- Marketing Without Advertising
Marketing Without Advertising
Easy Ways to Build a Business Your Customers Will Love & Recommend
Money-saving and smart solutions
Michael Phillips, and Salli Rasberry,
May 2008, 6th Edition
Make your business stand out without the cost of advertising!
The best marketing you can do for your business is to concentrate on creating a high-quality operation that customers, employees and other businesspeople will trust, respect and recommend.
Marketing Without Advertising teaches small business owners practical strategies to:
- encourage customers to spread the good word about your business
- attract new customers and gain their trust
- turn dissatisfied customers into loyal supporters
- list your products or services widely and inexpensively
- plan marketing events that will keep customers involved
- encourage the media to comment positively on your business
The 6th edition is completely rewritten with and updated with real world examples and resources. It also discusses the latest marketing trends, such as international Internet marketing and blogs.
- Physical Appearance That Develops Trust
- Evaluating Your Pricing Policy
- Employee Questionnaire
- Questionnaire for Suppliers
- How Open Is Your Business?
- What My Business Does
- The Domains in Which Your Business Operates
- Do People Know What You Do?
- Do You "Tell Them Yourself"?
- How Customers Can Evaluate Your Business
- Customer Referrals
- Phone Accessibility Checklist
- Mail Accessibility Checklist
- Walk-In Accessibility Checklist
- Listing Questionnaire
- Customer Recourse Policies and Practices
- Your Marketing List
- Designing Direct Marketing Events
- Designing Parallel Marketing Events
- Marketing Event Worksheet
Michael Phillips, an experienced businessman and consultant who helped to develop the Mastercharge interbank credit card, was the founder of the Briarpatch, a network of small businesses that espouse common values. He also ran a pioneering small business school called the Noren Institute in San Francisco. Co-author of Marketing Without Advertising, Michael is the author of many other books, including The Seven Laws of Money (with Rasberry, Pocket Classics), Honest Business (with Rasberry, Pocket Classics), The Briarpatch Book (ed. with Rasberry, New Glide), Simple Living Investments (Clear Glass), Citizen Legislature (with Callenbach, Banyan Tree), and Commerce (Clear Glass).
Salli Rasberry has successfully run a dozen small businesses in fields as varied as book fairs, publishing companies, documentary films, construction, business consulting, and writing. An artist and gardener, Salli is the author of the Art of Dying: Honoring and Celebrating Life's Passages (with Watanabe, Ten Speed Press), Living Your Life Out Loud: How to Unlock Your Creativity and Unleash Your Joy (with Selwyn, Pocket Books), Running a One-Person Business (with Whitmyer, Ten Speed Press), The Seven Laws of Money (with Phillips, Pocket Classics), Honest Business (with Phillips, Pocket Classics), The Briarpatch Book (ed. with Phillips, New Glide) and Marketing Without Advertising (with Phillips, Nolo).
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Your Marketing Companion
1. Advertising: The Last Choice in Marketing
- The Myth of Advertising’s Effectiveness
- Why Customers Lured by Ads Are Often Not Loyal
- Why Dependence on Advertising Is Harmful
- Advertisers: Poor Company to Keep
- Honest Ads
- Listings: "Advertising" That Works
2. Personal Recommendations:
- The First Choice in Marketing
- Overcoming Established Buying Habits
- Basing Your Marketing Plan on Personal Recommendations
- When Not to Rely on Word of Mouth for Marketing
3. The Physical Appearance of Your Business
- Conform to Industry Norms
- Your Business’s Appearance
- Fantasy: A Growing Part of Retail Marketing
- The Test of Time
- Easy-to-Understand Prices
- Complete Prices
- Giving Customers Choice About Price
- Internet Pricing
5. How You Treat the People Around You
- Tracking Reputations via the Grapevine
- How Employees Spread the Word
- Common Employee Complaints
- Handling Employee Complaints
- Finding Out What Employees Are Thinking
- Business Friends and Acquaintances
- Individuals Who Spread Negative Word of Mouth About Your Business
- Your Behavior in Public
6. Openness: The Basis of Trust
- Financial Openness
- Physical Openness
- Openness in Management
- Openness With Information
- Openness With Ideas
7. Deciding How to Educate Potential Customers
- What Does Your Business Do?
