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How to Market Pharmaceuticals

October 16, 2013

I’m twenty-five. It’s early mid-morning. I’m wearing a tweed jacket, grey flannel trousers, brogues. It’s the mid eighties, after all. I arrive on time. I’ve even combed my hair, God rest its soul.

I sit there patiently. I read through a Women’s Weekly. A No Idea. A BRW. I can remember Alan Bond’s face was on the cover. I’m warming a seat for a good 40 minutes.

Mr Bowll? I look up. “Doctor will see you now. Do you have your Medicare card? I forgot to take the number before.”

I’m ushered into a tiny office. There’s posters on the wall of skeletons, of blood flows. Charts showing what you should eat. Who could live on that much cereal and that little meat, I ask you? The desk is tidy. But covered in pads for prescriptions, for notes, all emblazoned with the brand of a pain killer, a beta blocker, an anti-inflamatory, Brufen I think.

He comes in, not that much older than me. May-be 35. Looks at his watch. Crosses his arms. “Right you’ve got ten minutes. Do your song and dance.”

Understand this is the first market research interview I‘ve ever tried with a Doctor. He’s been written to. I’ve had someone ring his receptionist and word him up about how important this is. He’s even charging me for the time on the bulk-billing scheme. Still, he couldn’t have been ruder. Wouldn’t complete the interview (only two questions to go) which made the whole thing pointless; throws out all of the other statistics. I was at minute 10 when he put down his glasses and said he had a clashing appointment. There was no-one in reception, I could see through the glass window in the door.

The culture lives for humiliation

This is what Phamaceutical companies have to put up with every day of the week.

Humiliation is the life of the drug rep. If you can survive this, you may get to be a product manager and one day a marketing manager in Phamaceuticals and the rest of this article will be useful, perhaps.

I’m told it’s getting worse, not better for the Pharmacy rep, at the bottom of the industry ladder. That the Doctors make them buy morning tea; cakes, focacias, coffee, the whole she-bang. Three of them in the surgery kitchen and they give you five minutes. And keep talking about their week-ends while you’re mid speech.

Here you are, knowing that your career depends on convincing some 20,000 doctors in OZ to prescribe your drug when they see certain symptoms, often hard to detect, often confusing. (When is a sweaty palm a sign of a fever, when is it part of a heart attack?) And the ‘market’ doesn’t want to know? No, I take that back. I don’t believe they don’t want to know. The ‘market’, doctors, simply don’t have the time. It’s because they are underpaid, due to down-ward pressure from politicians, so they need to squeeze in as many appointments as they can to keep the office turning over, which means they can spend scant time on your drug and your sales people’s presentations, and just as little time considering what a patient is presenting with.

Big, Profitable companies

Pharmaceutical companies do however manage to struggle through this problem relationship with Doctors with flying colors. Of the six or so biggest companies in the world, three are Pharmaceutical ones. Why? Because a patented cure for a common disease afflicting the planet’s population is intensely profitable.

Why so profitable? Because you can buy the chemicals by the tonne for say a few hundred dollars. A typical formula means you mix chemical A with C and Z, cook them for a few minutes then add a drying agent and put it into pills. Within minutes you’ve taken commodity inputs worth only several hundred dollars a tonne to outputs worth thousands or hundreds of thousands of dollars a kilo.

Price big issue

Price is becoming a real hot potato; getting to the tricky stage. The patents system and its monopoly effect has to really come in to question when you consider pharmaceuticals. As is discussed in web chat rooms across the globe, why not a special arrangement for them? Say 20 years? How can you justify a longer payback period when the profits are so huge and the need so great, the suffering so widespread. But them again, do we really want the third world to be much healthier? Do we want a grossly over-populated world?

It’s interesting to note Merck, big US based manufacturer, after a lot of political pressure, recently agreed to reduce prices for African AIDS sufferers. To one tenth the price of the same drugs selling in the USA. (eg. Crixivan from $6,016 per patient annum US  to $600 per patient annum for Africa. Stockin from $4,730 to $500 p.a per African.) Which demonstrates beyond doubt to everyone the margins being made.

Greed may be good for some, but the African’s making their own AIDS drugs is just the start. What will the industry do if poor countries go wholesale into knock-off drugs? The technology is on the web. How can you stop them? How can you stop them selling drugs back to the West? Think about pirated CDs. You can only make it not worth their while by sensible pricing.

System Out of Date

Couple the above with an antiquated, class-based system in the West, which is designed to keep the doctors in clover by insisting many drugs must be made available only by prescriptions, so you are forced to see your ‘family’ doctor, for anything. He/she always gets their slice, even for the umpteenth repeat of a standard drug with no known side effects. (Ignoring the value of the peasant’s, sorry, patient’s time or any other relevant efficiencies.)

