons/direct mail, radio, Yellow Pages, newspapers and newspaper inserts, all increased in influence to purchase as consumers are looking to stretch budgets in a slowing economy.”

What about television? Although television has proven itself to be the world’s finest brand-building medium, its awesome power to drive high frequency of message and measurable sales and profits for advertisers is often overlooked.

Used properly and consistently, television trumps all media, new and old, in generating massive immediate retail consumer response. If television were only a branding medium, then politicians would not spend tens of millions of dollars on TV ads to quickly influence opinions just prior to an election. If television were just a branding medium, then the iconic Macy’s One-Day Sale would not be part of our national vernacular. No, television is much more than a branding medium; TV builds sales and profits. But there is a real discipline to it all.

So when the economy cools, why don’t all advertisers run to television instead of printed coupons and direct mail? Simple: Many marketers think of television as a great brand-building medium but not as a good tool for helping to build immediate and measurable market share.

We think that’s just plain wrong.

Consider this: Coupon redemption rates have plummeted as female consumers balk at the prospect of clipping a coupon to save 25 cents on a can of hairspray. With 60% of American women working full-time, it seems her time is better spent on activities other than clipping printed coupons from the local newspaper.

Next, direct-mail return rates have declined from 2% to just under 1%, a cataclysmic drop. We feel this is a result of the consumer getting better at using the Internet and thereby less influenced by direct-mail pieces. The Internet has created a commonly held belief that free information about any advertiser is easy to find. This knowledge has significantly impacted the “Wow!” effect of direct mail sent to the home. Why read direct-mail pieces when all you want to know about buying anything is on that business’ Web site?

Also, since television is ranked as one of the top influencers in triggering an online search, it makes sense that television and the Internet are moving into one appliance. The Internet has created a blur in the traditional retail shopping patterns, thereby affecting the rational retail buying windows.

During the 1970s, car-buying consumers shopped up to four dealerships before buying. In the 1980s that number of dealerships shopped declined to three, and in the 1990s the number of stores shopped dwindled further to just over two. Today, many car buyers shop just one store before buying.

Delayed Effect
I remember when we could air a television commercial for a big-ticket-merchandise retailer and that very day retail outlets would buzz with store traffic. Now, because of the Internet, interested consumers spend some time on the advertisers’ Web site and may also surf related blogs before actually using their valuable shopping to visit the physical store. So today a delayed effect to a television campaign can be expected.

We need to give the consumer time to do their homework on your business. Assuming you pass the “Web preview,” they will phone you and set an appointment to shop.

“Unfortunately for marketers faced with the challenges of an uncertain economy and the need to increase marketing ROI, new-media options are impacting how consumers use traditional media,” Mr. Drenik says.

If you buy into what he is saying, then you need to look at old media and new media as just plain media. And the real world demands that advertisers use a new cocktail of electronic media tools to help turn around lagging sales.

Since Nielsen reports that the average American consumer spends a total of 5½ hours a day between television and the Internet, the solution is right in front of us.

That solution is high-impact levels of targeted sales promotion with a retail ad that drives immediate sales, married to Internet tools including, but not limited to:

Media partner web banner ads
Topic blogs
Self-blogging
Limited paid search
Free "how to buy" information on you own website.

All of these elements combined interrupt consumers in the middle of their shopping pattern. This pleasant television commercial interruption effectively deflects “now” buyers to your business. Let the other guy get the window shoppers; you want serious buyers ready to buy now.

Bottom line: Consumers don’t want to work so hard anymore for information about how to buy from you. Make it easy for consumers to buy and they will reward you with a purchase.

Adam Armbruster is a senior partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Company. He can be reached at adam@esacompany.com.

Recession-Proof Your TV Campaign

2008-02-05T11:24:00.001-05:00

Adam Armbruster

Are we in a Recession? Who knows? Even the experts don’t agree.

In fact, I seem to recall that during the last two recessions the experts did not agree even then.

It was only when we emerged from these down cycles that the economists finally identified each recession as it was swiftly fading away in the economic rear view mirror.

How does that saying go? Economists can be wrong every time and still collect a paycheck. Fact is we just don’t have a clear way to identify a recession. So for discussion purposes let’s assume that we are in one now.

In a recession, customers don’t stop buying; they just stop “over-buying”. In other words, they start second guessing that four dollar Starbucks latte and start talking about how great ninety-nine cent Dunkin Donuts coffee really is after all. Spending more conservatively on small items helps the American consumer rationalize larger purchases like cars, vacations, and clothes.

So what to do when your local market economics wither? You need to make sure that your television ad campaign generates an even higher Return on Investment to compensate for a smaller market opportunity.

How do you do it? Simple. You “Recession-Proof” your television campaign. Here are a few tips on how to do it:

Present a Superior Value: The consumer wants to see a commercial from you that can help her stretch her dollar. Auto dealers are moving toward advertising and selling more preowned cars instead of new cars. These used cars are a great value and the dealer makes money on these used car sales at a rate of five to one versus new. Department stores start gift with purchase events. Furniture stores are offering full room discount deals. Grocery stores start accepting competitor’s coupons. You get the picture. Think about what value statement you can create that makes your product or service a more attractive value than those of your competition.

Create a Renewed Sense of Urgency: In a slower economic cycle consumers shop longer and buy slower. However, we find that there is always a sector of “Now” buyers that will respond to short term sales promotions. Home builder clients of ours are proving this to be true in all kinds of regional economies. With so much negative press, even attractive home purchase opportunities are second guessed by shoppers. What can you do to create excitement and a short term sales promotion and communicate this excitement in your commercial? Examine the offers in your commercials. Are the motivating? Would You buy from You?