- Defining the Domains in Which Your Business Operates
- Providing Information on Businesses in Established Fields
- Businesses in New or Obscure Fields
- Whom to Educate
8. How to Let Customers Know Your Business Is Excellent
- Tell Them Yourself
- Help Customers Judge for Themselves
- Giving Customers Authority for Your Claims
9. Helping Customers Find You
- Finding Your Business
- Convenience of Access
- Telephone Accessibility
- Listing Your Services Creatively and Widely
- Getting Referrals From People in Related Fields
- Trade Shows and Conferences
10. Customer Recourse
- Elements of a Good Recourse Policy
- Designing a Good Recourse Policy
- Telling Customers About Your Recourse Policy
- Putting Your Recourse Policy in Writing
11. Marketing on the Internet
- Business Uses of the Internet: Demystified
- The Geographic Reach of the Internet
- What to Put on Your Site
- Designing an Internet Site
- Interactivity and Customer Screening
- How to Help People Find You Online
- International Marketing
12. Dynamic Interactive Marketing
- Beginning Architecture
- Attracting Customers
- The Look and Feel of Your Site
- eBay and Supplemental Outlet Sites
- Customer Education
- Customer Comments
- Video Clips
13. Designing and Implementing Your Marketing Plan
- Your Marketing List: The "Who" of Your Marketing Plan
- How to Evaluate Your List
- Marketing Actions and Events: The "What" of Your Marketing Plan
- Direct Marketing Actions
- Parallel Marketing Actions
- Peer-Based Marketing Actions
14. Creating a Calendar of Events
- Marketing Calendar for an Interior Design Firm
- Marketing Calendar for Jerry and Jess’s New Chiropractic Clinic
- Marketing Calendar for Lolly & Criggles -- an eBay Children’s Boutique Clothing Website
Advertising: The Last Choice in
The Myth of Advertising’s Effectiveness........................................................ 5
Why Customers Lured by Ads Are Often Not Loyal............................... 13
Why Dependence on Advertising Is Harmful............................................ 14
Advertisers: Poor Company to Keep............................................................. 16
Honest Ads................................................................................................................ 21
Listings: “Advertising” That Works............................................................... 24
Marketing means running a first-rate business and letting people know about it. Every action your company takes sends a marketing message. Building a business image is not something invented by a P.R. firm; it’s a reflection of what you do and how you do it.
A clever ad is what pops into most people’s minds when they think about getting the word out about their business. The fact is, most of us know little about advertising and a whole lot about marketing. We are really the marketing experts for our business because we know it better than anyone else.
It may surprise you to know how many established small businesses have discovered that they do not need to advertise to prosper. A large majority—more than two-thirds in the U.S., certainly—of profitable small businesses operate successfully without advertising.
In this book we make a distinction between “advertising,” which is broadcasting your message to many uninterested members of the public, and “listing,” which is directing your message to specific people interested in the product or service, such as in the yellow pages.
Here’s where the figure about small business and advertising comes from: There are about 20 million nonfarm businesses in the United States. Of these, about two million are involved in construction; another five million deal in wholesaling, manufacturing, trucking, or mining. A small minority (30% of the total) generate customers by advertising. The rest rely on personally knowing their customers, on their reputations, and sometimes on salespeople or commissioned representatives. Of the remaining 13 million businesses, 70% are run by one person. It’s very rare for the self-employed to find advertising useful; the single-person business, whether that of a lawyer, doctor, or computer consultant, relies almost exclusively on personal recommendations. That leaves the percentage of businesses who might even consider advertising useful at less than 19%. We think most of them don’t need it, either.
There are four main reasons why advertising is inappropriate for most businesses:
• Advertising is simply not cost-effective. Claims that it produces even marginal financial returns are usually fallacious.
• Customers lured by ads tend to be disloyal. In other words, advertising does not provide a solid customer base for future business.
• Dependence on advertising makes a business more vulnerable to changes in volatile consumer taste and thus more likely to fail.
• Because a significant percentage of advertising is deceptive, advertisers are often seen by the public (both consciously and unconsciously) as dishonest and manipulative. Businesses that advertise heavily are often suspected of offering poor quality goods and services.
Let’s now look at these reasons in more detail.
The Myth of Advertising’s Effectiveness
The argument made by the proponents of advertising is almost pathetically simple-minded: If you can measure the benefits of advertising on your business, advertising works; if you can’t measure the beneficial effects, then your measurements aren’t good enough. Or you need more ads. Or you need a different type of ad. It’s much the same type of rationalization put forth by the proponents of making yourself rich by visualizing yourself as being prosperous. If you get rich immediately, you owe it all to the system (and presumably should give your visualization guru at least a 10% commission). If you’re still poor after six months, something is wrong with your picture. It reminds us of the man in Chicago who had marble statues of lions in front of his house to keep away elephants: “It works,” he said. “Ain’t no elephants in this neighborhood.”
James B. Twitchell, the author of Adcult, notes, “Although elaborate proofs of advertising’s impotence are available, the simple fact is that you cannot put a meter on the relationship between increased advertising and increased sales. If you could, agencies would charge clients by how much they have increased sales, not by how much media space they have purchased.”
Paradoxically, even though some small business owners are beginning to realize that advertising doesn’t work, many still advertise. Why? For a number of reasons: because they have been conditioned to believe that advertising works, because there are no other models to follow, and because bankers expect to see “advertising costs” as part of a business proposal.
It’s important to realize that your judgment regarding advertising is likely to be severely skewed. You have been surrounded by ads all your life, and you’ve heard countless times that advertising works. To look at advertising objectively may require you to reexamine some deeply held beliefs.
Advertising budgets have doubled every decade since 1976 and grown by 50% in the last ten years. “Companies now spend about $162 billion each year to bombard us with print and broadcast ads; that works out to about $623 for every man, woman and child in the United States” (Laurie Ann Mazur, Marketing Madness, E: The Environmental Magazine, May-June, 1996). Information Resources, a global marketing resource firm (www.infores.com), studied the effect of advertising and concluded, “There is no simple correspondence between advertising and higher sales .... The relationship between high copy scores and increased sales is tenuous at best.”