As a marketer, I’m on a knife-edge here. I don’t know whether to laugh, cry or take a pill. I see an extremely efficient money-making machine, and I’m suggesting price control. Shame on me. I’m seeing an extremely inefficient health system, being rorted by its suppliers, and I’m suggesting wholesale reform. If someone suggested making advertising more efficient, I’d be furious.

But I still feel sorry for the Pharmacy companies. They are in the main producing things that make our lives less painful and often way longer. And so are Doctors.

But the Doctors hold a status position in our society which flies in the face of their often appalling day to day behavior. Doctors are in the main spoiled, sexist, big headed, schoolboys. Bright schoolboys who’ve never had to learn to deal with grown-ups. They’ve gone from school to uni to hospital to surgery; all closeted environments designed to keep their ‘important’ brains focused on saving lives – and away from the distractions of the real world. Almost none of them have had a job where they were not the center of attention. So they behave badly. In no other business can you be so rude to your customers and get away with it.

And they also do it because they are time-pressured and bored at the same time.

I think it’s a terrible waste that we have some of the smartest people in the country spending the bulk of their careers dolling out prescriptions for antibiotics all day. Wouldn’t we be better to put other folk in that role and get the really bright ones working in more productive occupations? I think this sheer boredom leads to mistakes, how can you care if you’ve seen it all before too many times to count?

Human Failings

Yes, I do need a Doctor occasionally, and I’m grateful when I find a friendly one. But I’d rather be using a computer into which I could punch my symptoms and get an accurate analysis, (like the program Medical Director) than pay a doctor to do precisely the same thing at $45.00 a ten minute session. Why? Not because of the money, but because of inaccuracies. I have little faith in doctors. For good reason.

Doctors are people, regardless of how they see themselves. As humans, even with the checks in place, they are capable of making mistakes. And they frequently do. There are some 1500 drugs available on the PBS list. They can’t know them all. They can’t get the ratios right, for body weight and age etc., with them all.

Deadly Repercussions

The Society of Hospital Pharmacists put out a report the other day that indicates 5.63% of prescriptions (more than one in 20) have to be changed because they were plain written wrong by the Doctor. (Keep in mind this is Hospitals, staffed by young doctors, under incredible time-pressure and usually exhausted by ridiculously long working hours. I’m not saying these stats run across the board.) In 36% of those changed, the adjustment was to decrease the potential adverse effects of the medicines prescribed. In a staggering 16% it was to ‘reduce morbidity or mortality.” An independent review panel, worried about the results, found 1.1% percent of prescriptions would have killed the recipient. One in a hundred? I’ve probably been to the doctor a hundred times over the last 45 years. When is it my turn? Much sooner if the wrong one reads this article.


How do you market Pharmaceuticals?

First, get your focus right

As a marketer of Pharmaceutical or biotechnology in this country, you are essentially in the business of educating doctors, (dentists and vets for that matter) pharmacists and nursing staff about the purpose, use and complications associated with your products. It’s getting through the clutter that’s hard. But that’s why you hire creatives, like Starship, isn’t it?

Get your wonder drug

Find a good, constant human problem, like diet-induced diabetes or sex induced AIDS, work out how much it can pay by multiplying population by affliction rates by affordability etc. Got anything that might relieve part of that problem? Worth a couple of million punted on a couple of billion return? Yep, let’s do the final tests/ research…. (It’s a real boon if you can find another use for something you already have in the larder, like Carvedilol an old Beta Blocker, re-launched by Glaxo Smith Klein as a Conjunctive Heart Failure treatment.)

Do your tests

Work with the leading experts in a couple of countries to ensure there’s no culture cringe. (Humans, except for some genetic-related problems, such as cardiovascular, usually respond similarly when they present similarly, no matter which country, but the Poms rarely believe the French, the Chinese distrust the Yanks). Make very sure you get results that are statistically accurate. I’m talking thousands, not hundreds. Even if your drug only works in 20% of cases and has to be used in conjunction with someone else’s, if the trials are accurate and the results indisputable, the money is there for years.

Get your write-ups

Because you’ve obviously been working with people who can get a write-up in The Lancet or the Australian Medical Journal, this shouldn’t be hard, but it’s best if the paper is presented at a world-conference, making it inarguable news. Especially if you’ve had the TV crews and the newspaper journo’s attend.

Get your PBS registration

Funding via whichever country you are operating in is usually the biggest hurdle (after scientific discovery of course). Hire good lobbyists. Be extremely careful not to look like you are trying to influence too much.