Offer Deferred Payment: Americans are not broke. It’s just that their cash is tied up in their homes. They overbought during the home sales run up and now since home sales have stalled they have to spend “real” after-tax money instead of home equity money. This has crimped the free cash in the market. On the upper end of American consumers these buyers have cash but don’t want to take their cash out of their investments especially in a down stock market. So what to do? Offer deferred payment. Most retailers can assign a small portion (3-4%) of their product cost to be able to offer a full year of free financing. Even if you never offered this before … now is the time. The consumer will be to rationalize buying from you since they will see the expense of buying as “free” financing. In other words, they would rather use “your” money to buy than “theirs”.

Create new Service Standards : Live web chat is being used by busy female home shoppers. They like the fact that they can hold a conversation with you while they are “at work”. (In reality, she is shopping while working…but don’t tell anybody!) As a result home builders are encouraged to include this function in their web site and to promote this capacity in their television commercials. Click to Call (www.clicktocall.com)is being used by auto web marketers to create an instant connection with a car buyer. Now you can load in your phone number and have the car dealer do all of the dialing. Consumers are using this function more everyday. It makes for quick contact and never underestimate the power of a passionate salesperson in a down economy.

Eliminate Wasted Ad Dollars: If you normally buy multiple television stations on your buy, perhaps it’s time to choose a few friends from the group of stations. Approach your television station partners and ask for creative support. Ask how these stations can stretch your dollar. If you approach in the right spirit, most station managers will join your cause and help. In a battle, chose your foxhole friends carefully. This is not the time to demand added value…this is the time to request creative support and new ideas.

Buy Smarter: Negotiate an annual plan instead a quarterly buy. Television stations can help you on cost if you help them by planning. Next, analyze your current cost per thousand. Has it slowly increased as you’ve added dayparts to your buys? You may find better results in reducing your daypart count and instead double spotting lower cost per thousand areas such as local news and syndicated programming. Moving prime dollars to access can increase your frequency in your buy and create better response. Adding more AM news to your buys can increase reach and add frequency as morning news programs in some markets rival local evening news reach numbers.

Look the Part: Market share can be bought “on the cheap” when your competition stops being aggressive and leaves the marketplace. If you see that a major player goes quiet, then get loud. Pick up their customers and try to keep them. Several of our clients had terrific years in 2007 because while their competition pulled their TV ads in favor of more “measurable” direct mail, we created a new pricing strategy and which enhanced their TV presence and in some cases doubled their market share! The smartest thing to do in a recession is to present your business as aggressive and in search of value shoppers. Some clients even open up discount themed
departments to represent this theme visually in their stores.

These are just a few ways to stretch your television advertising dollar in a slow market. Hey, nobody asks for a down economic cycle. So let’s stay smart and give the customer what she wants and show her the message she wants to see. Use your resources creatively. Recession proof your campaign right now and, while your competition struggles, you may not even miss a step.

Adam Armbruster is a partner in the retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Company located in Red Bank, New Jersey. Adam can be reached at adam@esacompany.com.

A Cool Half-Million (or More)

2007-12-03T16:37:00.001-05:00

Dave Eckstein

Quick, multiply 10,000 by your cost-per-point.

Is it a quarter million dollars? Half a million? A million or more?

That's the low-end of what a simple change can bring to your sales team per salesperson.

Certainly, some of you have stopped reading by now, out of disbelief. for those that remian, the payout is very real and is already happening.

The Plus-1 Challenge is not a new concept, nor is it rocket science. But its time is way overdue. It goes something like this: Get in front of one more destination business owner a week. That's it. The math takes care of itself. If you look at what established destination businesses spend on television (the low end is 800-1000 points), and look at a very tenable close ratio of 20-25%, the payout is enormous.

What is a destination business? An auto dealer, furniture store, HVAC shop, window & siding installer, credit union, legal firm, home builder elective healthcare practice, mattress store, and so on. They are the businesses that buy television because they know it works.

Even more of you have stopped reading by now, maybe out of fear or complacency. For those that remain, the math is right there for us.

One more decision maker (i.e. business owner) a week equals 52 more meaningful meetings a year. Those 52 qualified prospects a year represent 10-12 more clients at a modest close ratio. Those 10-12 clients translate into 8,000 - 12,000 more points moved each year. On the low end. So, again, for those of you with cost-per-points around $50 ... does a half-million sound worth it? If not, multiply that by the number of people on your sales team. A mid-market station could stand to gain a lot of ground in a very short time. Any station could.

We're well aware that not everyone is still reading this. For those that remain, you must have objections to this "plan".

Wait, it's not easy to get in front of one more decision maker each week, is it? Maybe "easy" is the wrong word. If it were easy, it'd be done by now, and we'd all be millionaires. But just for the record, we posed this same challenge to a group of relatively "unseasoned" broadcast television salespeople. Actually, we recommend they talk to three decision makers a day. Makes one a week look like child's play. That's a tall order, huh? This "unseasoned" group of AEs responded by getting in front of one more decision maker each day (let alone each week), which led to more clients, which lead to more points moved, which ... well, you know how the story ends.

I hesitate in using the word "unseasoned". They had the ability to do this all along. And if they were unseasoned, their seasoning happened so fast it was scary. In a very good way. What we noticed along the way, is that the salespeople who got the most meetings saw their close ratios improve along the way. Some as high as 47%. Oh, by the way, this all transpired in a month's time. About twenty business days.

We presented this challenge again to a group of veteran salespeople and sales managers and saw a few careers significantly change in trajectory ... again, all in a month's time. The most stunning report was a salesperson who had closed nearly $400K in new business in less than a month.

Okay, here come more objections. "We could never write that much in this market ... our market is different."

Stop with the objections. Your prospects and clients already provide plenty. Why add to the list?

If you're a salesperson and you're looking for the next "surefire way to double your sales in short order", which seems to be printed in boldface on so many dust-jackets of best sellers these days, consider this your plan. It works. Just go one more.

If you're a sales manager, try it for a month. Be sure to take a check-point every day. That part is absolutely necessary. No meetings required, just a brief conversation to reinforce a positive habit. Here's the context of that discussion: "Who did you meet yesterday? And who are you meeting today?"