To illustrate how pervasive the “advertising works” belief system is, consider that if the sales of a particular product fall off dramatically, most people look for all sorts of explanations without ever considering that the fall-off may be a result of counterproductive advertising.
Skeptics may claim that you simply can’t sell certain consumer products—beer, for example—without an endless array of mindless TV ads. We refer these skeptics to the Anchor Steam Brewing Company of San Francisco, which very profitably sold 103,000 barrels of excellent beer in 1995 without any ad campaign. They believe in slow and steady growth and maintain a loyal and satisfied client base. (See Chapter 13 for details on how.)
In 2006, the fabulously sucessful discount warehouse, Costco, continued to outperform Wal-Mart and Sam’s Club thanks largely to their cost-cutting business approach—which includes absolutely no advertising.
Even apparent successes may not be what they seem. The California Raisin Advisory Board ran an ad campaign that produced the most recognized ad in the history of advertising. In the mid-1980s, its advertising agency, Foote Cone and Belding, used the first popular national clay animation campaign. (Claymation is a trademark of Will Vinton studios.) The annual budget was over $40 million. The dancing raisins and their song “I Heard It Through the Grapevine” created such a popular image that sales from dolls, other toys, mugs, and secondary products generated nearly $200 million in revenue and resulted in a Saturday children’s television program using the raisin characters. Raisin sales went up for the first two years of the campaign, largely because cold breakfast cereal marketers were so impressed with the popularity of the ad campaign that they increased the raisin content of their raisin cereals and joined in the advertising.
After four years, the dancing raisin campaign was discontinued. Sales were lower than before the ads started (Forbes, June 17, 1996). By the early 1990s, the California Raisin Advisory Board had been abolished.
The Internet and World Wide Web have introduced a new test of advertising effectiveness. Billions of dollars had been spent on advertising before the advent of the Web, yet no major offline advertiser was able to create an online presence of any significance. Even Toys “R” Us, the major American toy retailer, ranked far behind eToys in brand awareness online, despite the fact that Toys “R” Us is a 25-year-old company and eToys lasted barely two years. For Toys “R” Us, decades of advertising simply had no staying power (The Industry Standard, March 20, 2000). One of the biggest successes on the Internet, eBay, used no advertising at all.
The hugely successful Craigslist is a community-based operation headquartered in San Francisco. Eminently useful, the on-line bulletin board accepts classified ads for just about anything, from jobs to apartments, football tickets to electronics. What is noteworthy about Craigslist is that it lets users post the vast majority of these classifieds for free—only job ads posted in three United States cities require a fee. It also has an unadorned, simple website and does no advertising.
Craig Newmark started his list ten years ago as a way to keep friends aware of events in the Bay Area. Craigslist now has websites in 65 cities in the United States, and prompted by users’ feedback, also has sites in Toronto, Paris, Belgium, Tokyo, and Sydney, with more planned in the near future.
One magazine with a significant audience on the Internet is Consumer Reports, a magazine that carries no advertising. By eliminating advertising from its business model, Consumer Reports is able to maintain a high degree of integrity and cultivate trust among its readers, who value the magazine’s objective information.
“Unlike many others who dispense online advice, Consumer Reports does not accept advertisements, does not earn a referral fee for directing customers to specific merchants, and does not repackage and sell its data as market research to the companies whose products are reviewed” (The New York Times, March 22, 2000).
Consumer Reports also maintains a list of companies that pledge to keep their websites honest. This is their statement about the 300 companies that are highly rated: “The companies and Web sites listed … have taken a pledge to abide by our guidelines to improve online credibility. They know that unless their sites are trustworthy, you won’t come back. So we will continue our efforts to expand this list, to make the Web a safer place for consumers everywhere.”
One giant aircraft manufacturing company, to look at the effectiveness of heavily advertising an in-house computer service through one of its subsidiaries, conducted a survey to find out how its 100 newest customers had found out about it. The results: 13% of these new customers came because of the advertising campaign, 23% because of sales calls, 56% signed up because of recommendations from other satisfied customers and professionals in the field, and 8% weren’t sure why they had chosen that computer service.
This is actually a fairly common survey result. Yet, as we can see from their bloated advertising budgets, very few companies act on the information. If they did, they would obviously budget funds for promoting personal recommendations. Indeed, some businesses are apparently so unwilling to believe what market research tells them—that personal recommendations work and advertising doesn’t—that they spend money on ads like the one on the following page.
Google is one of the most successful companies in history. Started by two students on credit card borrowings, and bootstrapping the business at every point along the way, the company became profitable in its third year. It was worth $50 billion in a little over five years, with fewer than 2,000 employees.
Google has kept its opening search page refreshingly stark, white, and blatantly free of ads. It also doesn’t accept advertising (like banners on Yahoo). It only sells listings, and the listings are kept separate from the search results and have no influence on them. This policy is virtually unheard of in magazines, TV, and newspapers.
