Maximizing a Budget

Advertising tactics vary based on budget. In an ideal world, the level of innovation brought to a small budget should be brought to a large budget as well. You should constantly strive for fresh, different ideas on how to maximize the return on that dollar.

You can go in and determine an advertising-to-sales ratio, and some categories are naturally higher than others. Retail has a fairly high advertising-to-sales ratio because it’s demand-driven. You might have categories where it’s 3 percent, and others where it’s 15 percent. There are rules of thumb that say how much you should be spending. The reality is that spending is enabled by the amount of money available, but the logic that drives spending should always maximize the returns. If you’re dealing with a smaller budget, usually you’re trying to find ways to zig when everyone else is zagging. You’ve got to find other ways to engage a consumer’s attention and have them connect with it. If you can afford the Super Bowl, that’s pretty cool too, but you need to find inventive ways of doing it. Case in point: Several years ago Victoria’s Secret did a runway show, an advertising piece, that later went to the web. It was really interesting and extremely well-viewed. That was a very inventive use of high-cost advertising. The agency’s job is to maximize return on investment no matter what the number is. There might be times when an agency should advise its client to take a radically different view, because it cannot compete in traditional ways based on the amount of money available. That is not unusual. For example, a certain cleaning product started out with heavy-duty infomercial demonstrations that built the business by buying relatively low-rated TV airtime when the time was cheap. A man would demonstrate the product, and people would buy direct. Then the company went to traditional advertising, not an infomercial but more of a direct-response commercial. Now you can go to a retail channel and buy that product. Here is a company that probably did not have the resources to compete against the traditional detergent and bleaching products: to get all the distribution, run $25-35 million worth of advertising against “homemakers” and build the business that way. It came out in a fresh, radical way. I don’t know how big the business is now, but it has to be a reasonable size because it has the retail distribution and is running more traditional kinds of advertising. Coming at it in an entirely different way maximized the long-term return.

You have to look at advertising and media in totally different ways. You think about media as not being just paid media. You think about how to maximize visibility, how to maximize the impact of every dollar spent. You look at it in nontraditional ways – you’re not just talking about traditional media. The lines between the media vehicles and what’s advertising and what’s not advertising start to blur dramatically. You don’t know where the paid advertising stops and the non-paid advertising takes over. It takes on a very different texture. That maximizes the budget, but you’ve got to use a similar kind of thinking even if you’re working with a big budget.

The other way to maximize a budget is by the inventiveness of your creative communication solutions. One of our current clients is a brand called LendingTree.com, an online loan marketplace. It came after e-Loan but has obliterated the competition in about three years, becoming the No. 1 brand in that business. We run a lot of television advertising (also radio and print) and measure the return on investment on every dollar we spend in a variety of ways. It looks like very traditional advertising, but the trick to that solution was really in the positioning. We harnessed the power of a latent emotion that consumers had and turned it into something positive. Consumers think banks abuse them. We turned the tables on the power and put the consumer in control of the bank. That’s just a very strong emotional drive. A creative solution can maximize the return on a budget, so even though we may not spend as much as other people do, we get a lot more back for the money.