Run your conferences

The ‘sexy’ issues are currently Aged Care, Degenerative Diseases, and Mental Health. Reflecting an ageing population, dare I say it for cash-flow reasons? Again  for cash-flow, ‘alternatives’ are also a very sexy topic. Alternative medicines/practices now account for way over 30% of the medical spend in Australia. (Doctors are looking at the hippies down the street sticking pins into people, or massaging their feet and scratching their heads saying “How can I get a slice of that action?”.)

Public Relations

It’s a funny balance you need to make between really upsetting the Doctors by too much hype and still pushing them over the line with it. Too much and they’ll look for an alternative just to spite you. So steer away from Today Tonight, but try to get a mention, depending on the subject, on shows like George Negus’s men’s health program on the ABC, or on 3LO in the mornings etc. Just the right balance of media choice and presenter is important to add credibility, boost awareness and get the patients asking….

Websites

The Pharmaceutical companies have very in-depth web operations. Often all of their hundreds of products have their own site (see Bristol Myers Squibb’s site) – pages upon pages of scientific analysis, contra-indications etc. Doctors use the web more and more to run their practices; the web is living up to it’s promise of being the information hub of this industry.

Magazines

The best place to get frequency of exposure for a drug is still magazines. They are reading it, they can’t miss the ad. There are literally hundreds of magazines you could place ads in. From high-coverage, more expensive ones like The Journal of the Australian Medical Association, to obscure ones with a specialized focus and following, like Opthamology Times. And many of your targets read the international mags, like The British Medical Journal and the Journal of American Medical Association. If you’re a global business, it’s often cost effective to use these.

But do decent, thought-provoking, memorable ads will you? Bad puns and irrelevant images are so common in this industry it’s simply embarrassing. They come from weak briefs and badly trained creatives. I blame the incest-like relationship between the claimed specialist ad agencies and their clients. If you haven’t seen anything good for ages, would you wonder if anything better was possible?

Direct Mail

If you are going to get past the reception filter, you better have something in it that is either funny or very ‘important’ like a big move forward in efficacy. But it’s best if it’s so funny it goes on their wall for a month or two.

As they only get about one piece relevant to medicine a day, and most of them are boring, there’s real scope to work this vehicle. I get about 10 pieces a day from relevant sources. The average Journo about 57 according to a recent study by the Financial Review – surely the Doctors can probably cope with a lot more than one? Pharmacists are a bit busier with 2 or 3 a day, but this is obviously an area under worked by the industry.

Don’t forget to work staff as well as doctors. The receptionist and nurses are powerful influencers. And keep in mind the hierarchy. The head of practice wants to be seen as more important than the junior partner doctor….

Hire/Train Your Reps Well

If your people are going to be at the coal-face, treat them with the respect they deserve. Give them a great answer to every hairy question and more background information than any doctor they are ever going to meet. Make sure you hire bright, qualified reps (Degree Nurses, Marketing Grads). Dummies will be cut to bits. Good looking with it, if you want them to be seen for a second time.


Presentation tools; power point etc.

Nothing more powerful in a meeting than a quick, to-the-point presentation so your troops don’t have to appear to be doing the hard sell. Rarer than it should be. It’s just murder getting the meetings and being humiliated…

Reminder toys etc.

All the Doctors I interviewed for this article complained about the poor standard of current give-aways. They hate pens, caps, pads and dinky stuff. They want scales or disposable gloves or something else that’s practical. Reception and the front office are as important as the surgery. Phones, charts, reminder stickers, patient’s details pads, credit card machines, etc. If they are useful they’ll hang around, pushing your product.

Print/Brochures etc.

Print is still the vehicle most companies put major effort into, for good reason. It hangs around in the filing cabinets. It can be handed across the desk during a consultation. The market believes it is scientific, so it responds well to scientific-looking information, close typed, long-winded. But it is also very influenced by emotion. They are after all only human, so where you aim ostensibly at the patient, remember all the Doctors have to read the brochures, as well as the PI. (Prescribing Indicators.), because the patient is very likely to ask how to pronounce something on page four…What I’m saying is go for the dramatic issues in the glossy stuff, that you know they will read (the Doctors apparently love the little 3-4 page mini-magazines people are doing at the moment) and back it up with ugly badly type-set stuff to make the whole thing seem ‘scientifically’ more credible.

Career?

Should you contemplate Pharmaceuticals as a career? Yes. Pharmaceuticals are a great industry for a clever marketer – they’ll understand your scientific approach, your desire for best practice. And they have the money to make your projects really sing.

