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Spread the News on Your Site |
Always remember to post the good publicity that you receive on your site. People who
visit your store will read quotes and other media tidbits that you’ve received and learn
more about you, which undoubtedly builds more familiarity and trust, which in turn
improves the likelihood that they will shop with you. However, one mistake you should avoid is reproducing copyrighted materials on your
site. Just because you were featured on the cover page of your local newspaper does
not give you the right to republish the page on your site. Similarly, just because your
product was reviewed in Wired magazine does not give you the right to reproduce
that review in its entirety on your site. To take advantage of the good publicity without
violating the copyright rules of the publications giving you coverage, do the following:
- Ask permission to reprint first; you might just get it without a hitch.
- Reprint a small excerpt of a sentence or two.
- Scan and reduce the story in the publication to an unreadable but visible form
on your site if you can’t link to it. This might show the entire page, the headline,
some graphics, and the logo of the publication, but the core text would be too
small to read.
- Link to the article on the Web if it’s available.
- Purchase reprint rights if you feel it’s useful to have a perfect representation.
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| Free Publicity Works Wonders |
In the end, it’s important to remember that free publicity isn’t really free. It takes a lot of
time to get your free publicity strategy into place and to maintain it. The payoff comes
when you achieve a hit or links that drive traffic and then sales to your site. Obtaining
publicity can also be tedious and labor-intensive. If you commit an hour or more to it
each day, especially during slow times, it will begin to pay off. The key is patience and
persistence. For every fifty people who ignore your solicitations, perhaps one will take
an interest in you and your products – but it only takes one good public mention to
drive hundreds of people to your site.Advertising your store is not as easy as promoting it because, unlike promotion, it’s
hard to advertise without expending some funds. However, advertising can be extremely
important to the long-term growth of your store. The key to advertising an online store
is understanding why you’re advertising, and then determining how to ease your way
into it and maximize results so that you’re not overspending. Many early Web stores
ended up spending millions of dollars on advertising, and the customers weren’t ready
yet, so the stores overspent, all in the name of cornering some market before someone
else did. It worked for very few, and the rest ended up giving us the so-called “dot-com
bubble” when the whole industry collapsed as the investment money dried up. The most important lesson in this Section will be to use advertising, but to use it
realistically, to expect realistic results, and to measure the results as closely as you can
so that you can adjust as necessary to achieve your personal best results. |
| Why Advertise? |
The first question to ask is: Why advertise at all? It’s a good question because small
stores won’t have big budgets for advertising (we’ll assume that you have some budget,
though). You may wonder, when there are so many actions you can take to obtain free
publicity for your store, whether those are better options. Frankly, they are – to a point.The truth is that smart storeowners spend more time working on free publicity efforts
than on advertising. It’s easier to invest 20 hours and $0 than it is to invest 2 hours
and $2,000. However, at some point, you can expect the free publicity route to do two
things. First, it will hopefully start to provide some real income, income that you can use
to invest in other activities. Second, it will hit some level of diminishing returns. You’ll
always be able to find ways to obtain free publicity, but in general you’ll find it takes
less time to find a few new sites to get links from, and there are only so many times that
the local business pages will feature you, or Time magazine will put you on its cover
(you never know!). That means that your need for advertising will increase as an outlet
to look for more customers. |
| The Advertising Model |
Before you can begin to formulate some basic decisions about advertising, you
need to consider the model that drives advertising. John Wanamaker, the famous
early American department store merchant, once said, “Half the money I spend on
advertising is wasted; the trouble is I don’t know which half.” That one sentence sums
up advertising better than anything said since. The paradox of Wanamaker’s quote aside, there is an advertising model, although to
some extent it reinforces Wanamaker’s statement. The payoff from advertising is spread
out over a long time and usually in a diffused manner. That’s because it’s likely that the
sales you get from advertising will result in less overall profits (or even revenue) than
what you spent on advertising in the first place. However, if some of those buyers are
repeat customers, over time the advertising can pay off. And therein lies the rub: If you
overspend too much, you won’t stay in business long enough for the residual force of
the advertising formula to pay off. Consider an example. Say you spend $2,500 to place an ad for your custom doll
business in a niche magazine that covers dolls. It’s a nice ad, perhaps expensive, but
it’s the best doll magazine in the country, and all the enthusiasts read it. The result is
that for a few weeks thereafter, you rack up $1,000 in sales, making $300 in profits. So,
you spent $2,500 and you made $300. Keep that up, and you’ll be out of business in no
time. However, imagine five years later that a few of those first customers have become