Then let the math work itself out. And after a month, you'll notice this information will be regularly volunteered. Because by then, it'll be a learned habit, and it'll be working quite well.

We're positive that only a few of you are still reading. We're also hoping many of you are picking up a phone or walking to the car to meet your next client. If so, congratulations.

Just go one more. It's your choice.

Dave Eckstein is not the shortstop for the Toronto Bluejays. He is a partner in the firm ESA & Company, based in Red Bank, New Jersesy.

Tapping the Resources of Local TV

2007-11-05T06:14:00.001-05:00

Adam Armbruster

Local TV stations are one of the finest sources of marketing concepts and execution among media choices. When the overall market is slower, the opportunities they offer only multiply.

Broadcast television stations can help media planners and clients generate measurable results in short order—just the thing needed in this difficult economy.

There are several reasons to tap local stations:

Local reach and a low cost per thousand. Local TV stations never gave up on the local consumer. Live news programming is never out of fashion, and local stations deliver these programs at a cost per thousand that is 30% of radio ads’ and 10% of a direct-mail drop’s. In a slower economy, one of the wisest things you can do is to examine the cost per thousand of an overall media plan. Profits are made when expenses are contained. If your company profits are off, then it’s time to break down the cost of bringing a customer in your door.

A strong track record of local success. When the pundits spin their tales of woe about the masses leaving television as a primary source of news and information, they are dead wrong. The average American still watches more than four hours of TV per day. How can this fact be lost on marketers? Perhaps it’s because there are new and sexy media arriving every year. Perhaps local broadcast television is being looked at as “old” media. TV stations present an amazing track record of success with business and they will share these plans with you. As media planners, we need to embrace many perspectives and use the experiences of others to build on our knowledge pyramid.

Local station managers see dozens of clients a week and can give you more local economic data than an economist. Their information is in real time and it covers all major product and service sectors. Where else can you get so much information on a target market so quickly for no cost? Their work with large-ticket retailers, home builders, financial services, medical clients and more can give you a sense of what to do and, maybe more important, what not to do when planning for their market.

High-quality local television production. We recently reviewed the creative production of Allbritton Communications-owned WJLA-TV in Washington, D.C., and were stunned at the very high production standards. The WJLA creative team achieves this because of its investment in talent and equipment in addition to its freelance contacts in the best production facilities.

It seems that WJLA can turn out network-quality creative for local clients because it can eliminate major markups in costs, delivering a phenomenal value to the client. And it could do it for more clients if only they and their media planners would ask for this help. Why work in a vacuum when this caliber of talent and tools are at your disposal? Smart people surround themselves with even smarter people.

Local Web tools. Would you rather have a customer in a distant city or a local customer looking at your Web site? You want a local buyer, of course. Then why not take advantage of the massive traffic on local broadcast Web sites? These sites are teeming with local consumers who are also interested in buying from local business. The fact that these Web sites are promoted on local TV stations means that many of these consumers also may have seen your local television messages. This builds frequency against your target demographic. This additional frequency of your message is far more important than click-through rates. The simple fact that your logo and image are on these local TV station Web sites builds additional media value for a very low cost per thousand.

Weaker national spot buys create opportunity. If a national competitor to your brand has left local spot media in favor of national network television, there may be an opportunity opening up. Heavy buying of local news programs amps up market share and sales results against a national competitor in your local market. In effect, the competitor has done you a favor by reducing local impact, which it has diluted by spending “thinner” across many markets. Market share opportunity grows when a competitor pulls back.

Here are some recommended ways to begin a dialogue with local TV station managers:

Share your goals. You don’t have to reveal any confidential data, but telling your station manager your overall goal can help that manager to think through the concepts, programs and even creative ideas the station presents to you.

Ask what has worked. Ask the management team what client had great success in your market and ask what they could see working for you.

Ask what they know about impending changes in television viewership, both on their station and in the market as a whole. These managers can tell you what programs are about to balloon in viewership, thereby helping you secure a good buy before the rest of the media planning community.

Review the results. Ask your station contacts to keep their eyes open to changes in the market as your campaign unfolds.

Mix it up. Look at other retail sectors and see what works. We find that people tend to shop in similar patterns regardless of product. What can you learn from other industries that you can apply to your campaign?

When local markets soften, everyone has a choice. And the choice is to control your own destiny, or suffer along with everyone else.

Controlling your destiny involves out-thinking your competition rather than outspending them.

Broaden your understanding of specific markets and make intelligent adjustments to your television plan while the competition is still wondering what to do. Let local stations bring you a list of 10 ideas that have worked in other similar market conditions.

Smart industry people are all around us. Let’s use their talents and ensure success in any kind of market.

Adam Armbruster is a senior partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Co. He can be reached at adam@esacompany.com.

The Media Party

2007-06-22T06:43:00.001-04:00

Dave Eckstein

Here we are, in the first quarter of 2007, at a point in time when virtually anybody -- and I do mean anybody -- can buy and sell advertising. This isn't a new phenomenon. If you don't believe that's true, just check your email right now. Or visit Google. Or read a blog. And look at who is buying and selling advertising.

Everybody is.

This notion -- the decentralization of the advertising and media sales functions -- scares the daylights out of many people in media. It makes them fear for their clients, for their share of the market, and for their jobs. It makes them wonder about the evolution and extinction of media in general. It may even predicate a quick glance to the future and possible escape routes.

I think I speak for many of my colleagues, and many of the readers of this commentary, when I say this energizes us.

I can't imagine a better time to be here, doing what we do. This is not a motivational speech. It's a reality check.

Media sales is akin to a big rollicking party. It's easy to see the similarities between media sales and a big party. No, not the wild and crazy atmosphere, although, truth be told, those who really enjoy selling media (as they would a party) are usually the ones who outperform their peers.