But it’s a complicated market. On the one hand, such important causes. On the other, gross inefficiency. I have to say, it was hard to decide what to say in this article. The scientific market researcher in me said, tell it like it was said to you. And what have I done in the process? I’ve alienated every Doctor and Pharmacy company I might ever contemplate going near. But the article is due. And it’s almost time I let a media rep buy my morning tea…

How to do the right thing – On Ethics in Advertising and Marketing

October 16, 2013

It’s 7.50 am, I’m watching the box for the weather, the ads come on. A cute looking guy (editor has deleted his name, as we might get sued) with blue eyes, thick black hair and a square jaw (I think he had a cooking show once) is walking through a farmers market. He says this is where you get the freshest products. He walks past fruit and vegie stalls and gets to the fish. He says fresh is best. Then he holds up a tin of canned Tuna and says that this brand is best cause they can the Tuna when it’s fresh. Then he says it’s gourmet quality. This is rubbish. Gourmet quality Tuna is so fresh, it’s still kicking. You don’t get gourmet out of a can and you don’t get fresh out of a can. Canning is a preserving process (I’m not against canning – it’s the most cost-effective, chemical-free way to preserve food). It’s a long way from fresh. It is the antithesis of fresh.

This kind of bullshitting is why we marketers have a poor image. What has this cooking guy done? Proven he’s no authority on freshness or for that matter on gourmet food, just a pretty face easily bought. What does this do for the public? It has misled them. Yes, the lawyers could argue it’s legally sound, as he doesn’t actually say it’s fresh Tuna, just freshly canned Tuna, but this article is about doing the right thing and splitting hairs for the sake of pulling the wool over the eyes of the public, is not doing the right thing.

I confess last month I had a nice time getting my evil twin to write an article about being a bastard in business. I felt good about it, like when you go out with the boys and get totally smashed cause you have a) just turned 30 b) have just inherited your great uncle’s fortune c) just had the divorce papers through or d) haven’t had a night off from the family in six months.

But like drinking until the wee hours, it isn’t a sustainable way of life, being a bastard. It catches up with you, and like going out on the town, it leaves a bad taste in your mouth the next morning. Call it guilt, call it regret. Yes, we have it in us, but we can’t survive if we treat others with contempt. The world is a small place and nasty stuff comes back to haunt you, call it Karma.

But it’s hard, no, impossible to do the right thing all the time. We are simply humans and we make mistakes, change our minds, react to circumstances. We do some things properly, nicely, then on the same day, perhaps because we’ve had one too many coffees, or some body has annoyed us, we turn like a snake and stab some poor bugger who’s only sin is to cross our path from the wrong direction.

For me to assume you don’t know how to do the right thing and need to be told is also quite rude. I am doing the wrong thing right here and now. But it is interesting isn’t it? On the one hand, we all think we know what is the right or wrong thing to do. We all think we do the right thing almost all of the time.

Now here’s the rub, the fact is that the companies we work for don’t and we know the customers out there, the buying public, think we don’t either. The punters are continually complaining about service, about pricing, and most importantly about attitude.

For example, the company entrusted with running Victoria’s toll highway system, Centrelink. You get billed by Centrelink before they’ve even used all your money in their account. Centrelink writes you a dirty letter saying your account is below their threshold amount of $20.00. And they threaten to fine you if you don’t top up your account. What kind of public servant negotiated a deal where a private (overseas owned) company can impose fines?

Centrelink have an attitude. And the attitude is, we have the roads, we have the legislation in place, we have the power to fine you, so you, Miss Customer, can get stuffed. This is not the way marketers are taught to behave and reflects an appalling cultural divide between their overseas management and us Australians.

Is it the right thing as seen by their overseas bosses? Is it OK because they have values like sewer rats, to enforce those values because you work for them? (This is known as the ‘Nuremberg excuse’ the guys being tried at Nuremberg after WW2, for war crimes like gassing innocent children, said they were only following orders. That ‘excuse’ got them hung.)

Is the right thing a moving feast? Is it a perceptual issue? Does this subject come down to heavyweight philosophical arguments like what is truth, what is justice or what is the right thing? Is it all just where you sit, what your benefit is, what you feel? Is the alien eating human flesh a killer or just a hungry endangered predator with a perfect right to a feed?



Some thoughts about Ethics

Business is often unfair

This gets really tricky when you consider the average business. To pay wages and phone bills, the average business has to make a dollar. Sounds simple enough. But to do this by definition most of us buy stuff for one price (be that people in the form of wages or widgets for that matter) and sell it for another, thus making a profit, which goes to pay those costs. The buyer wants the price lower so he’s got more money. The seller wants the price higher so she’s got more money. If the price goes one way or the other one of the two parties thinks they have not been the recipient of ‘the right thing’.

Judge on what they do

I’m a big believer in judging people not on what they say but on what they do for you. I’m also a big believer in doing the right thing by people and not having to explain why it is, which often gets me in trouble in this shallow, ‘slap me in the face if you want my attention’ era.

