For most industrial companies, advertising represents the single largest discretionary expense.
When times are good, advertising budgets grow and often develop some fat or waste. When times are tough, advertising budgets shrink to the point where, in many cases, they are not sufficient to achieve the objectives essential for efficient market coverage. The prevalent attitude in many businesses is “When we’ve got it, we’ll spend it, and when we haven’t, we won’t.” Which leads us to ask “Why spend it at all? If you don’t need sales efficiency in bad times, why do you need it in good times?”
There is a wide body of research that shows that dollars cut from an advertising budget aren’t really saved, but reappear in the form of increased selling costs.
Since selling is almost 100% communications, the right advertising appropriation is the amount necessary to implement programs which, when combined in a mix with other communications resources, provide optimum communication at the lowest total cost. In order to arrive at this number you have to start with sales calls. Determine the communications tasks that can be performed only by salespeople, and then add into the mix each succeedingly less effective, yet more efficient communications resource such as email marketing, direct mail, etc.
At the very end, you’ll come to advertising – not because it is the least important of the resources, but because you can only determine what you need to do when you consider it in relation to the overall marketing communications mix.
If you follow this process, you’ll know exactly what you want from your advertising. You’ll also have a pretty good idea of the type and volume of advertising you’ll need to do in order to perform. Suddenly, you’ll have turned advertising into a justifiable, accountable investment with clear goals and measurements.
At Norris & Company, we believe in task-method, zero-based budgeting rather than percent-of-sales appropriations.
If you would like more information on this subject, or a reprint of this and other ads in the series, please contact us: (508) 510-5626 • info@norrisco.com
