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How to Advertise

Here, we are talking about the advertising process. The basic process of advertising takes several forms. One is to hire a firm and let them do all the work, formulating and producing your entire advertising campaign and buying your ad space. Most small stores don’t work this way, but larger ones certainly do. The second process is to hire a design firm to do the creative work, but you do the ad space buying. The third process is to do it all yourself.No matter which way you do it, you need to combine some creative aspects with media buying. Buying media is not that difficult. Many Internet sites let you purchase ad space automatically over the Web using a credit card. Smaller offline media outlets like local weeklies will also accept credit cards. Others, like newspapers and magazines, accept checks. To purchase advertising, you usually just call the advertising sales departments, which are listed prominently within a print publication or on the Web sites that most publications have. The ad people will work with you and discuss what they think might work best. This can sometimes be a hard- sell process. You will usually receive a discount for buying ads in multiple issues of a newspaper or magazine, but don’t be afraid to purchase a single ad to test the waters. Be aware it’s common for smaller advertisers to end up with their ads in a less prominent space. Some outlets will also provide a combined discount if you purchase names from their mailing list with an ad. Keep in mind that you shouldn’t expect a huge response to a single ad.

The where part of advertising breaks into two clear categories: offline and online. Offline advertising includes the traditional outlets of mass/local media and direct media (direct mail). Online advertising includes an array of relatively new, Internet-specific ways to advertise, such as paid search engine listings, banner ads, and affiliate programs. Only you can determine the most effective places for advertising your store, but in most cases a combination of offline and online advertising is the best way to reach the most potential customers.

The amount of offline media in this world is staggering. Everywhere you look, there is a magazine covering some niche subject. There are hundreds of daily newspapers, and more community-style newspapers than there are communities. To decide where you want to advertise, it is useful to understand all the basic offline media outlets and how they work.

Newspapers

There are several types of newspapers. At the top of the chain are major daily newspapers. Below them are smaller alternative papers and community weeklies. Most major universities have student-run papers as well. The biggest universities have dailies, but most are weeklies. Newspapers offer a few options to stores. First, many have special sections that you can target interests by, and of course there is the geographic targeting they offer. Depending on what you sell, the classified sections can be useful as well. Newspaper readers tend to be affluent, educated, and older, and they regularly turn to the newspaper to learn about sales. The weeklies are probably a better stop for some stores; you get better rates, and you can target weeklies that hit various demographics based on their editorial bent. The best way to purchase ads for weekly newspaper outlets is via advertising networks, which will run a single ad across the country among all their participating newspapers. Many college newspapers also utilize ad syndicates. Despite the fact that many students spend their days studying or playing video games, a statistic released by college newspaper advocates stated that 62% of students read their college newspaper.

Magazines

Magazines allow you to target niche interests. Because of this advantage, magazines can charge high rates for every 1,000 readers. The result, if you’re careful, is advertisements in magazines that will put you front and center in your target market’s view. Although magazine ads are expensive, most magazines have sections that allow for relatively less expensive ads toward the back of the magazine. These ads are usually the size of a business card or even smaller. Even though it might seem like you could get lost in the crowd, these ads can be beneficial and you can get a decent return from them over time.

Newsletters

Newsletters are more difficult to find because they don’t usually sell on newsstands, but they can be useful outlets for small stores because newsletters hit the “nichiest” of readers. The best place to find newsletters is on the Web, because most have accompanying Web sites. Some are electronic only, but many well-run newsletters still print and mail copies to their subscribers. To advertise, you’ll need to contact the editoror publisher. For those that accept advertising, prices will range from really cheap to as much as $500 to $1,000 per issue.

Radio

Let’s face it: Advertising on TV is going to be impossible for most small businesses. Sure, you might be able to afford some cable ads at 1 a.m. or in local markets, but the fact is that advertising on TV is a quick way to waste money. Radio advertising, on the other hand, is much cheaper and might actually be useful, depending on your store’s theme. With radio, you get more precise audience demographics and geography. More importantly, many people listen to the radio while at work, which for many people is the only place that they have access to the Internet.

Cable TV

If and when some Internet stores begin to advertise on television, they will probably begin on cable. Cable provides a better method than regular TV of matching special interest advertisements with related programming. For example, a sporting goods store could advertise on ESPN, and a record store might choose MTV. As online competition increases and markets mature, cable will become a viable outlet and will signal the ascent toward national television advertising.