You don’t have to say it

Really good people rarely need to talk about what they are doing, as it’s self-evident. The ones you have to watch are the ones who tell you they are doing the right thing. Cause they probably aren’t.

Use charm, humour

I believe in being charming. I’m not sure if I ever am, I think I’m more like one of those guys you see after he’s just been to a James Bond Movie. Saying ‘Vodka Martini. Dry. Shaken, not stirred.’ in a deep voice. I think I’m being amusing but I’m probably just a hair away from completely gross. Never the less, humour goes a long way if you are dealing with others. And being polite doesn’t mean being obsequious. You get more power, rather than less, with the sensitive use of manners.

Don’t lie

I know the world thinks we were employed because we’re better bullshitters than the next guy, but the fact is the public ain’t stupid. They don’t buy from liars more than once. Why call yourself ‘All Natural’ when you’re not? Or ‘Convenient’ when you’re harder to open? Better to find a good USP or a decent convenience factor or whatever angle, than lie. Everything should have a reason to be, and if it doesn’t, stop trying to sell it.

Churning

The most despicable concept in marketing & management today is the concept of churning. The deliberate acceptance that you will piss off customers at a certain rate and who cares? This flies in the face of all other marketing practises and is an acknowledgement that short-term money matters more than long-term customer relationships. Do the right thing by us all. Sack the churners.

Sustainable Pricing

Try this. Have your pricing low enough to discourage competitors from entering, so you can maintain a bigger customer base and become the market leader. It’s a mature, big thinker way to go and is so much more dignified than the sort of circus act the petrol companies force their poor little franchisees to perform each week. Lowering prices on Monday/Tuesday then marching out there with bigger numbers on Thursday and over the week-end. The public know petrol prices don’t vary that much. We hear the price of a barrel of oil on the news every day. They look like greedy school kids trying to grab an extra lolly.

Timing matters

With everything from fashion to food to sex, it’s when you do things that makes all the difference.

Stick to agreements

There’s a type who accepts a party invitation, then gets a better offer, and wavers. As a person, you are your word. In a more serious context, if you agree to a deal in business, like say taking 20 ads at $20,000, if you renege after email sign off, you don’t deserve another chance. You may get another deal, but you won’t get the really sexy deal for the next 20 spots cause you’ve been a prick before.

Do small things first

Like with food and sex, do small things first and test the waters. Give people a little job and see if they respond well. If they can’t be trusted to do the right thing, you’re only risking a small amount. If they are a bad kisser, it’s better to know it than spend a whole night trying to get their tongue out of your throat.

Take the blame

The best advice a PR firm ever gave a client of mine was to take the blame. Once you’ve accepted your people stuffed up, there’s nowhere for the other guys to go.

Ethics and Fairness

Is like sharing a bag of lollies in the kinder yard, when every one gets an equal amount. If it wouldn’t make you happy on the receiving end, it isn’t fair. Fairness is a tricky one, though. When UN choppers drop food portions over Somalian villages, does every villager receive an equal portion? Should they? Should a starving child be given more water than a stronger adult who could probably hang out till the next food drop a week later? What if that adult has 3 or 4 kids she needs to feed in the grass hut over the hill? Does it come down to who needs it more or who wants it more? Nothing in this world is equal; fair is in the eye of the beholder, a richer man can afford to be fair, a poorer man often has to be greedy. Then again, in our society, it’s often the rich who are greedy, and is why they are rich; Toorak’s Safeways is cheaper than Footscray’s for a reason.

Manners

Good manners makes the world like you. Good manners begin with acknowledging others and their needs, like opening the door for the courier with his arms full, letting the other car out of the side street when you’re stuck in traffic. Making others coffee. Most of us know what is acceptable by osmosis. For the stupid ones reading this, while behaviour that is acceptable moves with the times, the best test is to carefully watch the reaction of those around you to other’s behaviour, then copy what works.

Respect

Even if you don’t like them, most people deserve respect (that’s listening to them, doing what they want sometimes) or they shouldn’t be working with you. If you feel you can’t work with them it’s most likely your fault, your perceptions.

Honesty

This is not a moving feast. Tell things in the most frank and basic way you can. Do things as directly as you can. But don’t take this to extremes. If your wife asks if her bum looks big in this dress, it’s a very grey area. If you’re honest, you could be on the couch for a few nights. If you’re not honest, she may someday see those photos of the party she was at, and hate you forever.

Freedom

Allow others the opportunity to succeed on their own terms. Motivation often comes from the belief that what you are doing is actually contributing to the project/world.

What’s The Thing?

