Advertising

Advertising is the fastest and simplest way for a start-up business to let a large number of people know about its products and services.

Advertising can pay off handsomely, if your product appeals to a large number of potential buyers. If your ads win you new customers you can turn into regulars, they can be a vital tool in helping to establish your business.

This briefing explains:

  1. What advertising can do for you.
  2. How to choose where to advertise.
  3. How to measure real costs and real results.
  4. When to call in an agency.

1 What are your aims?

1.1 Begin by establishing who your target customers are going to be.

  • You need to have a clear picture of exactly who you are trying to reach.

1.2 Before advertising, decide on specific goals. For example, you might want to:

  • create awareness of your new business
  • tell people about a special opening offer
  • build the image of a product or business
  • compile lists of leads for direct mail campaigns or sales calls
  • increase traffic through your shop
  • make immediate sales, eg by mail order

1.3 Plan your advertising in terms of results.

  • Who are you trying to affect?
  • How can you reach these people?
  • How quickly do you need results?
  • What is the one thing you want people to remember most from your advertisement?

2 What platform?

Which media will reach the right people? Look at where your competitors advertise - and where they don't - to help focus your thinking.

2.1 National newspapers are the right choice for high-volume consumer sales and direct response selling (eg air tickets).

  • The advantages are high circulation, low cost per reader, prestige, flexible timing and a choice of known readership profiles.
  • The disadvantages are the high cost per ad, the probable high cost per target customer and the short life span of a daily newspaper.

2.2 Local papers, freesheets and community magazines can be ideal for local advertising.

  • The main advantage is that they have the geographical focus needed for shops or local services. They are also inexpensive per ad and good for test marketing.
  • The disadvantages are restricted geographical coverage and low readership.

2.3 Trade and technical journals - plus club and society magazines - can be ideal if you supply businesses or other special groups.

  • The main advantage is the huge variety of publications, offering accurate targeting of well-defined and committed readerships.
  • The disadvantages are usually low circulation and a high cost per reader.

2.4 Lifestyle magazines, including hobby magazines, are suitable for advertising consumer goods, especially for mail order.

  • The advantages are usually well-defined readership and scope for colourful, high-impact advertisements.
  • The disadvantages are the high cost per reader and the volume of adverts jostling for the reader's attention.

2.5 Trade and business directories, such as Yellow Pages, work well where customers naturally turn to this kind of reference source.

  • The advantages are high circulation, long shelf life and the fact that your ad is seen by customers when they are keen to buy.
  • The disadvantages - long publication lead times and slow results - may make this sort of advertising unsuitable for start-ups.

3 Non-print media

3.1 Online advertising can be a good choice even for the smallest start-ups. You can advertise and sell via your own website. For suitable products, buying banner advertising space on other companies web pages can be highly effective.

3.2 Transport and poster ads (eg on buses, bus stops, trains, stations and roadside hoardings) can be the right option for advertising to shoppers and commuters.

  • The advantages are impact, 24-hour exposure and, often, low site costs.
  • The disadvantages are slow results and the cost of producing good colour posters.

3.3 Local radio and cinema advertising may be useful for selling to the public in a particular locality. With cable, even local TV may be affordable.

  • The advantage of local radio is that you can target different listeners at different times of day, at fairly low advertising rates.
  • The disadvantages are that a radio ad needs to be professionally produced and needs repeats to make an impact.
  • Cinema ads can be effective for retailers and restaurants.

National radio and TV are usually unsuitable for start-ups.

3.4 Direct mail and door-to-door leaflet drops can be economical, cost-effective and under your control.

4 Choosing a publication

If you are going ahead with advertising in conventional print media, look for a journal that can deliver what you need.

4.1 Ask yourself three key questions.

  • Is it read by your potential customers?
  • Is it read partly for its advertisements?
  • Is it relatively inexpensive to advertise in?

4.2 Many start-ups find that advertising in trade magazines, special interest magazines and local newspapers is highly cost-effective.

  • For example, if you sell to caterers, one obvious choice is Caterer & Hotelkeeper, a weekly that is full of information on equipment, suppliers and new products.

4.3 For a comprehensive listing of thousands of publications - and poster sites, websites and radio and TV stations - check the BRAD website on www.bradinsight.com.

5 Advertising packs

5.1 Most journals will provide you with an advertising/media pack, giving the facts about the publication. These will include:

  • Advertising rates (see 6).
  • Circulation - the number of copies sold.
  • Readership - a much higher figure than circulation, as a whole family or office may read a single copy.
  • Readership profile - analysing the readership's characteristics and spending patterns. For example, 70 per cent of readers are male and 50 per cent own two cars.

Ideally, look for circulation figures verified by ABC (the Audit Bureau of Circulation

5.2 From the readership profile, estimate how many readers might potentially buy your product. Then work out the cost for you to reach each of these potential customers.

