Decades ago, when I worked for Procter & Gamble, we were always told there were two categories of expenditure for which they had never reached a point of diminishing returns. These two categories were training and marketing. Consequently, every year they just spent as much as they possibly could on these cost centers. Pay the bills, calculate and allocate a good return on investment, and throw everything else at training and marketing.
Our subject here, of course, is marketing and advertising. However, I likely alr
eady know your first reaction-"but P & G is retail." Yes, I know that. I have contended for years, though, when it comes to marketing and advertising, everything is retail. It is only when one get s to the Moment of Decision that your business becomes Business-to-Business, for a sale in your business is based on a return on investment or some other relatively sophisticated value judgment (as opposed to retail impulse buys, for instance).
There are three "Moments" in any transactional experience.
1. The Moment of Awareness
2. The Moment of Decision
3. The Moment of Use (Experience)
Only one of these three (Number 2) is a Business-to-Business sales function. Number 1 and Number 3 apply to all sales and despite what you or your prospects and customers may think, numbers 1 and 3 can be just as emotional for a Business-to-Business sale as they are for a consumer or retail sale.
So, the first thing we have to do when talking about Budget Setting and Allocation is change your mind and convince you that, at least step-wise, two-thirds of the activities do not involve solely Business-to-Business considerations. Hopefully I have done that.
Preparing for and executing a successful Moment of Decision requires expensive and experienced sales talent. Creating the Moment of Awareness and exploiting the Moment of Use do not.
Using expensive sales talent to run around the countryside creating Moments of Awareness and memorializing the Moments of Use is a foolish waste of money. This is your first lesson in allocation.
Advertising in all forms is how you create the Moment of Awareness. By all forms, I mean print, electronic, radio, mailed collateral material and so forth. A good rule to follow here is to get your name and message where your prospects and customers are. This includes their desk, their mailbox, and the places where they absorb content. First and foremost, nothing you make or service should leave your facilities without a sticker on it with a website, email address and toll-free phone number, all connected to places where your appropriate employees will check at least once per day. If you can't do anything else, you can buy a couple of hundred bucks worth of stickers and stick them on everything that doesn't move.
Let's assume you have already done this and are moving to the next step. You can look at print and make a cost-based decision there. However, in our most recent survey, as many respondents said they receive their information about the industry electronically as they do in print. And, by the way, in this survey, the age range of respondents was 27 - 73 with an average age of 55. Electronic is no longer for the young.
These days, we think the most effective way of creating Moments of Awareness is Pulp & Paper Radio International (www.pnpri.com). It is the only place we know in the Business-to-Business world where one can run repetitive saturation campaigns just like retail marketers do.
Moments of Use (Experience) are memorialized in White Papers and Testimonials. Testimonials are easy to do and inexpensive to make. We can do these for you without ever visiting a site, anywhere in the world. We'll interview the people involved, either for transcription into a printed Testimonial or radio interview. We'll contract a local photographer to take photos that can be placed in a printed Testimonial or "simultweeted" (simultaneously tweeted) during the playing of a radio interview. No travel cost involved whatsoever.
By the way, in the survey I mentioned earlier, 55.5% of respondents said White Papers are "very important" or "important" as an information source.
I apologize for this entire preamble, but felt it was necessary in order to get to the point of the title this week. It is hard to set budgets and allocate them if you don't know why you are doing so. Hopefully, you learned a few things getting to this place.
Now to the money. If you have never set an advertising budget before, I would suggest you find a way to set your budget at 10% of your past direct sales cost budget. By your direct sales cost budget, I mean your sales people's salaries, fully loaded, their travel expenses, and any costs you have attending trade shows (We'll talk about trade shows in a future issue, but for now, just lump them in with the sales people). So, if your budget last year for sales and marketing was $500,000 and you did no advertising and collateral material, this year split it as follow, now that you know the "Moments":
$50,000 for Moments 1 and 3 and
$450,000 for Moment 2.
But, you say, how do I allocate between Moments 1 and 3? This depends on your circumstances. If you have either (a) a roaring success already in the marketplace or (b) a terrible disaster in the marketplace, you'll need to allocate about 75% of your advertising budget to Moment 3-the Moment of Use (Experience). In other words, you have something great to brag about or a disastrous perception you must repair. On the other hand, if you are a relatively new or unknown company or are developing many new products, you'll need to swing the other way, and put about 75% of your advertising budget in Moment 1-the Moment of Discovery. And, of course, if things are just going along somewhat steadily, split it 50/50.
Now we come to where to exactly place your spend, that is, what do you spend it on. We, of course, are an electronic publishing company (newsletters, websites, radio) and our bias is naturally in our direction. You may be surprised, but we do think you should spend some of your budget on tangible, or collateral materials. First, you'll have the stickers we mentioned earlier. You also should drop a mailer, perhaps just a custom postcard, on your prospects' and clients' desk two or three times a year. This helps get keep your name in front of these people.
At the end of the day, the objective is to place your message and your brand everywhere your customers and prospects are looking all the while being as economical as possible.
Follow this path as outlined above, and you will find it to be effective and inexpensive. May you have a great year ahead of you.
Jim Thompson is CEO and Executive Editor of Paperitalo Publications. He can be reached by email at jthompson@taii.com.
For more information on Paperitalo Publications, feel free to contact:
Curt Gifford
cgifford@taii.com
770-367-4823
Helen Roush
helen.roush@taii.com
937-403-8602
Jim Thompson
jthompson@taii.com
678-206-6010