Offline Direct Media (Direct Mail)

Direct mail, although often overlooked, is a great way to advertise a product or service. The catalog industry is the most obvious user of direct mail. Because Web stores are closer in style and workings to catalogs than to bricks-and-mortar retail stores, direct mail can be a good advertising outlet. There are several different types of direct mail. The easiest to use are postcards, which contain some basic message such as announcing a sale or highlighting the store’s theme or particular products. Another type of direct mail is a letter, which rigorously explains a particular product or service and tries to push people toward an action. Letters work well for services or fundraising, but not very well for much else. Finally, there are circulars, catalogs, and brochures. Some Web outlets, like Amazon, have used these with some success, essentially mimicking popular mail-order stores or large stores that push Sunday circulars through newspapers. A good offline catalog can be useful, but it is very expensive to print and develop such a product.Assuming you’ve got a good idea of what you want to mail, where will you get the names for your mailing list? There are several options. Besides using the names you’ve acquired from previous leads and orders, the most popular process for getting names is to purchase a list from a list broker. List brokers such as CMGI Direct have myriad names available, categorized by occupation, interest area, and other demographic/psychographic attributes. Also, many magazines will sell you their subscriber lists for one-time use. Most lists are sold by number of uses. Be careful about using a list more than once; most are seeded with names that allow the broker or magazine to find out if you used the list more times than you paid for. You are allowed, however, to capture any names that later order or otherwise share their names with you for further information. Another form of list broker will sell you “current resident” households by ZIP+4 codes around the country. Targeting can be done simply by selecting very affluent ZIP codes (90210 anyone?) or specific geographic ZIP codes. Most direct mail houses that offer ZIP+4 targeting can work to skew a mailing toward those ZIP codes that best match a particular profile you want. You can handle direct mailings yourself or leave it to a direct mailing house. If you’re conducting a large mailing of 2,000 or more pieces, it’s best to use a direct mailing house unless you have a lot of free time, energy, or people power. A mailing house will take your files, organize them into a presorted mailing, use their own postage system, and mail everything out in one fell swoop. Many also have printing capabilities or deals with local printers to handle your printing once you provide artwork and a list of names. You should check pricing carefully among several vendors, and should include a few names of friends and employees on the mailing list to spot-check the mailing house’s efforts.

Advertising on the Internet, as with advertising offline, offers a variety of different outlets with each offering some strengths and some weaknesses. In the early days of the Internet, banner ads were the most popular form of advertising. Today, however, paid search engine listings are quickly becoming the dominant form.

Paid Search Engine Listings (Pay-Per-Click Marketing)

In recent years, the concept of paid listings has taken off like a rocket. This advertising vehicle, which was made popular by GoTo.com and Google, works a lot like the Yellow Pages. Everyone receives a free single listing, but some businesses might want to stand out from the crowd. To do that, they buy space in the Yellow Pages to get noticed more and to say more than the other guys. Paid search engine listings work in the same manner. Search engines like Google still do their basic work finding sites and pages and serving them up to users. No one can pay to change the main listing work of the search engine; that you have to earn other ways. However, Google and other search engines do offer special parts of their site as paid real estate. These listings are clearly designated as sponsored links and usually appear down the side of the page in small boxes like classified ads. What makes sponsored links so great is that you only pay for a click-through, not an impression. In earlier Web times, everyone sold impressions. However, click-through rates were so small that businesses, especially smaller ones, needed a payment method based on click-throughs, because they really couldn’t afford to pay for thousands of meaningless impressions. This isn’t to say that impression-based Web ads don’t still get bought; lots of great consumer brands and other sites can benefit just from the impact of showing a banner. However, for people selling products (especially niche products), click-throughs provide a better economic model. Several sponsored link systems exist on the Web, but the two biggest and most popular are Google’s AdWords service and Yahoo!’s Overture division. (Overture was a separate company that Yahoo! acquired in 2003.) These systems sell sponsored listings not only on their own sites, but also across other content sites. Google, for example, serves ads through the New York Times Web site. These are called content ads. Instead of determining ad content based on the key words a user puts into a search, the service dynamically reads the content of a page or accepts variables from a Web site it is sending ads to, and serves up ads relevant to the content. For example, if the Times has an article on Ireland, the Google AdWords system might send it ads related to traveling in Ireland. Again, as an advertiser through the Google AdWords network, you pay only when someone sees and clicks on your ad. Everything else is free.

TIP: It’s a good idea to view other ads for key words you want to buy. Take note of what they say and look like, so that you can adjust your look and wording appropriately.

Banner Ads

Until paid placement search ads became popular, the banner ad ruled the day. Banners are still extremely popular and remain a top choice for many advertisers. While paid search placement requires little skill beyond wordsmithing, the banner ad requires that you create something that is graphical in nature and usually animated to some extent. As Web technology has improved, it is now common to see banner-sized Flash/Shockwave ads. Other new options include ads containing HTML forms with drop-down lists or image maps that allow users to select a specific part of an ad to trigger a response. This style of ad can be effective for merchants who want to list all of their departments or a variety of items in an advertisement. Creating these ads is not as easy as it looks. We suggest that you inquire about custom design services. Alternatively, you can hire an ad-banner design firm, which you can find on the Web, or a local advertising/desktop design firm to create a few banners for you. It should cost several hundred dollars to get two or three standard banners and a couple of buttons. With those banners in hand, you can begin to look for a few places to purchase advertising space.