Think of the last time you were at a big party. Strip out all the formalities. Imagine the big party, in a dark room, with dim lighting, smoke fills the air, there's lots of noise. You can hear multiple conversations, see lots of silhouettes, and you know there's plenty going on. But you can't make out much.

This is advertising. At least, this is the advertiser's perspective. They have been at the party long enough and aren't really having much fun. Their senses are bombarded. They can hear and see as much as they'd like, but nothing with any clarity. In a word, it's chaos. This is why today's adveriser is frustrated. They have more options than ever, with less performance to show for it.

Every time a new form of adveritising media evolves, the experts from the ivory tower (as well as the number-crunchers in the back office) hail this as the "dawn of a new age in advertising", with new efficiencies for advertisers to reap. These same experts then begin digging a grave for "traditional media" right then and there.

Actually, they couldn't be more wrong. With more selection has come more inefficiency. This is a statement of fact, founded in the numbers.

Just check out the average cost-per-lead for some of advertising's largest categories. Over the past five years alone, most major television categories at the local level (think durable goods and services like automotive, furniture, home contracting, carpet, financial, elective healthcare, and so on) have experienced dramatic decreases in their advertising efficiencies. Cost-per-lead, cost-per-up, cost-per-new-customer ... whatever measure you use, all of them are up over the past five years. Some as much as 50% or more.

Home contractors, who once enjoyed cost-per-leads in the $200 range, are now forking up an average of $241 per lead. Auto dealers once paid $200 per unit sold in their tier-3 (auto dealership) spending. That figure is now well in the rear-view mirror.

Hey, now that media is so much more measurable, shouldn't we be measuring the things that really matter? That's like being a consumer in the market for a new car and forgetting to "measure" price and MPG.

Back to the party. Now imagine for a moment, a newcomer to the party walks over to the giant switch on the wall and pushes it to the "ON" position. The switch controls the floodlights in the room. Light pours into every dark corner and under every chair and table at the party.

We have this thing called the internet, the new kid on the block (thank you, Al Gore), and it is the self-proclaimed most measurable medium of all time. Don't get me wrong. The internet is great for business and advertising. Those that embrace it correctly have seen the results. It has a place in the media mix which grows stronger every year. Most importantly, for those of us in media sales, the internet spotlight has cast a beam of accountability and measurability upon the media landscape that is inescapable.

Thank goodness for that. I'll ask again ... Is there any better time to be selling what we sell?

In other words, the party is over. The chapperones have arrived. And many are running for cover. When accountability and measurability are paramount, when numbers mean more than promise, when the true measure of advertising is front-and-center ... that is, advertising as a profit center ... does it not make our job clearer? Does it not energize us all? Does it not make a clear statement about the selection of media for destination businesses in our markets?

It's really the best thing that could've happened. Whatever measures are trumpeted from ivory towers or server-dominated back-offices -- ROI, Cost-Per-Click, Cost-per-action, etc -- the primary criteria for media planning will always be a declining cost of customer acquisition coupled with real market share growth. Period. Good advertising is a profit center, not an expense line, not an experiment, nor is it an exercise of measuring the minutiae.

If I own a destination business in any market, and I want to buy more share for less, the decision has never been clearer. This is not a generality or a statement of hyperbole, it is the numerical reality of comparitive media today. Run the numbers, see who wins. And please, encourage your clients and prospects to do the same. Actually, be so bold as to challenge them.

You might also want to listen to these words from ESA & Company's ROI2007 conference:
Main Street Math (MP3 audio, Time = 8:18, Size = 7.7MB) Well put, Craig!

Simplicity has triumphed over chaos. Can we bring this simplicity to our clients and prospects? If so, they win, and so do we.

They are ready to leave the party and would like to hear from us soon.

Dave Eckstein is not the shortstop for the Toronto Bluejays. He is a partner in the firm ESA & Company, based in Red Bank, NJ.

Making Advertising Really Pay

2007-05-21T06:21:00.000-04:00

Adam Armbruster

Every year our firm holds advertising profit seminars with large groups of clients. What have we learned? For starters, we've learned the old adage about "50 percent of all advertising is wasted" is wrong. Actually, the percentage is higher.

We have determined that at least 60 percent of a typical client's advertising dollars are wasted because they burn ad dollars in the wrong places, advertising to the wrong people, in the wrong TV programs, on the wrong days.

Enough about the problem. Let's talk solution.

Let's start with what an advertising budget really is: a small percentage of the gross sales of a company that is allocated to create more demand for even more sales. The ad budget is the "gas money" of a company.

Without new customers, business soon will begin to stall.

So we should help a company owner redefine what his ad budget really is to help him begin to see how important it is to have this budget working at its highest level of performance. Otherwise, the client will be just another member of the 60 Percent Wasted Ad Budget Club.

What we see most often are clients whose ad expenses are too high in relation to the amount of sales volume. This red flag can be a symptom of a weakening plan; if so, it's important to fix the advertising plan before we can expect to generate a significant return over the prior year.

Clients need three important things: Profitable advertising; measurable advertising; and effective advertising.

That being said, if a company owner is most interested in making more money, then profitability should be the priority target instead of the usual target of a sales increase.

Profitable advertising requires an analysis of past media choices. How does a client's media choice affect profitability? Simple: The CPM (cost per thousand) of the current media mix has a direct effect on the buying power of the ad budget. The CPM of a client's multimedia ad plan should be the first thing examined.

As the different media begin to assume new roles in the lives of consumers, clients need to recognize this evolution and shift their ad plan accordingly.

Case in point: When was the last time you used your Yellow Pages telephone book to look up a local business? Compare that to when you last Googled a local business. Google is the new Yellow Pages for millions of us today. So a home improvement company owner who keeps buying ads in the Yellow Pages trying to grow sales volume will actually experience a steady advertising CPM increase each year.

Therein lie the inherent advantages of broadcast television. Television's very low CPM delivery of audience generates an immediate increase in profitability because you're bringing more prospects to the client's door at a much lower cost per prospect (CPP).