regular buyers and spent another $3,000 in your store, earning you $1,000 more in
profits. Now you spent $2,500 and earned back $1,300; that’s a bit better. What’s more,
those customers (unbeknownst to you) told their friends and fellow doll collectors about
your store, and that brought in even more revenue to the point where you broke even
(if you were able to track things so perfectly over time). That is how advertising really
works to your benefit. Based on the scenario above, we can see that there are three key questions that
advertisers must ask: (1) What can we do to narrow the time it takes for a full return? (2)
How do we factor critical repeat buyers into our plans? (3) How can we measure things
better so that we can see where the best bang for the buck really is? |
| Advertising Math |
If we turned the advertising model into mathematical formulas, the result would look like
these two equations:
- Total Revenues from an Ad = Initial Customer Visits * Average Order + (Repeat
Customer Visits * Average Order) + Residual Word of Mouth Generated
- Total Return on Advertising = Total Revenues from Ad * Profit Percentage/Total
Amount Spenton Advertising
The keys to these formulas are three variables: average order size, repeat customers
gained, and your baseline profit percentage. If your average order size multiplied by your baseline profit percentage is a lot of
money, then you might be able to get away with fewer initial and repeat customers to
achieve an acceptable return on your advertising investment. If your repeat customers are low, or slow (think computers, furniture, or cars), then you
can’t depend as much on the immediate effect of residual advertising, so you might
need to focus more on advertising that drives initial sales. This is why big-ticket items
usually emphasize sales and rebates in their advertising, because the sellers know that
the return has to be more immediate. If your order sizes are low but your product lends itself to a lot of repeat buyers (think
books or video games), then you can focus on an advertising model that puts more
emphasis on a return from repeat customers over time. Using these calculations, you can begin to figure out a rough idea of what it costs you to acquire a single new customer. Then, for each new customer, you need to decide
what is the immediate and the expected lifetime profit potential of that customer. For
example, imagine a store that spends $5,000 on advertising and generates 100 new
customers as a result. The average initial order is $45, and you make $15 from each
order. The result is that each new customer costs $50 to acquire. Because you earn
$15 on each order, you need the average customer to order three more times to make
a profit on each new customer acquisition. If you don’t think this formula is acceptable
to your business, you can begin to refine your efforts a bit. Clearly, if you can’t get three
more orders per customer, then you need to work on two things: (1) get the average cost per new customer down, and (2) get the average profit per customer up. If you
can’t do either, then you need to slow down your spending on advertising so that you
can conserve funds and grow more slowly, letting the residual effect of advertising
catch up. This is what makes advertising both an art and a science. It’s an art because creativity
in advertising can greatly help with its success. It’s a science because once you start
to get some rough results from it, you can begin to tweak your strategy based on cold,
hard, mathematical numbers. One great aspect of online stores and online advertising
is that it’s easy to get your hands on a lot of data to help you track your advertising
results. |
| What to Advertise |
| You can advertise two things: your store itself or the specific products you sell. Either
way, you want the same result: traffic into your store as a result of the message you
present to customers. Determining your message is where you can get into endless
strategizing. It might involve expressing a certain feature (e.g., “We’ll match any price!”),
or a certain event (e.g., “Our annual inventory clearance sale!”), or a certain emotion
and value system (e.g., “Brand names you love with the service you deserve for your
busy life”) that you think will motivate people to act upon the ad. When determining
what to advertise, decide whether to emphasize something about the store or a product
it sells, with a message that prompts customers to take action. |
| When to Advertise |
Your first instinct might be to send out a blast of advertising to coincide with the launch
of your store. However, you may want to wait a while to make sure that everything
works well and that you’ve completed the first round of linking, search engine
submission, and cost-free promotion to get things started. Small business owners
would probably do best by initiating their advertising campaigns after free media efforts
wane. If your cash flow is surviving (or even thriving) with current customer numbers,
take your time before ratcheting things up to the next level. The other aspect of when to advertise is seasonal timing. Advertising clearly picks up
based on seasonal issues. If you sell holiday ornaments, you’re not really doing much
in March or April. Maybe you have a July inventory sale and an after-holiday blowout, but the bulk of your advertising should be close to (and before) the holidays, when
people have decorating on their minds. Kids’ clothing stores always buy advertising
around back-to-school time and with the change of seasons. The basic rule of thumb,
though, is that the fourth quarter of the year is critical to many retailers. Thus, the bulk
of advertising funds is spent then. Your own model, along with experience with your
market, will help you to figure out these types of specific seasonal issues. |
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