In the office. Wipe the pee off the floor in the loos if you find a yellow puddle on the tiles. Don’t ignore the dishes, they won’t clean themselves. Download your porn at home and don’t call private mobiles from work unless you have no choice. Don’t steal stationary. Tomorrow you’ll need that stapler too. Resist temptation in the work place; don’t dip your pen in the office ink. (A submission from someone in my office, I wonder who he/she was thinking about?) And please don’t bad mouth your boss. There’s no-one less deserving than a person who works for someone they don’t respect. If you really don’t like your boss, move.

Right – it’s about me.

Doing the right thing is all about how others see you, and more importantly it’s about you being proud of yourself, instead of feeling guilty. It’s not about always winning. It’s about team work. All companies are just teams for making a living.

Be the one they love

Be the marketing manager the rest of the company cares about. Be the one the public loves the company for. Who makes the place seem bullet-proof. Who uses charm, humour, steely-eyed strength, great ideas and good, solid logic to make the place a success and your customers loyal, your suppliers happy. Be the girl, who when she leaves, they wonder what they are going to do and consider closing the show. Be the hero. It’s not an impossible task and it will make you feel great about spending those years studying and working like a dog to get where you are now. And you’ll sleep better, too.


Business Relationships – The Right Things

  • Always call people back. That sales will be a client one day.
  • Don’t take on conflicting clients. And lying about two sister companies not discussing issues is just so paper thin. Isn’t it George Patts/Campaign Palace?
  • Turn up to meetings on time – their time is as valuable as yours.
  • Listen. “Kerry Packer never read; he just surrounded himself and listened to those who did (James Packer, at his Dad’s funeral).
  • Treat everyone as an equal – this is an Australian rule worth defending. It reflects the fact that in our free society people often move rank, up or down. So we avoid assuming either servitude or superiority.
  • Talk about behaviour not personality. Don’t assume you know a person, just refer to what you’ve witnessed.
  • Offer constructive criticism in private, a public execution is demeaning.
  • Keep things humorous. There’s no excuse for boring people.
  • Don’t air your dirty laundry in the office.
  • Don’t be precious of your ideas – there’s nothing original it’s just you haven’t heard it before.

World Relationships – The Right Things

  • Tax deductible childcare (ask any parent who works)
  • Separation of Church from State (listen you fanatical jerks)
  • Assist diversification of media ownership (if you want a free society)
  • Support flexible work hours (if retailers are to survive)
  • Reduce third world debt (they’d win more medals at Games if they could afford food)
  • Respect other’s cultures (Coke & Maccas are not needed by all)
  • Save the wild fish – eat aquaculture only
  • Stop irrigation of rice and cotton – let the Rivers run
  • Unshackle the legal system from money (give the poor a chance)
  • Repeal one law for each created (we can’t keep up with them now)
  • Stop logging old growth forests (use only sustainable timber)
  • Re-use, re-cycle, reduce (creating landfill is just hiding poisons)
  • Respect copyright (if you didn’t think of it, it’s not yours)
  • Support the TPA (small businesses need fair rules)

Hardware Heaven – How to advertise Hardware Products

October 16, 2013

I’ve got the remote in my hand. Glass in the other. First time I’ve sat down all day. I’m surfing the channels for something to take my mind off that which I can’t control. Like Iraq, Israel vs. Palestine, the higher Australian dollar and pointy shoes that ruin women’s feet.

On comes one of the building shows. I’m not sure which one. (Renovation Rescue, The Block, Backyard Blitz, House and Wife Swap?) They all look pretty much the same. Butch guys in truckie tops laughing while trolleying trees into a backyard, girl in tight shorts and halter top leaning forward to paint a bookcase. I sit back, appreciate the crassness of Aussie cameramen, and learn.

I learn how to make a coffee table, how to make a garden seat, how to make a healthy, low fat, high fibre lunch and how to knock out a wall, safely, without the roof falling in. How to, how to, how to.

My kids like one of the ideas. “That’d be great in the backyard Dad.”

Three days later I find myself at Bunnings, buying. (I’ve spent about an hour walking up and down aisles of items. I’m told there’s some 15,000 in a Bunnings.) While I stand in the queue looking down at the $400 odd worth of gear I’ve got in my trolley, I look up to the sky. I close my eyes and say a little prayer to the great God ‘Television’.

I think about the selling power of television. The motivating, educating, ‘it’s so easy to do’ role that these TV shows play in our society. How the Do It Yourself TV shows are driving the Australian economy better than any interest rate toying by the Reserve Bank. Yes, they may all be similar, and some may be floundering this rating season, but I’m pretty convinced that these DIY shows are keeping the economy on the boil.