Measurability in advertising takes up-front planning. Plan what you want to measure in advance and don't shift to new metrics midway through the campaign. Real measurement is a science, not an art. You need multiple sources of data and you should track them for a period of six months or more to remove any variance from the data.

Yes, it's boring stuff. But it's the client's money and we need to help maximize their buying power with careful tracking tools linked to the campaign from start to finish.

A few metrics to establish up-front are: Organic (non-sourced) Web site hits, Web site traffic volume during TV ad flights, click-through rates of linked Web site ads, positive/negative ratio of incoming customer calls, closing/conversion ratios of TV leads generated, gross sales during TV ad flights, net profitability during TV ad flights and increases/decreases in the usage of related print media run during TV ad flights.

As stated in prior articles: Please do not ask actual customers. They don't know, don't care, and will only tell you what they think you want to hear. Following business consumer polls will lead you directly into a ditch.

Effective advertising requires knowing the real consumer buying triggers. Why do people really buy stuff? Are we logical? Usually not.

We are emotionally driven creatures who buy with emotion and rationalize with logic. My wife rationalizes the purchase of an outfit by saying she got it on sale. Don't we all do this?

Just as valuable is the real reason people will buy. Usually it's based on a person's desired image (Lexus), or a person's need for a reward system (Starbucks). Does a $104,000 car or a $4 cup of coffee make logical sense? No. But we don't make buying decisions logically.

Clients need to see their customers' emotional triggers in a new light, and your outside perspective usually helps. Choosing television programs based on consumer buying windows, psychographic composition, household income levels, lifestyle and brand orientation and, lastly, cost per thousand, respects the emotion vs. logic argument made above.

We often suggest a client write down the top 10 reasons a consumer would buy from his business to help the business owner see his business the way a consumer will.

It's said that a cash register ringing is the only true indicator of a successful television campaign. But ironically, when asked, buying consumers seldom credit a business's ad plan as the reason they bought-which is truly exasperating to clients.

That's not to say the advertising was ineffective. It just means that at the time of sale, the consumer made a purchase based on features and benefits of the product or service. The TV commercial is very far back in the mind of the customer emotionally. They've moved past the advertising's emotional impact and into their logical rationale to buy.

We all need to help make the client's progression into television advertising the most profitable, measurable and effective move they've ever made.

Adam Armbruster is a partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Co. He can be reached at adam@esacompany.com.

Choosing Between Broadcast and Cable

2007-05-02T06:13:00.000-04:00

Measuring Results from a Multimedia Marketing Plan

2007-03-07T17:59:00.001-05:00

Adam Armbruster

Our clients report that all of the drastic changes in consumer media usage has caused them confusion about how to measure retail mutli-media electronic advertising campaigns.

If you are the advertiser, you may have even already discovered that the old standby measurement tool, the customer survey, is becoming irrelevant due to the fact that your consumer is spending more and more time “virtually shopping” before “actually buying”.

In other words, by the time she finally comes in to your store, she may forget what advertisement media brought her there!

Due to today’s longer Ad Exposure to Purchase cycles, consumers may not able to accurately recall what motivated them to shop your store. This phenomenon is reflected in increasingly higher error rates of retail customer surveys. Case in point. Nielsen, and more recently Arbitron, switched over to digital audience measurement because of massive human recall error in recalling even “Same Day” media use.

We all know that consumers already have a foggy idea of what media they think they are using versus what Nielsen and Arbitron report that they actually use. As such, consumer recall rates of your original television ad may be diminishing due to the dramatic changes in her shopping habits. Clearly, it’s time for a new measurement tool.

We already know that consumers begin all major purchases by viewing the seller’s Web site…but we also know that something motivated them to visit that Web site in the first place.

Make no mistake about it. Television is just as effective, or even more effective, than ever before. Consumers have shifted to using video and electronic media as their media of choice. But new standards of campaign measurement are now necessary since consumers are also “using” television advertising in new ways.

Remember in the 1980’s television ads generated immediate store visits, and then in the 1990’s television ads generated phone calls? Well now television ads generate Web site hits. Today the consumer is beginning her shopping pattern virtually, before physically.

Try it yourself. Tell a friend about a great new store you just found and mosty likley the first question she will ask is “What’s the Web site?”

We also know that once a television message is seen and heard by a consumer, she makes a decision immediately made to act, or not act. Assuming she acts on your television message and perhaps logs on to your Web site that very same day, but then visits your business over a week later, and then returns another week later to actually buy, she may not be able to accurately recall how she originally found you!

So if you are still asking current customers the question: “How did you hear of us?” expect confusion when you sit down to go over the final research data.

So how can you eliminate the human error and begin to accurately measure the impact of these new multiple media television / internet campaigns?

First off, you need to design new measurement metrics. Here are the best metrics for measurement as reported by a mixture of our automotive, furniture, home builder, home contractor, health care, and financial clients:

Organic (Non-Sourced or Non-Searched) Web site hits
Overall Website traffic volume during TV Ad Flights
Click-Thru Rates of linked television station Web site ads
Positive / Negative Relationships of Incoming Phone Calls to Television Ad Flights
Closing / Conversion Ratios of Television Leads generated
Gross Sales during Television Ad Flights
Net Profitability during Television Ad Flights
Increase / Decrease in the usage of printed media run during TV Ad Flights

Did you notice that none of these measurement tools involve talking to actual customers?

The fact is that today the consumer is deluged with so many ads each day that asking them what brought them to your business is like you trying to remember what you had for lunch yesterday. Also, the metrics above are easily measurable so you can now build a measurement graph using some, or all, of these campaign measurement metrics

Next, you need to design “measurability” into your television and internet message.

To generate measurement, your television message needs to be promotional in nature and not an image ad. Image ads are not easily measurable as they require a very long horizontal style campaign and most advertisers are not willing to invest this level of television spending without an immediate payback.

