• by Gray Hammond , April 2, 2009

There are a few basic ways to waste money on advertising:

• Spending too much. [In reality, this almost never happens, despite the CFO's suspicions.]

• Spending too little. This actually happens a lot. Several polls have shown that at least one-third of marketing managers believe their resources are insufficient to meet their agreed-upon goals. Fifty GRPs is the minimum level to reach the target once a week.

• Spending too quickly. This is easy if the budget's too small. The best media planners understand the purchase cycle and accordingly "drip" the dollars over time. And a new brand needs time to become known; a "big splash" with no follow-up will be forgotten.

• Spending at the wrong time. "You can't sell snow tires in July," as the old saying goes. You have to advertise when people are buying; only huge resources can change an established spending pattern. We know an ad agency that improved a retailer's sales simply by changing the media timing, without changing the budget by so much as a penny.

• Spending off-target. This happens a lot, too. A media plan designed for efficiency [rather than effectiveness] will save money but can miss the primary target's eyes and ears. A poorly positioned brand or a misunderstood target audience will yield waste, no matter how good the media plan is.

• If your creative sucks, anything you spend is wasted.

• Forgetting the PR. History shows that the strongest brands have combined advertising [paid media] with PR [earned media] in a virtuous cycle that builds credibility with awareness.

• Forgetting the POP. You spend money on advertising, channel bribes and packaging, so make sure to connect the dots inside the store. Most consumers shop without lists; most lists are not brand-specific [e.g., they'll say "mayo", not "Hellmann's"]. The best POP will win the sale.

There is widespread executive ignorance of what advertising can achieve. Many non-marketers hope that advertising can quickly drive sales. This only works sometimes, and hardly ever is there a direct cause and effect. Simply by focusing on advertising, they overlook the rest of the marketing and sales mix. Most executives forget competitors' actions when assessing the effects of their own advertising.

This ignorance breeds unrealistic expectations. I've lost count of the number of new brand plans I've seen that target a 10% share in Year 1, but I've only ever seen one brand actually achieve this.

Most people don't realize that about 80% of all advertising is defensive. The bigger your share, the more defensive your ads are: everybody on the planet who's ever going to try your product has already done so. You have to encourage repeat purchase, and ward off the blandishments of your competitors. But you have to maintain your fortress walls. As our accountant once said, "In a recession, the winner's the one who loses least," meaning we're all in retention mode now, not acquisition mode. Preserving the existing customer base is more important [and profitable] than wooing new customers.

Even "everyday" products need to remind people to buy them. In the U.S., milk sales continued unchanged for 12 months after ads were pulled. So far, so good: everybody drinks milk, right? But suddenly sales fell at a nauseating rate. Advertising restarted, but it took another 18 months to pull out of the dive.