The funny side of these ‘reality’ shows (Don’t make out it’s reality – have you ever tried to renovate a room? Two days? You’d need 10 people!), call me a complete bastard, is the highest rate of injuries in the holidays ever – people putting nails through their finger nails, drill bits through their soft bits.

I can’t wait for the funniest home videos to get onto the screen – Dad up the ladder. Dad plugging in saw. Dad electrocuting himself. Mum trying to resuscitate. Gives mouth to mouth. Kids ringing the ambulance for both.

But they are not cheap. Not cheap to make with all those staff, and definitely not cheap to buy space on. Some advertisers are paying a million or more to be the key sponsor. Their 30 seconders are at the peak rate the stations dare charge. Their product placement charges are outrageous. But the que to be a product mentioned, used, is growing faster than the values of the houses they help us fix.

And what is it they sell? Hardware.

It’s not food, finance or I.T. that has their marketing act truly together in this country. It’s hardware. Simple, humble, bumbling-along hardware. What other industry has 10 or so shows about itself on TV? Heaps of magazines connected to those shows? What industry has the power to laugh in the face of the Reserve Bank? Hardware. God I love it.

Why is Hardware so interesting?

From a professional marketers perspective, hardware has a lot going for it. Especially as a career step. Most players don’t have real marketers in the traditional product management/marketing manager roles. They are often sales guys who’ve moved up, or builders who’ve moved down, if you know what I mean. Hardware companies are often miles behind HVPG or IT, so you could find a real opportunity taking them kicking and screaming into 2004.

But it won’t be that easy. It’s a cultural thing. If you’re a female, you may not stand a chance for a real job in a lot of these companies. They are often a touch old-fashioned, and plain sexist, reflecting the original customer as tradesmen. It’s a man’s world.

Even though many players are a bit backward in marketing theory and business culture, hardware is at the leading edge of technology. I defy you to walk into a big hardware store and not find a new invention. I do it weekly. I’m renovating two houses and one very expensive office and it’s all I spend money on. I can’t even afford a new T-shirt because all my money goes on tubes of no-more-gaps, cans of paint and packets of drill bits that I’m always breaking.

The hardware industry is worth about $20 billion per annum and according to Hardware Journal, about three quarters of that goes into the DIY market. That’s a heck of a lot of paint and screws.

And it’s a very competitive market. There are a number of established players in most of the big areas, like paint, electric tools, plastic piping and sealants. Many of the markets require large investments in capital equipment and good manufacturing operations, and many rely on off-shore manufacturers.

In retail competition is rife – and it’s getting tighter. The small guys are putting up a good rear-end fight, but being constantly wiped by the big players. Whenever a category killer opens up, it’s usually only a matter of time for the smaller players in that area. The discounting/buying chains of Home, Thrifty Link, Mitre 10 etc, are struggling against the colossus of Bunnings, rolling across the outer suburbs like a tropical cyclone, flooding the homes of the freshly married with everything their little imaginations can remember from last night’s show.

Big stores arguably account for half of the business and are getting to the stage where they carry everything. I’ve seen video cameras, I already buy lollies, (Mars had a stand at the recent National Hardware Show in Melbourne) I’m waiting for band aids, panadol… Meaning they are touching at the edge of other category killers, like supermarkets.

I can see huge stores in outer suburbs one day where you would go in to get everything – meals, drugs, tools, flowers and clothes. Why have Bunnings, Office Works, Target, Amcal and Coles when you could just have BOTAC?

What should a Hardware operator do?

Ask, who is your customer?

There’s a strong chance that you have only two distinct customer types. Most hardware players target trades people and the DIYer.

The DIYer is quite likely to fall into several sub-categories. The young renovator (the suckers who buy ‘renovator’s dreams’ – Victorian/Edwardian era, inner suburbs, with rising damp, rotten timber framing, rusted pipes and plaster peeling down the walls) the older ‘professional’ renovator (the ‘Dulux make-over’ specialist – who does no more than apply paint and no-more gaps and makes twice the money for half the effort). The young family needing anything from a pergola to a new toilet cause the kids tried out daddy’s hammer on the last one – happy to get anything that does the job and keeps the kids entertained for the weekend. I could go on and on.

The tradies are much less interesting. If they are not female, and there’s a few that are, they are real blokes in the traditional sense. They do make good money, but they are not that great to marry (they don’t wash up, and have you ever seen a tradie pick up a broom or a vacuum?), mind you they are flexible with their work hours and locations (they may be working in Queensland next week) and some can cook up a treat on a Barbie.

But if you’re a customer, sorry householder needing help, they are hopelessly unreliable because Mum never taught them how to read a calendar or tell the time.