In your promotional television message you also should include a clear and bold web site mention both in the middle of the script and most importantly at the end of the commercial. Your Web site address should always be the last thing the consumer sees and hears. Why? Because we already know that interested consumers will go to their computer next! Don’t be passive and make consumers “Google” to find you since your competition will most likely show up on the first Google page as well.

Next, your television flight needs to be planned around the consumer lifestyle patterns so that she can act immediately after seeing your commercial. An example of this is to run high levels of Early Morning news to reach Working Women so that she can see your television “Web Driver” message and then log on to your website at work that same morning.

Lastly, you need to be congruent in the design of your commercial so that it matches the same style and tone of your Web site. Here generous use of video versus text is the answer. Consider airing a television commercial and also launch a Web site that is designed to welcome consumers with a video using the same style creative and the same on-camera talent. This will help build frequency of message along with higher ad recall levels.

In the end, campaign measurement is kind of a bad news / good news scenario. The bad news is that television campaigns have never been harder to measure with traditional methods, the good news is that better metrics have arrived that are much more accurate than customer surveys. Getting accurate feedback about your television campaign is crucial to a knowing what ad concepts and media plans are most effective. Today however, asking the consumer may be the worst place to start.

So in 2007 let’s change our measurement metrics to align with the way that today’s consumer really shops.

Adam Armbruster is a partner in the retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Company located in Red Bank, New Jersey and can be reached at adam@esacompany.com.

Sources: Automotive News, Homebuilder Magazine, Ward’s Dealer Business - 2006

Main Street Math

2007-02-07T06:03:00.001-05:00

Craig Reumund

Not to oversimplify terribly, but your prospect's decision to use broadcast television should be clearer today than ever before. The decision based solely on three simple "maths", three criteria that underscore broadcast television's superiority versus any competitive medium in growing a business and increasing profit. And the beautiful thing about this approach is the information and criteria needed to make this important decision is readily available.

It all boils down to a key point:
Good advertising is the acquisition of a new customer at a lower cost per acquisition.

Any advertising that doesn't accomplish this is not working like it should.

Which is why broadcast television is the clear answer for any destination business today as the dominant element of their media mix. It not only passes all three criteria on the local level, it wins each head-to-head battle with any other competitive medium. In terms of unit cost, demographic penetration levels, and geographic footprint, broadcast television is the numerically superior. This is evidenced in the number of market-leading businesses that have been created through the correct use of broadcast television.

Listen to this MP3 for a full explanation, as delivered at ESA's ROI2007 conference:
Main Street Math (Time: 8:18, File size: 7.7 MB)

Craig Reumund is a Senior Consultant with ESA & Company. He meets with hundreds of local business owners each year and has significantly changed the fortune of thousands of local businesses over the past 20 years.

Drive Them to Your Website

2006-09-01T08:03:00.000-04:00

Adam Armbruster

Is your store foot traffic down, even as your brand maintains or even is increasing in share across your market area? It could be consumer “website previewing” at work.

Dealers who complain of lower foot traffic could be falling victim to their own lack of acceptance of today's busy car buyer and the dramatic impact of dealership website previewing — or going to a website before going to the place of business.

We estimate that only one in five dealers have fully embraced this phenomenon and have designed the appropriate buyer-friendly websites.

We've already seen the impact of this in other retail industries. In other big-ticket purchase categories, these are a couple of the percentages of consumers that visit a company's website before actually shopping its store:

Furniture Stores: 82%
Homebuilder: 85%-91%

Clearly, consumers are loving the convenience of being able to “look in your front window” before stepping foot in the dealership where they might confront an aggressive salesperson. Smart car dealers already know this and are spending more time motivating consumers to visit their store's website — first.

We see great growth opportunities for auto dealers who understand the new habits of how today's consumers preview, plan, and finally, buy vehicles.

How can you get started right now? Here are the website questions for you to consider and then act on:

Does your website design reflect the personality and taste of your customers?
Is it necessary for customers to conduct financial transactions on your website or is it being used simply to preview? (If it's the latter, simplify your website.)
Is your website easy to navigate?
Is it necessary for you to purchase traffic from a major search engine or could you promote your website and generate more traffic for less cost?
What's the best way for you to handle e-mails and customer comments from your website? Should you have one business development center manager handle this process to ensure consistency?
How do you advertise your website? Does it need its own advertising budget or can it be added to a current TV advertising plan?

Also, think about the profit and growth impact of using local mainstream media, such as TV and billboards, to promote your dealership website.

There is a less of a chance of consumers seeing a competitor's website address on a search engine at the same time as yours, thereby reducing cross-shopping.

We've designed hundreds of “triangulated” broadcast television plus TV station website campaigns, and the results are in. Dealers report web traffic increases of 20% -100% with 10-30% net profit increases following.

Why is this? Cost efficiencies! For contrast, think about this. Consider how many full-page color car dealer print ads ran last Sunday in the newspaper in complete opposition to the fact that most consumers are doing their auto buying online and previewing dealer websites mid-week. Also, the cost per thousand to run these print ads is exponentially higher than a television and online campaign.

Web previewing is big. But if we've learned one thing over the last 30 years it's that many dealers do not accept change easily. Dealership principals need winning website ideas right now. A good starting point is to contact your local broadcast television station and their station website. They already have the muscle that it takes to explode a dealership's sales and profitability.

Adam Armbruster is partner with retail and broadcasting consultancy Eckstein, Summers, Armbruster & Co. in Red Bank, NJ. He is at adam@esacompany.com

David vs Goliath: Winning Against Bigger Competitors

2006-08-01T13:51:00.001-04:00

Adam Armbruster

You’ve just received a tough assignment to develop a successful television campaign for your client that must compete with their much larger competitor.

How do you begin?

First, you need to fully understand the larger competitor’s strengths and weaknesses from the consumer’s point of view, and, in direct relation to your client’s business model. Next you will need to promote your advantages in a passionate television message all without drawing the attention and resulting counterattack campaign by the larger Goliath.