TIP: You should go through that same list to find good candidates for static sponsorship. As you visit each site, make a note of what you would pay for a banner ad on various pages on their site. Then, after you achieve link placements, you can go back to the best/most receptive ones and pitch them some sponsorship ads. You also can combine this with affiliate status, where you pay a static sponsorship fee plus a bounty for each sale or new customer.

Affiliate Networks

An affiliate network is a form of paid advertising, although it is structured quite differently from other forms. With affiliate networks, Web stores pay affiliate sites each time a link from an affiliate site to the Web store generates a shopper who buys something. Some networks pay a single bounty (a fee paid to a referring affiliate site); others pay a percentage of sales. When an affiliate site reaches a certain level of commissions, then the Web store sends the site a check. Typically, Web stores pay between 5% and 15% of sales, and pay out quarterly whenever an affiliate site hits $25 or more in commissions. Amazon.com is credited with starting the affiliate network concept when it launched its highly successful Amazon.com Affiliates System. Other stores immediately copied the clever concept, and several services sprung up to help stores run their own networks. Up until now, small Web stores haven’t had much luck with affiliate networks, mainly because it’s difficult to create the networks, and many sites aren’t sure that they can send enough traffic to smaller niche Web stores to generate enough commissions. Smaller Web stores have also found it difficult to generate a system to track everything. Given that smaller stores have had trouble establishing successful affiliate networks, what can you do to improve the value of this service. Here are some tips:

• Pay a bounty for each new customer, not a percentage of sales. A straight-up bounty of $10 to $15 may work better than a complicated percentage of sales for some smaller Web stores working with smaller affiliate sites. You could pay even more if your estimates of revenue-per-customer are high enough. This is especially useful if your average sale is under $50 and you have decent repeat business.
• Work hard to build your affiliate network site by site. Smaller Web stores need to aggressively push their affiliate networks. Potential affiliate sites are not trying to find you; instead, you need to work to find them, evangelize your store and affiliate program, and hopefully sign up people that way.
• Be proactive. Structure special deals when it makes sense. Identify a few opportunities for affiliate program deals and develop those with sites. For example, go to a site that has a newsletter, and pitch them the idea of placing a link in their next newsletter that is pre-set as an affiliate link to your site. Tell them that you’ll pay $X for each sale. For sites that aren’t selling many ads, a deal presented to them on a platter like this may just work for you. Look on their site for other pages that you might suggest affiliate links to, and provide this insight as part of your sales pitch.
• Pay out thresholds lower than $25 to get things going. Lots of big stores have high thresholds before the first payment. By lowering your threshold to $10, you might get a few more sites to take the plunge.
• Don’t bother with bigger sites. Big sites want big advertising dollars, and are probably not worth targeting for affiliate programs.
• Stay away from free home page sites. Free home page sites like GeoCities, Tripod, and Angelfire tend not to allow their users to create affiliate links to Web stores that haven’t struck a big deal with the service itself.
• Help potential affiliate sites build pages with links on them. Coding pages for use on another site can help you sell your affiliate program. For example, if you sell fishing equipment, you might create a four- to five-page mini-affiliate store, complete with the motif and other information for a particular affiliate site that you want to get on board. One of the big impediments for many sites thinking about participating in affiliate programs is generation of content. By doing the legwork for them, you might have more success signing up sites.
• Develop other content that sites can use to help their affiliate efforts. Helping a site with content is another good way to get them to sign on. This could be a Top 10 List, or it could be some reviews of products – all linked to your store.
• Look for sites with good regular email newsletters. Some of the best opportunities lie in the newsletters that sites send to their members who left an email when they once visited. Signing up sites with newsletters means getting a chance to work with them on embedding links in their next newsletter. A site that’s willing to put in the work required to produce a newsletter is probably a well-run site.
• Promote your affiliate program. There are several sites where you can list your affiliate program and receive some promotion for it. These sites include www.affiliateguide.com, www.affiliateinformer.com, and www.refer-it.com.

TIP: One problem with affiliate programs is that if you pay an individual more than $600 in a given tax year, you are required to issue a 1099 statement of miscellaneous income with the IRS. Thus, it is critical that you keep very good records on your affiliates. First, encourage site operators to get paid as a business rather than as an individual. Second, when someone breaks $500 per year in affiliate sales, send him a note requiring him to provide a social security or tax ID number before he can get any further funds released to him. Keep these records handy, and turn them over to your accountants so that they can issue the proper 1099s to your affiliates. Let people know that you will be issuing a 1099. In order to avoid being liable for the taxes yourself, you must issue 1099s before the end of January in the year following the year during which you paid someone. As a rule, do not offer anyone tax advice about their 1099s or how they’re taxed; refer them to their accountant.

Online Yellow Pages

One final form of online advertising worth mentioning is the online Yellow Pages. As in the real world, people often utilize the Yellow Pages when they’re seeking a business that provides a particular product or service. Listing your store in the online Yellow Pages is relatively inexpensive, and doing so provides yet another place where potential customers can find you.