It’s not only large national corporations that are disappointed in the results of advertising. Local retail stores that run redeemable discount coupons to measure the effectiveness of their advertising usually find that the business generated isn’t even enough to offset the cost of the ad.
Despite this, supporters of advertising continue to convince small business owners that:
• The ad could be improved; keep trying (forever).
• All the people who saw the ad but didn’t clip the coupon were reminded of your business and may use it in the future. Keep advertising (forever).
• The effects of advertising are cumulative. Definitely keep advertising (forever).
But what about the favorable long-term effects of continuous advertising? Isn’t there something to the notion of continually reminding the public you exist? Dr. Julian L. Simon, of the University of Illinois, says no: “[attributing] threshold effects and increasing returns to repetition of ads constitutes a monstrous myth, I believe, but a myth so well-entrenched that it is almost impossible to shake.”
Using advertising to make your business a household word can often backfire; a business with a well-advertised name is extremely vulnerable to bad publicity.
Take the Coors brewery as an example. Thirty years ago, after it had vastly expanded its original territory and become a household word throughout much of the country with heavy advertising ($100 million per year in the 1980s), the Teamsters’ Union waged a very effective consumer boycott against it. In Seattle, a strong union town, less than 5% of the market in the 1990s was drinking Coors. The Coors of the 1960s, known primarily to its loyal customers in the Rocky Mountain states, where it had a third of the beer-drinking market, was far less vulnerable to such a boycott.
Or how about the stockbroker E.F. Hutton, which spent many millions creating a false advertising image: “When E.F. Hutton talks, people listen.” The image backfired spectacularly when Hutton was caught engaging in large-scale illegal currency transactions. The many jokes about who really listens when E.F. Hutton talks contributed to the dramatic decline of the firm, which was ultimately taken over by another broker at fire sale prices. Similarly, the huge but little-known agricultural processing company Archer Daniels Midland, headquartered in rural Illinois, made itself a household name by underwriting public television programs. The public was well acquainted with “ADM, Supermarket to the World,” by the time it became embroiled in a price-fixing scandal and had to pay $100 million in fines.
Becoming a brand name has its disadvantages. Martha Stewart, the self-promoted diva of gracious living, saw herself ridiculed, and her business empire plunge in value, after she was accused of improper stock trading.
The price of Omnimedia stock (the company that owns the Martha Stewart brand) fell from $20 per share to $5 per share after the criminal charges against her were made public, losing shareholders three-quarters of a billion dollars. It took more than three years and Martha’s release from prison before the stock returned to its earlier levels.
The moral of these little stories is simple: If these companies had relied less on advertising, their problems would have been much less of a public spectacle.
Sadly, many small businesses make sacrifices to pay for expensive ads, never being certain they are effective. Sometimes this means the quality of the business’s product or service is cut. Other times, business owners or employees sacrifice their own needs to pay for advertising. We think it’s far better to use the money to sponsor a neighborhood picnic or take the family on a short vacation or to put the money into a useful capital improvement to the business. As John Wanamaker, turn-of-the-century merchant and philanthropist, put it, “Half the money I spend on advertising is wasted, and the trouble is, I don’t know which half.”
Why Customers Lured by Ads Are Often Not Loyal
Perhaps the worst aspect of traditional advertising, one apparent to anyone who runs a retail store, is that customers who respond primarily to media ads don’t usually return. The same truth has been discovered by magazines and publishing companies that rely heavily on junk mail solicitations to sell their wares. The fact is that customers recruited through scattergun advertising techniques such as TV spots, newspaper ads, direct mail, contests, unsolicited telephone sales, and Internet freebies rarely come back. Unscrupulous Internet businesses such as DoubleClick have used the Internet to invade your privacy and sell your email address to other businesses who beseige you with so-called “targeted” marketing based on sites you have visited and purchases you have made.
An example of this phenomenon familiar to most owners of small service-type businesses comes from the experience of Laura Peck. She wrote to us that she used to advertise her assertiveness workshops, but due to financial problems discontinued the ads. Instead, she started cultivating her own community of friends and acquaintances for clients. Two years later, her business was thriving, and she noted:
“When I advertised, I seemed to attract people who came because of the discount I offered. These clients often did not return, would cancel sessions, and generally were not repeaters. The people who were most enthusiastic, most loyal, and continued with their sessions were almost always clients who had been personally referred. Had it not been for the economics involved, I would probably not have learned this important lesson: Personal recommendation is the best advertising there is.”
Why Dependence on Advertising Is Harmful
To an extent, advertising is an addiction: Once you’re hooked, it’s very difficult to stop. You become accustomed to putting a fixed advertising cost into your budget, and you are afraid to stop because of a baseless fear that, if you do, your flow of new customers will dry up and your previous investments in advertising will have been wasted.