Surely this is not easy! But it is possible.

Since taking the on the bigger Goliath head-to-head is a sure way to draw their resulting wrath you are best served to instead stay off of their radar screens and win market share with a less “obvious” strategy.

Helpful tip …NEVER mention the Goliath by name in ANY of your advertising. It’s always better that the competitor not know immediately that you have them firmly in your sites for market share growth!

Second, Goliaths typically enjoy their success thanks to their volume buying efficiencies, store design, locations, superior supply chain management, and their marketing budgets. Try to identify which one of these business attributes is most likely the key to their current dominance. (Note: It may be a strong combination of all of these elements, but often one element will stand out.)

Now, ask your customers how they think about Goliath’s weakness’ and what area of your business you have a unique advantage. Ask for total honesty and never compromise on this step. This idea is the foundation for the entire campaign and new customers will expect you to deliver on this promise.

Third, determine the correct strategy to employ against their weakness. It’s time to shape the television campaign plan and develop specific tactics for your television marketing effort so here are some of the basic principles to develop a successful strategy:

1. Specialize and Categorize!
Use your key advantage identified above and promote it on television as a special “store within your store”. Example: What if you had to design a campaign for small local wine store against a bigger Goliath discount wine superstore. Your smaller local wine store that has the “broadest” selection of small vineyard French dinner wines all with in-store expert advice” can successfully compete against a larger national chain that sells the “largest and cheapest” inventory of wines in the region. Why? Because when it comes to buying wines, consumers have more questions than answers.

Demonstrate to consumers that you specialize in answering questions and that you will “price match” any advertised price. Also, promote unique and hard to find wine selections to protect your client’s profit margins since there is no reason to discount wines that the larger discount store does not advertise.

Here’s another example. Home Depot clearly has a strong “low price” perception in the US thanks to a very successful “Low prices are just the beginning” network television campaign. But, Home Depot also has massively large stores. Have you ever gotten trapped in one of these on a Saturday morning? These huge stores mean that that you will be walking a significant distance to find your items and also means you may have to check yourself out to avoid a long
checkout line. Aha! Goliath has a weakness. The smaller Ace Hardware chain also chooses to employ TV messages that offer great price and value. But this is where they take on Goliath. In the stores they position “helpful” employees near the front door to greet you and walk with you to pick out your items. Ace customers are immediately handed the item they are seeking. This time saved on a busy weekend is worth more to some consumers than a few dollars in savings at the Home Depot.

Bottom line: Ace Hardware successfully competes with the goliath Home Depot because Ace understands what many hardware store customers really want in addition to a low price.

2. Use Service Bundles to Surprise the Customer!
Creative bundling of services is a way to help your client’s customer solve several unrelated life issues all at once. These service bundles save consumers time and money in a way that they may have not expected.

Example: How did Lexus gain market share so quickly against such a well entrenched Goliath like Mercedes? One way Lexus does this is that their dealerships offer office-like environment for their customers. These special areas include free food and drinks, free car washes anytime, free wireless access, golf and car magazines, large plasma television screens and computers, plus quiet rooms with comfortable leather furniture. Compare this to a “traditional” car dealership service waiting area and you’ll get the picture.

Lexus chooses to use this as a Service Bundle for a “closing tool” when giving potential customers a tour of the facility. Do you see how Lexus bundles a “transportation” solution with a “zero down time” businessperson solution? (Check out the Lexus used car lot…you’ll see many shiny Mercedes trade-ins parked there!)

3. Solve a “Unique” Customer Problem.
Taking on a bigger competitor means that you may also need to offer a better overall value experience. This can have nothing to do with the prices, goods, or services being offered by the large Goliath competitor! And, this is a sure way to stay out of Goliath’s reach.

For example, we consult a mid-size home air conditioning company in Florida that guarantees to make a home service call within in 2 hours of initial contact by a customer (or it’s free!). They also ask their entire service tech’s to wear special shoe coverings before entering a home.

Is all of this really necessary? Not really. But it demonstrates to a customer that they respect your time and the cleanliness of your home enough to get there fast and also not leave greasy footprints across your floor. Women have reacted so positively to these promises that the company is enjoying fast growth and an 85% referral rate!

Lastly, designing a television campaign to help your client win market share vs. a Goliath requires additional thinking before acting. So take the time to reflect on the strengths and weaknesses of Goliath as seen though the consumers’ eyes. Then design an appropriate strategy. And finally passionately deploying these creative tactics with a smart TV campaign. You can begin to win market share. Plus, you can win business while avoiding a dreaded counter-strike by Goliath!

Adam Armbruster is a partner in the retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Company located in Red Bank, New Jersey. Adam can be reached at adam@esacompany.com.

Not a Question of Luck

2006-07-01T07:33:00.001-04:00

Adam Armbruster

“If I could just tell when my dealership advertising was working, I'd be thrilled!” I hear this comment from many dealers.

To this point, I offer the same response: “If you can't tell when your ad plan is working, how will your customer!?”

There's no getting lucky in dealership advertising. Most dealers spend 1% of sales on advertising and are always searching for new methods to maximize their advertising plan. So here are some proven methods to ensure that you are thrilled with your dealership ad plan.

Do an Advertising SWOT (Strength, Weakness Opportunity and Threat) analysis.
Begin by listing your top three competitors in order of impact on your business and what they are “saying” through their advertising to your customers right now. Then write a six-word description of each competitive positioning statement.

Example: Jones Ford #1: bigger store. Great displays. Poor pricing.

Now design a “visual”-map description of these positioning statements to help visualize the competitor's message so you see it just as a customer would. Then, design an effective counter-position. This is the “play” you will perform against the competitor. It could be a pricing play, a selection play, a convenience play, or any other advantage that you have over this competitor. Choosing the right play just takes a little common sense.

Record clear campaign goals.
Some dealers want their advertising to accomplish all sorts of goals as if they can keep adding responsibilities to the ads instead of their sales staff! However, don't be tempted.

