If you’re wondering if advertising will work for your company or not, the most probable answer is “no.” Why?
When considering that the amount of money spent on global advertising is projected to hit another all-time high (see chart above), advertising must be working for a number of businesses, otherwise, they wouldn’t keep pouring more cash into it.
So, why wouldn’t it work for your business, too?
ADVERTISING WORKS FOR SOME BUSINESSES
Well, first of all, companies that are executing successful marketing and advertising campaigns aren’t wondering about the potential of advertising. They’re already achieving it.
In other words, the folks who would ponder the question are those who have not had success with advertising. And there are plenty of those. In fact, it’s almost universal — even among those who are routinely achieving profitable advertising: they failed before they got there.
One of my higher-profile examples was helping a health business grow from nothing to over $100 million USD in three years, via online marketing, direct mail, and national TV. However, like most successes, whether it’s a business, a sports team, or even someone becoming competent at their job, they usually didn’t start that way. It was a process. A process of finding what works and doesn’t. A process of “failing to succeed.”
Successful marketing and advertising boil down to that one word: “Process.”
Or, in the parlance of advertising professionals, a process of “Testing.” It’s how advertising becomes successful for businesses.
MARKETING AND AD PERFORMANCE “SPLIT-TESTING”
Marketing Success = (incremental gains + applied effort) x time
The incremental gains occur through split-testing, which is a process of running and comparing the results of low-cost ads with different messages to not only find what works best for a given market today, but to improve performance and lower ad costs for tomorrow. (See our marketing strategy for an example).
These message tests can then be leveraged into video tests, for further performance optimization.
This requires good old-fashioned work. And some time. Artificial intelligence and data science speed up the process, but it still requires real-world effort and labor to not only make it happen but to understand how to best execute ongoing testing effectively and efficiently. (The bigger the budget, the more granular the testing.)
Testing is about spending less today, to determine what generates the best ad performance, so that more money can predictably be spent tomorrow, without guessing or hoping that it will work.
WHY ADVERTISING WON’T WORK FOR YOUR BUSINESS
Many businesses are ‘not’ conducting a process of ongoing ad testing.
Over many years, a common theme I have observed in businesses that have limited success with advertising is the concept of “Let’s try it and see if it works.” In the majority of such circumstances, it won’t.
And with each passing day, the likelihood that it won’t work increases as markets continue to get more competitive and ad costs go up.
Furthermore, businesses with a small margin may never see the results they desire, because the cost of advertising is more expensive than what they are selling. In which case, their profit comes from add-on or follow-up sales.
Infomercials are an example here. In a number of cases, the advertiser is hoping to break even on the cost of advertising so they can make a profit on the “back-end sales,” which includes upsells and follow-up sales. Other times, they may not break even on the advertising at all. But because they make enough money on the backend, they still continue the advertising, since the overall campaign is profitable.
Or, in businesses with lots of products — take retail as an example — they may intend to lose money on a specific product promotion, simply to attract more buyers, knowing that some will buy other products at regular prices (“loss leader”). Once again, the net result is higher revenue, even if the specific promotion itself was not profitable.
But of course, for most businesses, the ideal scene is to make money on the initial advertising, so that it can be continued in such a way to create steady growth for the company.
MARKETING AND ADVERTISING TRIAL
Successful advertising is an art and science. Doing any kind of promotion can be helpful, but the right kind of experienced partnership can make the process more productive, profitable and understandable.
A unique opportunity that Skyworks Marketing provides is a trial of basic ad services. This way we can establish a benchmark of current, real-world metrics, to better inform the potential for a partnership.
Such a trial also helps to harmonize an ideal pricing arrangement after the trial (in some cases it might be a pay-for-performance model). Generally speaking, a higher budget means more split-testing can be done faster, which equates to a shorter runway towards maximizing revenue and profit. Alternatively, a lower budget means the process takes longer, yet still provides a path towards sustained growth.
WHO QUALIFIES FOR A SKYWORKS MARKETING FREE TRIAL?
In brief, we are seeking a “mutual opportunity.”
More specifically, we want to answer the question, “How much can a prospective business partner benefit from a marketing and advertising campaign, whether online or on TV?”
This is especially important since many businesses will not see a profitable result in a 2-week trial, especially if the sales cycle is longer than 14 days (which is common) and they won’t know until later how many prospects turned into clients. However, products or services with longer sales cycles are usually higher-priced and with higher margins, which is ideal.
Regardless, we determine the best mutual opportunity through an application.
Each applicant answers some basic questions, such as: how long they’ve been in business, what their product or service is, whether they’re an original manufacturer or service provider, as well as revenue, ad experience, and competition.
Another factor is how well we can target the product or service. We like to start such trials on YouTube because it’s an inexpensive way to provide base metrics. However, other platforms, such as Facebook and LinkedIn, which have additional demographics, may provide even better targeting opportunities, typically with higher costs.
Regardless, after the trial and when it makes sense, we start branching out to other ad platforms as part of an ongoing testing process. Ultimately, the cost of an ad is less important than ROAS (return on ad spend), which is a marketing metric that measures the amount of revenue earned for every dollar spent on advertising.
Returning to the application: research is conducted on each applicant’s product/service/industry and all this is scored to determine the probability a trial will provide a favorable opportunity. It’s worth emphasizing that “opportunity,” in this case, doesn’t mean that the trial will be profitable in 2 weeks, it just means that it will establish a benchmark of ad metrics that are opportune enough to point the way to profitability in a way that makes sense to the potential partner.
Click “Contact” to find out more.
Avid hiker, bicyclist, motorcyclist and long-time advertising pro. Founder of Skyworks Marketing, Nonprofit Fire and Our Ventura TV (cable TV). One career highlight was working on a small team that built a business from nothing to over $100 Million in 3 years. Skyworks Marketing provides lead generation and video advertising services. We create custom marketing funnels that provide the highest-quality leads and sales.