Taking Bigger Share of Down Market

Shifting Media Plan to Web and TV Can Boost Buying Power and Impact

By Adam Armbruster, Special to TelevisionWeek

In a down-tracking market it’s all about market share. As marketers, in order to help build clients’ profits from year to year, we need to help them increase their fair share of the shrinking market. Only through immediate and bold market-share increases can you expect to beat last year’s earnings.

Where do you start?

First off, understand the “total” market-share opportunity. For example, if your company earns $10 million in sales in a market that consists of $100 million in total annual industry sales, then growing market share is somewhat simple. You hold only a 10% market share. There is a significant market-share growth opportunity of $90 million. Moving from a 10% market share to a 15% market share is plausible because of the tremendous upside and the potential that many of these competitors may not try to counter your advertising plan.

Conversely, if your company earns $10 million in sales and the total market industry sales are $15 million, it may be much more difficult to grow since all of the competition combined holds a very small percentage of market share and the cost of growing incrementally may outweigh the cost of advertising. It just so happens, however, that most companies fall into the former category.

How can you take this same $10 million company’s profits up in a down-tracking market?

If a company’s current ad plan consists of newspaper, radio and direct mail in equal percentages and you shift those dollars to a television- and Web-based plan, the company’s actual ad dollar would increase in buying power 500% in almost any U.S. TV market.

Its ad dollar would buy five times as much impact as in the prior media plan because the efficiencies of broadcast TV married with the Internet simply cannot be matched.

Now let’s assume the market opportunity is down 25% from last year, and let’s further assume that consumers are 25% less likely to buy now because of economic concerns. If these factors exist, then launching the same media plan as last year is doomed to failure.

It takes bold and decisive action to compensate for a down-tracking market with a hesitant buyer. It takes a threefold to fivefold increase in impact to overwhelm the negative factors working against your campaign.

We have auto, furniture and home service clients that are up 10%, 20% or even 30% in profits today because they took the steps to make these media shifts last year when the marketplace was already cooling. They eliminated wasted ad dollars on niche media and instead looked at raw buying power on a cost-per-thousand basis. This year they are enjoying the benefits of their foresight.

What can be done to build share in a down market?

Be original. Your television creative look needs to have its own texture and style. Having the same look as your competition is a sure way to be perceived as wallpaper in the world of television. Take a chance, be a little clever, daring and different, and the viewer will come right along with you.

Examine your TV buys. Look for cases where you drifted from the proven basics of adequate reach and frequency. In days where less has to buy more, having too many programs or too many TV stations on a buy can severely hamper your sales results.

Only advertise high-demand products or services. Some managers want to build sales volume on slow-moving products or services, so they will ask us to promote these lines exclusively. This is not recommended, since promoting an unpopular product or service in a slow economic window can actually reduce your sales and profits. Appearing as if you sell only the worst choices is not a desirable niche in your market. Go with the popular options and promote yourself as the first-choice destination for them.

Watch the competition for weaknesses. I recently met with a client who had followed our recommendations perfectly for the last two years. As a result, he exceeded last year’s profits, his market share is growing by the month and he has been able to increase his prices. Why? Because as he was moving his direct-mail and radio dollars to TV and the Web last year, his competition was simply cutting ad budgets.

As competitors were reducing their market impact, he was increasing his by 500%. A competitor called him and offered to sell his business to my client, telling my client, “I see your ads everywhere I look.” Little did this competitor know that my client’s cost of advertising is lower than last year; it’s just that the impact is so much greater.

Ask for the business. Including a sense of urgency in your TV commercial is one of the most important components, yet many advertisers overlook this major element. For example, if you advertise to a marketplace and don’t have a deadline in your commercial, aren’t you just selling for your competition? Always ask for the order in your commercials. Case in point: Some recent political ads didn’t even clearly ask viewers to vote for the candidate featured in the commercials. How do these things get missed?

Offer a real value. Now is not a wise time to cut price. Improving margins is critical in a down market. Now is the time for innovative merchandising and cross-selling. Banks do this by offering free checking with a CD purchase. Furniture stores offer a free mattress with the purchase of a bedroom set.

It has not ever been about price, it’s always about value, and Americans are the world’s best at spotting deals in any economy.

Adam Armbruster is a senior partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Co. He can be reached at adam@esacompany.com or 941-928-7192.