Choose one specific success metric to provide a real measuring stick for the campaign. These metrics can include, but should not be limited to, store traffic, sales, market share, profitability and brand development index (BDI).

Build the marketing campaign “house” from the bottom up. By this, I mean that the campaign message needs to include the key elements for an effective retail message including a:

Clear dealer identification.
Clear merchandise impression.
Bold positioning statement.
Sense of urgency.
“Tie-breaker.”
Web site.

Dealers that miss just one of these are the same ones who worry about whether their advertising is working.

Ensure the proper frequency.
Media professionals often recommend a three-time minimum frequency for a campaign. I'll argue here that this is far below the required “burn rate”of a message against a targeted audience.

All nameplates have a unique buying window and the figures are somewhat predictable. Knowing this helps to focus a campaign like a laser on the key buying days of this customer.

Create effective, not creative, advertising.
Funny ads are great for the nationals that have the money to burn and have so many corporate initiatives that no one is really paying attention to the ad campaign results anyway. But dealers are spending real profit dollars directly from their business profit statements.

Dealers can't afford to spend 90% of their TV message amusing viewers.

I suggest a ratio of three parts selling to one part entertainment in the script. The halls are lined with terribly funny TV ads that had no real effect on sales.

So let's stick to the basics. Present an advertising message that is designed to be measured, and one that customers can use to make a decision to buy.

Adam Armbruster is a partner in the retail consulting firm Eckstein, Summers, Armbruster & Co. He can be reached at adam@esacompany.com

The Other Success Indicator

2006-04-15T14:20:00.001-04:00

Adam Armbruster

“Increase my sales immediately!” is the cry we all hear so often from advertisers. Is it that a sales increase is the only, or even the preferred method to measure an advertising campaign?

Is there no other way to create financial success for a television advertiser?

Of course there is. It’s Profit increases.

How many companies constantly search out the next sales increase only to report a poor financial “net margin” performance 12 months later? Perhaps it’s time to discuss some of the basic points about how to market a business for an increase in profit as the success metric, and not just for a sales increase.

In our experience, most clients are already generating adequate sales volume based on their overall investment. But what we most often see these that their expenses are simply too high in relationship to the amount of their sales volume. This can be a symptom of a broken advertising plan and if so it's important to fix the advertising plan before we can expect to generate a significant return over the prior year.

We’re also assuming here that the company leadership is interested in the profitability of the company and that they are not compensated simply on sales increases. Since most companies in America are privately held this is true in most cases.

That being said, if a company is most interested in making money, then profitability should be a priority target over sales increases since sales increases also bring along increased expense.

The best way to start this analysis is to examine the clients’ industry profitability averages. Most trade industry magazines or organizations publish this type of information. Another way to get accurate information is to poll several other noncompetitive clients in the same field. You will soon begin to see some predictable averages of industry profitability.

Next, compare your clients’ profitability average with that of his top five competitors in the selected market. This data use often available through vendors or financial partners. It’s a simple step that may reveal a substantial opportunity for profit gain. For example, if your client is the lowest in profitability of the five. Then it's going to be relatively simple to generate a profit increase with a better designed advertising plan. In contrast, if your client is first in profitability than another success metric should be applied. Usually this involves market share increase.

So to begin, how does your media choice affect your profitability?

One of the great advantages of broadcast television is its very low CPM (cost per thousand viewers) delivery of audience. Simply bringing a retailer into television advertising can generate an immediate increase in business profitability because you already succeeded in bringing more prospects to the door at a lower cost per prospect.

But we need to go deeper into a marketing plan design to target a profit increase.

Merchandise selection is a key component to be discussed in the design of a advertising plan. Some clients may try to convince you to feature their slowmoving products in their TV commercial as a way of clearing it off the shelves. Try to convince the client and is in his or her best interests to instead feature widely popular merchandise since this will be the traffic driver for the entire campaign. It makes no sense to put the slowest moving product in front of tens of thousands of viewers since they will now judge your clients business based on this impression of merchandise.

Pricing and product has a lot to do with the success of the campaign as well.

Some high-end advertisers will want to avoid advertising lower prices out of concern that they will generate an unqualified consumer. Most often this concerned is unwarranted since today American consumers will cross-shop 3 to 5 different retailers within a product category. This is especially true in fashion orientated products like furniture, apparel, homes, and home-improvement. A high-end advertiser that refuses to demonstrate their affordability to a mass client base is limiting their profitability since many of these will be first-time customers that can be generated at a much lower cost per thousand.

Lastly, the television program selection is the final step in building a profitable television marketing plan. Choosing programs based on audience psychographic composition, household income levels, lifestyle and brand orientation, and finally the cost per thousand of the television program are all equally important. You may find just as much profit success using an early-morning news television show as you will with substantial primetime programming. Of course all of these decisions are taken in a case-by-case basis. There is no such thing as a standard television marketing plan.

Final note: Helping a client achieve a profit increase has a dramatic effect since it can take a substantial sales increase to generate a small increase in profitability. This said, it makes sense to view this proposition in reverse mode and target of profitability increase first. Only after the net profitability of the company has improved doesn't make sense to go after a significant sales increase.

My view of business goes this way, first help business owner to examine their operating systems much more closely since the sales increase will put stress on these systems quickly. These systems include but are not limited to their sales staff, their display, computer software, registers, and overall staffing levels.

I hate to admit it, but I've seen businesses insist that they target major store traffic increases only to get it… and then suffer the consequences of poor preparation! Case in point: one business generated a 50% traffic increase and saw sales decline 2% because they were not able to help customers coming into the store quickly enough in the overcrowded store was avoided by high-end shoppers.

So next time your client insists on a major traffic increase, consider a profit discussion first. It may be the best recommendation you could make.

Happy Profiteering!

Adam Armbruster is a partner in the retail and broadcasting consulting firm
Eckstein, Summers, Armbruster and Company located in Red Bank, New Jersey