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Retooling Ad Plan Can Build Results

Oct 7, 2007  •  Post A Comment

Home service companies are spending a lot of time these days trying to come up with ways to beat the negative effect that the downturn in local real estate sales has had on their business.
Since Americans tend to fix up their homes before selling them and moving, and sales are down, these home improvement and home contracting companies have been calling us to ask how they can redesign their marketing plan to include television and Internet advertising.
If there has ever been a truism in marketing, it’s that when the available market share decreases, your ad plan needs to increase. Increasing your plan does not mean spending more, it means that your plan must get much more cost-efficient, making the same ad budget work harder.
For example, in Florida the real estate market is down anywhere from 30 percent to 50 percent. Most home contractors are seeing double-digit declines in traffic as well.
Believe me, when a business owner is sitting in front of you and telling you that his sales are down by double digits and that his ad budget has increased 50 percent, it is truly time for drastic action.
As we have stated before, achieving client growth in an expanding economy is easy, since the marketplace takes business forward. However, achieving growth in a retracting economy is a demonstration of real marketing prowess.
Businesses caught in a down market have two choices: Either they can wait out the market until it regains momentum, or they can examine their ad plan for weaknesses and replace weak media with a more efficient marketing model.
The first thing we say to the business owner is, “Are you prepared to do what it takes to get your business moving again?” We ask this because when you move into television and Web marketing, everything changes, from how the campaign is designed all the way to how it is measured.
We then ask if the business owner is ready to be flexible enough to adapt to local market conditions. This is to make sure the business owner is realistic about market factors and is not in denial about where the market is in regards to price and value. (Real estate salespeople spend a great amount of time negotiating the listing price of their client’s home; you simply must “price to market” and not just “market a price.”)
Next we look over the client’s ad plan for media they have outgrown. These can include niche magazines, local newspapers and other small-audience media. These media are simply not powerful enough to pull a client forward in a down-trending economy, and keeping these media in the plan will continue to bring the same poor results.
Our firm employs the use of disciplined broadcast television on a local level since the resulting low cost per thousand prices make a lot of bang for the home service client buck.
Lately we have been seeing a lot of Yellow Pages advertisers seeking an alternative to the books. Since Yellow Pages usage is down dramatically over the last 10 years, it’s clear that consumers are beginning to use Google and Yahoo as well as local television Web sites as local search engines, for the simple reason that the data found online is fresher. Phone numbers still work, companies are still in business and the consumer can instantly click over to the business’s Web site for even more information.
We recently worked with a large residential electrical company that wanted to grow sales in a down housing market. This client needed a 20 percent increase in sales just to maintain the previous year’s profit margin. Clearly some bold action was needed.
We first examined his media plan and found it to be very heavy in Yellow Pages directories and in direct mail. In the past those two media had worked well together.
But over the last five years, his direct-mail response rate has dipped from a 2 percent return to a 0.02 percent return rate. And his Yellow Pages ads were drawing only “price” shoppers who wanted quotes on the phone and did not seem to be serious about having work performed. In short, the owner of the business felt his Yellow Pages ads were being used by consumers to cross-shop his competition and the ads did not effectively distinguish his business in the mind of a consumer.
Surprisingly, despite the slide in direct-mail response rates, our client was increasing his spending in direct mail. Some clients do this. They will throw money at their current ad plan, expecting it to work harder and thereby generate more customers. This is a fallacy. If a media plan is outdated or poorly designed, it will not keep up with the marketplace.
We then moved to examine the current media plan from a cost perspective. When we broke down the CPM analysis, it turned out he was spending $600 for every 1,000 homes reached. Few regional businesses can afford to spend anything close to this high a CPM and still expect to make money. Further, when we structured a television and Web plan, the cost per thousand came in at $25.
By moving to television and Web marketing, the owner of the business was saving so much in customer reach costs that he literally was putting $575 back in his pocket with every 1,000 TV viewers he bought.
We launched the plan and within six months, sales were up 40 percent in his TV advertising markets. He is now considering doubling his local broadcast television plan for 2008, since he expects home sales to be even or down from 2007 levels.
When I asked the president of the company what he liked about TV advertising, he said, “My competition is still advertising in the Yellow Pages … I am on television … who do you think will get the phone calls?”
Creating success for a midsized business in a declining real estate market is not difficult. But getting a client to set his mind to take action can be very challenging. As one of my mentors said, “Some people won’t reach for a lifeboat until the water level reaches their chin.”
Some business owners will delay taking action when their market declines. It’s our responsibility to help business owners understand the tactics to use in a non-growth economic scenario.
Television campaigns that are boldly executed draw the attention of consumers no matter what the market conditions are like. So next time your client complains about a weaker economy, help him by finding the weaknesses in his marketing plan. It’s the fastest way to improve profits.
Adam Armbruster is a 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.
Source: Kelsey Research

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