While of course there are rare occasions when a particular ad can produce lots of business, it’s as rare in the small business world as catching a 30-pound lake trout off a recreational fishing boat or winning a $100,000 jackpot at a gambling casino. The story of the great advertising success (the “pet rock” fad of years ago is an extreme example) becomes widely known in the particular community and is picked up by trade journals and sometimes even the general media. As a result, many inexperienced businesspeople are coaxed into spending money on ads. Overlooked in all the hoopla is the rarity of this sort of success; also overlooked is what often happens to the person whose ad produced the quick profits. Flash-in-the-pan advertising success may bring an initial influx of customers that your business isn’t prepared for. This usually has two unfortunate consequences: Many loyal long-term customers are turned off when service declines as the expanding business stretches itself too thin, and most of the new customers will not be repeaters.
Mary Palmer, a photographer in San Jose, California, started her business with a simplistic but traditional marketing strategy—advertising on her local newspaper’s “weddings” page. Palmer was one of the first photographers in her area to insert an ad for wedding photos. She very happily took in $12,000 during the prime April-to-August wedding season. The next year she advertised again, but this time her ad was one of many. Not only did the ad fail to generate much business, she got few referrals from the many customers she had worked for the previous year. Concerned, Palmer called us for emergency business advice.
Visiting her, we found her business to be badly organized and generally chaotic. The overall impression it gave was poor. It was easy to see why so few of Palmer’s customers referred their friends, or themselves patronized her business for other occasions. Palmer was a victim of her own flash-in-the-pan advertising success. Believing that “advertising works” had lulled her into the false belief that she didn’t really have to learn how to run a high-quality business. There wasn’t much we could really tell her except to start over, using the solid business techniques and personal recommendation approaches discussed in this book.
Palmer’s business is in direct contrast to Gail Woodridge’s, who also specializes in wedding photography. Woodridge doesn’t do any advertising in the conventional sense, although she does list her services widely in places likely to produce referrals, as discussed later in this chapter and in Chapter 9. Her clients are primarily referred to her by wedding planners, bridal gown and flower stores, friends, and former clients—people who know her and trust her to do a good job. Using this approach, her business has grown fairly slowly, so she has had the time, and the good sense, to make sure that the many details of her business are in order—including her office work and finances, as well as her camera equipment, darkroom supplies, and filing system.
Advertisers: Poor Company to Keep
According to a recent consumer expenditure survey, households spend $4 trillion per year. It’s estimated that $236 billion will be spent this year in the United States on print, radio, online, and broadcast advertising to get a piece of this market. The result is sensory bombardment. It is also estimated that each American is exposed to well over 5,000 advertising messages per day, and that children see over 50,000 TV commercials a year. In our view, as many as one-quarter of all these ads are deliberately deceptive. Increasingly, the family of businesses that advertise is not one you should be proud to be associated with.
Do you doubt our claim that a significant portion of advertising is dishonest? Do a little test for yourself. Look through your local newspaper as we did one recent morning. Here are a few of the ads we found:
• An ad for a weight reduction center that promises its clients will lose five, ten, or 20 pounds a week. True, some people just might shed some of those unwanted pounds, but how many will keep them off for more than three months? According to Joan Price, in her book The Honest Truth About Losing Weight and Keeping It Off, 90% of dieters regain their lost weight within one year. She explains, “Sorry, folks, there’s no miracle way to block, burn, rub, jiggle, vacuum, melt, or wrap fat off our bodies. There’s no magic pill, injection, cream, or potion. If there were, don’t you think it would make the front page of all the newspapers and medical journals instead of being buried in an ad?” Nowhere in the ad is there a mention of permanent weight loss, because, of course, whatever the method it won’t work over the long term. If the ad told the truth, no one would use the service.
• An ad that duped our friends, who bought their son a highly advertised remote control car for Christmas. It had just hit the market, and our friends joined the long line at the checkout stand picturing the delight on their child’s face Christmas morning. It was not clear to our friends from the ads that the car needed a special rechargeable battery unit, and when they returned to the store a week before the big day they were informed that the batteries were sold out and wouldn’t be available until after Christmas. They went back week after week until finally, two months after Christmas, the batteries arrived. To add insult to injury, the charger unit for the $50 car cost an extra $20.
• An ad that offers home security at a bargain price in big letters sounds like just the ticket to protect your family, until you read the fine print. In very tiny letters, the ad explains that the $99 price covers only the standard installation and that an additional 36-month monitoring agreement is also required. In addition, a telephone connection fee may also be required.
America’s Largest Airline?
In a 2006 Wall Street Journal article, Scott McCartney reported: “Earlier this summer, Delta began claiming that “it is proud to be America’s largest airline.” The Atlanta carrier said in a June 8 news release that it has “more departures to more cities in the United States than any other carrier.””
But, according to McCartney, the number of flights and the number of destinations have never been the accepted criteria for ranking airline size. It would be a bit like ranking retailers by the number of stores rather than sales, or scoring baseball games by the number of hits instead of runs. The standard measure of airline size has long been passenger traffic, measured in revenue-passenger miles. Delta is a distant third in passenger miles and revenue.
Whether you look in a newspaper, a magazine, or the electronic media, it is not difficult to find many less-than-honest ads. Even if you advertise in a scrupulously honest way, your ads keep bad company. The public, which has long since become cynical about the general level of honesty in advertising, will not take what you say at face value. For example, suppose you own a restaurant, and instead of extolling the wonders of your menu in exaggerated prose you simply state that you serve “excellent food at a reasonable price.” Many people, cynical after a lifetime of being duped by puffed-up claims, are likely to conclude that your food couldn’t be too good if that’s all you can say about it.
But some warn against combating the cynicism with trickery. For example, in a Time magazine article titled “It’s an Ad Ad Ad World” (July 23, 2002), Keith Reinhard, chairman of marketing services agency DDB Worldwide, stated, “I’m against any form of deception. In the end, it’s bad business.”
One type of dishonest advertising is a bit more subtle and involves magazines and newspapers that you might have respected before you discovered their policy. It works like this: The publication touts the products and services of its advertisers in its news stories. For example, some computer magazines have been known to favorably review the products of their heavy advertisers, and small newspapers often fawn over the products and services of businesses that can be counted on to buy space. Once you discover this sort of policy, everything the publication reviews, even businesses that are truly excellent, is thrown into question.
Devious advertising is rampant in our culture; from “enhanced underwriting” of public broadcast shows, featuring announcements that look identical to commercial television ads, to paid product placement (inserting brand-name goods into movies, video games, and TV).
Stealth or covert marketing occurs when potential customers do not realize they are being marketed to. For example, when celebrities appear on talk shows praising prescription drugs without mentioning that a pharmaceutical company is paying them. No longer satisfied with product placement, companies now pay authors to include brand names in the text of their books. And it gets worse as the line between life and advertising blurs. Trendsetters are paid to drive cars to important parties. Attractive people are hired to frequent bars and talk up certain brands. Moms are paid to praise products at soccer games, and teens are hired to give their peers T-shirts, posters, and CD samplers hyping bands. A Tampa, Florida, high school classroom was recently transformed into a model Outback Restaurant, complete with wood flooring, their signature purple ceiling, and decor from Down Under. This trend is also seen in student-run bank branches within select high schools.
Indeed, we have come a long way from the dairy industry giving free milk to children at recess. School districts across the country now sell exclusive ad space to the highest bidder on school buses, hallways, vending machines, and athletic uniforms. Channel One, which gives participating schools video equipment in exchange for piping ads into the classroom, is the tip of the iceberg. Corporations have begun writing the very lesson plans themselves.
Thirty years ago, a study done for the Harvard Business School made clear how the American public felt about traditional advertising: “43% of Americans think that most advertising insults the intelligence of the average consumer. And 53% of Americans disagree that most advertisements present a true picture of the product advertised.” The chief reasons for hostility to advertising are that it is intrusive and patronizing (73%), morally objectionable (50%), and false and misleading (36%). That the judgment of the general public about honesty in advertising has not improved is demonstrated by a 2004 Gallup study asking: Which professionals does the public trust the most, and the least. Advertising professionals were second to last, and used car salespeople came in last.
If you want to know who is really behind an ad campaign that appears to be advocating better public policy or medical care, refer to Annenberg Public Policy Center’s website at: www.appcpenn.org.
Let’s take a minute to look at the advertising slogans of some of America’s most prominent corporations. Though the advertising business considers the following slogans “good” advertising and not dishonest hype, ask yourself, is this good company for your business to keep?
• State Farm. Like a Good Neighbor, State Farm Is There.
• BMW. The Ultimate Driving Machine
• Chevy. Built Like a Rock
• Visa. It’s Everywhere You Want to Be.
• American Express. Don’t Leave Home Without It.
• Mentos. The Freshmaker
• Taco Bell. Think Outside the Bun
• Got Milk?
• Just do it (Nike).
We’ve all heard these slogans or ones like them for many years. They’re so familiar that we have to concentrate to even hear them and really pay attention to understand if they are hype or simply not true. And more of them bombard us every day. You can undoubtedly think of many more with no trouble at all.
People are apparently so sick of traditional advertising hype that occasionally even counter-advertising is successful. Bernie Hannaford, who runs a diner named “The Worst Food in Oregon,” was quoted in USA Today as saying, “I’m a lousy cook, and my father always told me to tell the truth, no matter what.” Signs outside invite diners to “Come in and sit with the flies!” and warn, “Food is terrible—service is worse.”
Read the Fine Print
Check out mouseprint.org to see examples of some of the most outrageous “fine print” caveats. The name of this website refers to the common marketing term used for print so small that only a mouse could read it. Our current favorite is the online broker who advertises “online trades for as low as $9.95.” But when you read the fine print you discover this offer applies only to “customers with a balance of $1 million or more.”
Lest you become completely discouraged about the possibility of a better standard of honesty in advertising, there is hope. At least two nations, Japan and Sweden, encourage honesty in their advertising. In neither country do ads have “fine print” that contradicts the main message, nor do they permit the sorts of puffery and hype we are used to and which all too often amount to little more than lying.
Japan’s tradition of honest advertising is a long one. In the first century A.D., Chinese visitors were so impressed with the honesty of Japanese businesses that they recorded it as a main attribute of their culture. This 2,000-year-old history of honesty is today reflected in many details: Restaurants display samples of their food in the window and quote prices in round numbers, including sales tax and tip. If you see an 800-yen price advertised for an item, it is the total price you pay. Nolo’s Stephanie Harolde, who lived and worked in Japan, adds that Japanese businesses never put down their competitors or used comparisons that intimated their product was better than the competitors’.
In Sweden, whose culture is closer to our own, there has been a more deliberate political decision to foster truthful advertising. In that country, it has been against the law since the early 1970s to be deceptive in advertising. To accomplish this, the government not only extended its criminal code to proscribe deceptive advertising, but also formed an administrative agency to enforce the law. As a result, the Swedish people now strongly defend the integrity of their advertising. Perhaps someday we, too, will be proud of ours.
Deceptive advertising is technically illegal in the United States, but enforcement is minimal. The legal standards for advertising are discussed in Legal Guide for Starting & Running a Small Business, by Fred Steingold (Nolo).
We mention the Japanese and Swedish use of advertising to urge that, should you ever decide to advertise, your advertisements should be scrupulously honest and as distinct as possible in style, content, and location from the general run of other ads. For example, if you limit an offering in a print ad in any way, do so in print as large as the offer itself. If you advertise a service, don’t overstate the likely beneficial result of using it, and include a warning as to any risk.
“Branding” has been a catch phrase in advertising for the past decade, and brand managers can now be found in the marketing departments of large companies. Branding is an ingenious response to the fact that traditional advertising doesn’t work. The idea is to make a product or service so well known that its consumer recognition magically places it in the category of widely recognized and respected brands. The concept of branding is that a minor brand, Electronic Product X, can become as well known as a major brand such as Sony Electronics if Electronic Product X simply spends enough in advertising to “establish” its brand name.
The problem with this concept is that true brand identity is created when a company produces quality products or services and stands by them with solid warranties, product recalls, and other methods to ensure customer satisfaction. Running a business this way—not spending a fortune on advertising—is what creates trust and goodwill. In recent decades, several brand names were devastated when they did a lousy job of handling problems with their products. Perrier, Gerber baby products, Sears Auto Centers, and Firestone each mismanaged product recalls and took years to recover. Gerber was ultimately sold to new management, and Sears even damaged the reputation of its nonauto business. On the other hand, Tylenol handled a recall beautifully and made its brand even stronger.
For a branding strategy to be effective, a company must be vigilant about its product and service quality—and be prepared for emergencies. Without addressing these issues, a company’s reputation is a sitting target, waiting to be ruined. No amount of advertising will be able to develop a good repuation for a company unless there’s solid product integrity behind it.
In an article on branding in The New Yorker (June 10, 2002), James Surowiecki stated, “Where modern marketers have succeeded, wildly, is in selling us on the idea that marketing is all you need. The numbers suggest a different, homier lesson. The surest way to get stronger sales is to sell a stronger product.”
Listings: “Advertising” That Works
“Hey, wait a minute,” you may be saying. “Traditional media advertising may not be as worthwhile as it’s cracked up to be, but many types of advertising do work for small businesses.”
The types of “ads” that often work for small businesses include the telephone yellow pages, business directory listings, flyers posted in laundromats, good Internet Web pages, and “notification” type ads placed in all sorts of appropriate locations, from free “penny saver” newspapers to, in the case of a restaurant with late evening hours, the program of the local symphony.
We make a major distinction between these types of ads directed at interested prospects and traditional print, broadcast, and electronic advertising. In fact, we prefer to call these sorts of notices, whether paid for or not, “listings.” One good rule to distinguish the two is that a listing is found where people are looking for it. A traditional ad, on the other hand, like a billboard in front of some lovely scenery or a deodorant commercial in the middle of an engrossing TV show, is usually intrusive and often annoying.
Another aspect of traditional advertising, but not of listings, is that advertising agencies get what amounts to a kickback for selling an advertisement: They make most of their money from the discount the media offers only to them. For example, an ad agency might sell you an ad for $100,000 and then buy media time for $85,000. If you list your business in the yellow pages, even using a large ad, you and the ad agency are charged the same rate. Putting up a successful website can draw hundreds of thousands of viewers, even if you create it yourself. In other words, listings almost never have an ad agency discount policy.
To further illustrate the distinction between advertising and listing, consider the popularity of TiVo and other digital video recorders. TiVo lets the user skip the advertisements—a feature most users take advantage of. Advertising is an intrusion on nearly everyone’s time, and most people don’t like the intrusion no matter how cute, funny, or interesting the ad is. A listing, on the other hand, is always in a place that a prospective customer goes to for the purpose of finding information, like the yellow pages. A Google placement is the ultimate listing, because the prospective customer is looking for the specific word or words that define the information search.
Our friend, Alex Gault, wrote an article about the effectiveness of Google’s AdWords program for marketing purposes:
“Throughout the twentieth century most ad campaigns depended upon the following practices: demographic analyses by marketers, media selection by media planners, ad placement by media buyers, and then analysis of results by agency executives. All told, a campaign and its assessment took many months.
“With the Google AdWords program, an analogous process can take mere days. A shoe marketer like Nike might select 3,000 keywords—“pronation,” “distance running,” “Michael Jordan,” etc.—and write five messages for each keyword. It’s thus not unheard of to have 15,000 messages for just one product. The messages for each keyword alternate, and the ones that result in the least hits are eliminated. Feedback can be almost instantaneous. “Overnight you can see which ads work best and shut some off,” says Tim Armstrong, VP of ad sales at Google. “And there’s no penalty for trying every idea, because you only pay for what works.” Unless they run out of a product, advertisers have no incentive ever to shut off a campaign.”
To sign up for words on the Google AdWords site, go to: https://adwords.google.com/select.
We strongly encourage the use of listings. Indeed, for most businesses, listings are essential, particularly yellow pages ads for businesses that people use primarily in an emergency: a drain cleaning service, a plumber, or a locksmith, for example. Listings in the phone book yellow pages—and, where appropriate, the Silver Pages for seniors and ethnic yellow pages—are invaluable.
Also, if you have an online business, be sure to list it in directory sites. Online directories are like traditional yellow pages in that they are organized by subject—making it easy for anyone to find your construction, editing, or day care business. To check out the directory that already lists the competition—and to get ideas about how and where to list your own business—do a search using Google (www.google.com) or some other search engine under “Online yellow pages Directories.”
In a few instances, the concepts of listing and advertising have all but merged. For example, in many areas of the country, Wednesday is traditionally the day grocery stores put items on sale. Thrifty shoppers therefore check the full-page lists (ads) of items for the best bargains. In our view, this sort of advertising qualifies as a listing as long as it is placed where consumers normally check.
Similarly, in the computer software business, a great deal of software is sold at discount prices by companies that regularly advertise their wares in computer magazines. The ads feature, in very small print, long lists of available software. Sophisticated customers know to check these listings first whenever they need software, because the prices offered are usually lower than in retail stores.
The Chamber of Commerce, employment and rental agencies, professional newsletters, magazines and journals, and special-interest books, such as those geared to the writer or photographer, are commonly accepted places to list goods or services. And in some instances, newspapers have developed such strong special-interest sections that it also makes sense to list one’s services there. For example, a travel agency specializing in charter flights to Asia might place a list of prices in the Sunday travel section. Similarly, small community newspapers exist primarily thanks to local advertising, which usually consists of listings of goods and services. Many merchants find that this type of listing produces good results. Local schools and theater groups also depend on the support of the business community. We consider those kinds of ads as listings of the best sort.
In this vein, we have long been associated with the Common Ground directory, a very successful cooperative enterprise that publishes information in newspaper form about businesses involved in personal transformation. Interested people subscribe or pick up a copy at coffee shops, health spas, or wherever the businesses listing in Common Ground feel it is appropriate to leave a stack of papers. Because distribution is taken care of by the people who list in the directory, the paper has an uncanny ability to be located exactly where people who are interested in the listed services are likely to find it.
Nonprofits face the same challenge that for-profit businesses do: They need to tell as many people as possible about the service or product they provide. The Palo Alto, California, Information & Referral Service has come up with a clever way to disseminate a lot of information in a convenient package. It puts out an easy-to-use directory that lists some 200 local agencies and organizations and gives the Service’s number for further information.
Beware of False Buzz
Bruce Weinstein, a professional ethicist known as “The Ethics Guy,” criticized the trend toward generating false buzz. For example, the Word of Mouth Marketing Association encourages the use of viral strategies to promote products and services, such as hiring “satisfied customers” to stand in line at restaurants and give loud testimonials. “What this group is trying to do may work in the short term,” says Weinstein. “But the only way to really guarantee, in the long run, not only a loyal customer base but a growing one is for customers to trust you, to believe that you actually have their own interests at heart.”
It’s important also to realize that listing can take lots of forms other than paid space in publications. For example, in many areas, if your cat or dog runs away from home, you list this fact as poignantly as possible on the corner telephone pole or fence post. This sort of listing is so common that if someone in your neighborhood finds a pet, she is very likely to check out that same pole or fence. In rural areas all kinds of information is posted in this way. When Salli was out on a walk along her country road recently she noticed a cardboard sign nailed to a pole: “Warning! Don’t buy! Carl Chase [not his real name] delivers wet wood and won’t return deposit. Ex-buyer.” There is nothing new about this. The Romans used to paint information about upcoming gladiator fights on the walls of buildings, and the Greeks posted important notices on rotating columns at busy locations.
For home service businesses such as chimney sweeping, babysitting, and house-sitting, the laundromat bulletin board is where many people look for help. Colleges and universities are a good source for language schools, tutors, dance instructors, typists, and roommate referral services. In rural areas, being listed on the Farm Trails Map (a guide for visitors interested in buying agricultural products) is one of the most important marketing tools for people selling fruit, nuts, vegetables, livestock, and Christmas trees. And artists who live in a certain area will print a map along with a short description of their work and host “open studio” weekends. Motels and bed-and-breakfast inns are good places for many small businesses to be listed as part of the establishment’s recommended services.
Having a Web page is automatically a “listing.” Helping people find your website is a unique and specific marketing issue that we cover in every chapter and in detail in Chapter 11. No matter what your business, there are sure to be many excellent places to list its availability at low cost. •