It was right here in Seattle in March of 1922 that Remick's Music Store purchased the first radio advertisement on station KFC, some months later on August 28, 1922 the Queensboro Corporation in New York City advertised apartments for rent on WEAF. In those days the results were dramatic. The ads that worked -- really worked, and those that did not were not renewed. By worked of course, I mean produced more sales. Back then you advertised to get more sales. Now the reasons are more complicated.
There are whole books about how and why to advertise. Here are my thoughts about the real reasons:
- Surface New Opportunities: Of course an advertisement cannot actually sell anything. Even on the web, an ad can only deliver the prospective customer to the web site. The selling is up to the advertiser. Some sales are a quick order processes - buying a movie ticket on Fandango for example - but most involve a sales process beginning with the new opportunity and ending with real revenue. So even today the number one reason to advertise must be to drive new opportunities into your sales pipeline.
- Improve name recognition (build the brand): Brands are important and advertising can introduce people to your brand. Interestingly, Millward Brown just released their survey of the most trusted worldwide brands and Amazon.com got the #1 spot in the USA. I would venture to say that Amazon.com somehow achieved this without advertising. "Advertising is the price you pay for having an unremarkable product or service," said Jeff Bezos at the 2009 Annual Meeting as reported by the Seattle PI.
- Defend against the competition: Every industry has a publication that is central to their universe. This publication, whether on the web or in print, has the trust and the eyeballs of just the people you want to sell to. An advertiser can work to exclude their competitors from the publication as part of their agreement to advertise. But only as long as the company continues to advertise. So if you want to keep the competition out of a publication, just advertise.
- Make the sales department think marketing is doing something: Sales is measured by revenue, marketing is measured by.... well we still don't know. Marketing should be measured by the delivery of new opportunities to sales. Absent the ability to track such a thing, most companies resort to measuring marketing by the perception of performance. Advertising is visible and leaves a perception.
- Get recognized at industry events: Companies like to get recognized just as much as people do, or for that matter, just as much as movie people do. What if you could get an academy award for your movie just by spending a few extra dollars advertising? Luckily the academy works hard to prevent that kind of thing. If you want to get recognized in your industry, advertise with the people who give out the awards.
- General employee feel good stuff: We have come to think of the people that run Google as logical, quantitative types. So why spend the big bucks for a super bowl ad when 70% of the searches done in the world are already done on your site? To make sure your employees feel great about working at Google. It worked and it only cost $2.5M.
I am not trying to say that companies should not advertise. There are cases where advertising is absolutely the right tool for the job, but you must know what the job is. I wrote another post about Getting the Digital Dollars that proposes that as advertising gets more measurable -- sales of advertising will actually increase. I still think that is true.
Companies that can measure the impact of their advertising on specific new opportunities in their pipeline will be rewarded.
Here are some other lists of reasons to buy advertising: