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Develop an ad plan that hits the target

Demographics / Sarah White

If your business is a bait shop and the lake is across the street, you probably don't need an advertising plan.

But add just a little complexity to the picture — say you sell ice cream too — and an advertising plan starts to have real benefits for your operation.

The need for an ad plan increases with the sophistication of your marketing activities. If you are pursuing a target marketing strategy, focusing your efforts on segments of the population most likely to buy, then in all likelihood you will benefit from a solid advertising plan.

What can an advertising plan do for you?

·Assist you in making more accurate media-buying decisions, by giving you a means to measure the fit of a media vehicle's audience to your target market

·Encourage you to hold each media vehicle accountable for its performance

·Guide you toward a rational method for shaping your creative advertising messages

What are the components of an advertising plan? A comprehensive plan will lay out objectives, strategies, timetables, budgets, and means for measuring results. That's overkill for many businesses, however. For every operation large or small, the essential components of an advertising plan are:

• A definition of the target market
• An understanding of market share and market potential, to justify spending levels
• A creative message strategy

Define your target market

Whether it's archery, darts or advertising, you score more points for hitting the target.

In advertising, a target market is a specific segment of your current and potential customers who have shared characteristics that make them more prone to buy your products or services. You can define a target market by characteristics such as their demographic traits, their geographic location, or other factors, like their spending habits.

As manager of your advertising program, how you define your target market lets you evaluate each advertising opportunity in light of how well it delivers that target audience.

Matching media to market. Once you have defined your target market, you can evaluate media vehicles based on their ability to deliver an audience that matches your target.

Try this "yardstick" used by media planners: How much will it cost to reach 1,000 members of my target audience? This figure is known as CPM, or cost per thousand. This calculation expresses cost and circulation as a ratio, helping you to see not just what an ad costs, but whether it is a good value. (For step-by-step instructions on calculating CPM, see the article "Find the right media for your message," on this site.)

Any media sales person should be able to show you some independent research that will tell you what fraction of that vehicle's audience matches your target market. If you find out that only 25% of that media vehicle's audience meets your target specifications, multiply CPM by four. If the CPM of that media vehicle is $100, but only one quarter of them meets the description of your target market, your real cost is $400 per thousand. This adjustment gives you a better estimate of how much it will cost you to get your message in front of 1,000 of your potential customers (not just 1,000 members of their audience).

For each media vehicle you consider, perform a CPM analysis and adjust it based on the fraction of that vehicle's audience that fits your target market profile.

How much is too much to pay?

How big is your advertising budget? If you're like most advertising planners, the answer is "that depends". Few businesses find the discipline to set budget levels and stick to them on a yearly cycle. Instead, many planners fall prey to persuasive salespeople, or allow their spending to be driven by the latest sales reports. These approaches lead to spending too little too late, or even worse, spending scarce dollars where they go to waste.

Your advertising budget will be unique to your business, your competitive challenges, your growth goals, and other factors. For a reality check, consult industry sources for typical spending levels for businesses like yours. As a rule of thumb, consider that many businesses find their advertising spending falls at about 25% of gross revenues, or around 5% of total operating expenses.

A more useful approach for you, however, might be to study what market share you now hold, and what potential there is for you to command more of the potential market.

Some of your advertising budget will go to creating and producing advertising messages, but the bulk will go toward the expense of advertising time and/or space. If you estimate that under the best of circumstances only a few of every 1,000 readers will respond to the ad and perhaps only one of them will buy your product, then each customer from that source will be extremely costly. To operate profitably, carefully define your target market and buy media with the expectation that, on average, each $1 in advertising expenditures will result in more than $1 in revenue. After some testing and experience, you should grow to expect $3 to $4 in revenue for every $1 spent on advertising.

Hold every media choice accountable. There's an often-quoted saying about advertising: "I know only half my ads are working, I just don't know which half." If only we could know which media vehicles were delivering results, and cancel those that aren't earning their keep!

In your marketing plan you may choose to spend some money on direct mail, some on print or broadcast ads, some on a conference booth, some on Web site ads, and some on billboards or other media options.

Every advertising option you use should be held to a standard of accountability. Direct mail is great in this respect because by properly coding the various lists you use and the different offers you make, each can be evaluated against the best combination of offer and list.

The productivity of other media is more difficult to measure, but it can be done. Many businesses train their customer contact people to always ask: "How did you hear about us?" and code the response on the customer's sales record. However it's done, ranking each media choice from the most to the least productive on a monthly basis will alert you to ad spending that's just not working for you. It will also tell you where to spend more money to keep your business growing.

Create a message strategy

Once you have defined your target market, what are you going to say to them? The world's most perfectly targeted media won't produce much revenue unless your advertising messages are compelling and persuasive.

The hard work here is determining your unique selling proposition (USP). This is a process of discovering what attributes and benefits of your product or service are most important to your target customers. Your USP may be obvious or it may require research. But once it's done, advertising messages are a lot easier to compose. For more on this topic, see the article "Your Unique Selling Proposition: Use it or lose it" on this site.

Every message from your company to your target audience should convey your USP and support your brand identity. A brand is much more than a trademark or slogan. A brand is a projected identity that encourages customers to feel good about your product or service. Your brand helps customers build loyalty to your company and its offerings.

The best judge of the effectiveness of any marketing message is the target audience. Some advertisers fall in love with a particularly clever slogan or image, only to find out it doesn't ring the cash register very well. Experiment until you find exactly the right set of words and images to get the right message.

Conclusion

In this process of taking action and measuring response, be prepared to adjust as you go. Otherwise, you are failing to learn from your efforts.

For example, once you have defined a target audience, you must be prepared to redefine it when information comes back from your initial marketing efforts. One marketer defined the target for a statistical software package as any market researchers in business and academia. But after some experience, that marketer sharpened that broad target market description to a narrower point. Now he directs his messages specifically to market research managers in large companies — the segment that proved most likely to buy his product.

The objective of any marketing plan is short- and long-term business growth. Building brand recognition is a worthy goal, but building a solid base of profitable revenue is the ultimate objective. That will be the result of defining your target audience, measuring the effectiveness of your media choices, and building your marketing messages around your USP.

Quick tips on working with media sales reps

Don't bring your personal preferences into your media decisions. Buy a specific vehicle because it reaches your target market — not because it's your favorite.

Insist on verifiable information from your sales reps. Statistics such as audience size or gross rating points should come from third-party sources such as Nielsen or Arbitron.

Refuse to play along if you experience uncomfortable high-pressure sales techniques. Speak to your sales rep's manager and explain that you need information only; you will be making your own decisions.

 

 

 


My writing on marketing topics for small business appeared in Third Wave Research's demographics area on Microsoft's bCentral from 2001 to 2004. Microsoft’s bCentral portal was closed down in July 2004 as a result of a change in it's business strategy. Here are links to a few of those stories.

Your Unique Selling Proposition: Use it or lose it

Develop an ad plan that hits the target

Food channel: how fresh produce gets to a restaurant table

Branding: a key strategy in the age of parity

 

© 2009 Sarah White. Contact me with comments or questions. Home