  • For example, suppose you spend £1,000 on an ad in a magazine with 10,000 readers, 50 per cent of whom are potential customers.

    The advertising cost is 20p per potential customer (£1,000 for 5,000 readers).

  • If one reader in ten will be interested in the ad, the cost of reaching each potential customer is £2 - ten times as much.

5.3 You may choose to advertise in a publication with a high cost per potential customer.

Two good reasons would be:

  • The publication's readership includes exactly the people you are trying to reach.
  • The publication has an image with which you want your product to be associated.

6 The rate card

6.1 A rate card will usually show prices for three main types of ad:

  • 'classifieds', semi-display ads and display ads.

6.2 Common sizes for display ads are full page, half page, quarter page and eighth page.

  • Smaller ads are measured and priced in column centimetres.
  • '5 column centimetres' usually means 5cm deep and one column wide, but it could also be a double-column and 2.5cm deep.

6.3 There are premium prices for special positions (eg back page or centre spread).

7 Negotiate price and position

7.1 In many cases - especially on trade journals - prices are negotiable.

  • You may be able to win yourself a price reduction, an extra ad insertion or a better position for your ad. It helps if you are going to run several ads.
  • If you place an ad yourself, as opposed to going through an advertising agency, you may be able to save 10 to 15 per cent.

    The quoted price includes the commission an agency would take, but the media owner is not obliged to pass this on.

    An agency may be able to negotiate a better rate.

7.2 Try using tactics to get a better price.

  • Mention your budget, but appear undecided about who to spend it with.
  • Mention a rival that you are considering using.
  • Many trade publications are prepared to accept very low prices at the last minute, if there is ad space to be filled. This may mean less than favourable positioning.

7.3 Use repeated ads, but do not be persuaded to buy more space than you need.

  • Planning a series will produce a more effective campaign than using one-off ads. It will also cut the production cost per ad.

7.4 The position of your ad is important.

  • An ad selling greenhouses should be on a page devoted to gardening. Holiday ads should be alongside holiday articles.
  • Right-hand pages, and top right-hand corners, catch the reader's eye most often in publications, banners work better online.
  • If your ad has a coupon - for readers to cut out and send in - it must be at the edge of the (preferably right-hand) page.
  • If you frequently advertise in the same publication or website, you may be able to negotiate the best positions at no extra charge.

8 Posters and transport ads

To see what outdoor sites are available, check the BRAD website on www.bradinsight.com. Visit sites to check they really do get the traffic you need. There are two types of location:

8.1 'Waiting sites' include airports, bus stops and on station platforms.

  • People have ample time to read your ad, which should be written like a press ad.

8.2 'Passing sites' include the door of a taxi or a panel beside an escalator.

  • The public only sees the ad in passing, so it must be snappy.

9 Measuring an ad's success

Every time you make a sale, or take an enquiry, find out how the customer heard of you.

9.1 Work out which advertisements, in which media options, are getting you results.

  • Ads that generate sales are successful.
  • Ads that generate no enquiries are failures and should not be repeated.
  • Ads that generate dead-end enquiries, that do not turn into sales, cost you even more, because of the resource they tie up.

9.2 Monitor how your campaign is working.

  • Measure the number of enquiries resulting from the ad - giving the cost per enquiry.
  • Measure the number of sales resulting from the ad - giving the cost per sale.

    In advertising jargon, this is called the 'effective ratio' or 'yield'. Put your budget in the publications that give the best yield.

9.3 Consider what kind of sales are produced.

  • Are they large repeat sales with good margins, or small one-off sales that generate little profit?

9.4 Calculate the indirect costs of advertising.

  • For example, you may find a £100 ad nets a one-off sale with a profit of £100.

    But that sale, plus enquiries that did not convert into sales, may have taken up 20 hours of staff time - a huge hidden cost.

  • If your profit per new customer is less than the cost, you are throwing money away.

9.5 Bear in mind that advertisements produce delayed results.

  • One customer may order today. Others may wait until they have seen half a dozen ads and feel comfortable about you.
  • Other customers may order in two years' time, when they finally need your product.

Measuring an ad's success will depend on what your aims were in the first place (see 1).

Years of waste

One design company ran ad campaigns in four magazines for nearly five years before it bothered to measure the results. Everyone was too busy dealing with sales enquiries.

On analysis, however, it turned out that ads in the most expensive magazine - which always yielded a lot of enquiries - resulted in almost zero actual sales.

Too late, the MD worked out that his net profit figure could have been 50 per cent higher each year, if the whole advertising budget had been channelled into the other three magazines.

10 Calling in the professionals

A good agency will have the expertise to create an effective advertising campaign for you. It can also help you find the best publications to achieve your objectives and get value for money.

10.1 As a rough guide, use an agency if your advertising budget is at least £10,000.

  • Expect to spend around 15 per cent of your budget on agency fees.

10.2 Free advice is available from your local business support organisation.