Tradies are reasonably easy to hit with certain media, if you just think through their day, (they listen to the radio all day. They answer their phone for the next gig. One day a week, they check their ad in the local paper) and they are the key influencer on DIY, because, if the pros use it, it must work, thinks the average DIYer. And the tradies do buy a heck of a lot of product for obvious reasons, so you must always aim to be a success with the tradies if you want real market share.

Research customer need/desire

They are often not driven by demand as much as by ‘look what we can do’. Partially it’s a belief that as men sell it, men buy it. So it has to be ‘logical’. Wrong. Women often buy it. (Over 80% of those attending learn-to-do-it nights at major stores are women.) More to the point, the ‘logical’ info is that all sealers are more or less the same chemicals, so you ought to sell only one. That doesn’t stop people buying the silicone window, the silicone roof, the silicone mirror seal…because they buy for job specific and trust you wouldn’t bullshit them.

So things like test markets are a rare thing. Why bother? If they do bother, the test is almost never done on a scientific basis – that is, to do in the test what you would do in a national campaign, on a smaller scale.

Many unknown products

Where you have unfamiliarity with products, you have uncertain purchase decisions and well-known brands rule by default. Even living with that golden rule, few have managed to build brands across a range of markets. Selleys have done it quite well. So have Nylex. And Ryobi. So have … nup, I can’t think of any others. (No doubt they’ll write and tell me off for not mentioning them.) When you compare hardware categories to high volume consumer goods, there’s big gaps in hardware for key brands. If you’ve got a star product in one area, consider rolling it through a bunch of other categories. Sidchrome do tools, why not nails and screws?

Packaging is king

Packaging takes over in most categories because POS is limited (stores can’t spare the space) and markets are often too small to justify mainstream ad campaigns.

Use the shippers for messages

The shippers are often the main display item in the big stores. They are free, large POS. They are cheap to change, being usually only one or two colour. You can change them to reflect your other advertising or make offers that are reinforced on swing tags etc. Almost no-one seems to have worked this out yet.

Do POS – posters/floor posters/gondola ends

Almost no other POS means that in-store promotions really work. You can pick up spontaneous sales. I don’t care if you have to start with a dinky one-man store in Tootgarook, POS in his market works brilliantly and it does rub off as better sales over time. Just track your sales in one store/region and roll it out once the buyers have seen the results go through the till.

Check your pricing

Pricing tends to be a standard retailer call when they can’t think of anything else, which is most of the time. As we all know, price only affects customers when all else is equal, which is, like, never. However, there’s a lot of angst that goes on in the punter’s mind when they pay $3.50 at a small store for something they can get at a big store for $2.00. There’s not much you can do about it if you’re selling to large buyers who demand discounts, but keep in mind that if you only satisfy the big guys with discounts, rebates and other benefits, you won’t have any little guys to offer you an alternative outlet soon. And the big guys don’t actually give a shit if you live or die. Like most major retailers, they are happy to replace your branded line with a house brand in a blink.

If you’re a retailer reading this, do house brands then screw the brand marketer by telling them no-one wants them, delete their stock out of a couple of key stores, in a month tell them you haven’t missed their trade. Get them to make under your house brand. When you have enough sales in that line, take the new ‘brand’ to your opposition and become the key brand in that category. Simple, isn’t it?

Rebates, commissions, and all that stuff

Check the Trade Practises Act. Get your lawyer to look at your plans. Consider your brand as a long-term prospect versus the desperate desire to satisfy the retailer buyer who is usually only bluffing about deleting you – unless you happen not to have a well-known brand. Consider advertising as an alternative to being a house brand next week.

Merchandisers are Mandatory

In all the big stores you have to send in your own people (or contractors) to check stock levels and complete the re-order documentation, so get over it.

Do CRM

Keep their names from warranty cards etc. and convince the drill buyer to get extra sets of bits and batteries and chucks and another drill so they don’t have to change bits during the job and …

Move products around

Take shovels out of the tool section and into the garden section, screw driver sets in the lighting dept – you’ll be amazed at how items sell better away from the competitors.

Do freebies and offer relevant prizes

Everyone loves a freebie, especially in this market. But so many promotions have brain-dead prizes. Trips, golf clubs, esky’s, yawn. If they are buying paint, give them a spray gun or digital camera to photograph it with…make it new and interesting. If it’s sales you want, you need to fire their imagination – it doesn’t have to cost a fortune.

Simple to follow instructions on how to use

Give the DIYer a project and they’ll love you for life. Mitre 10 did a fantastic series of ‘How to build’ books about ten years ago. I can see a canny supplier doing a regular leaflet drop of small project brochures to the outer suburbs.

Replace without question

Do the right thing by guarantees and warranties with a smile on your face and sympathy for the punter who had to waste their time coming back to you. Handled well they will be a customer for years. Handled badly and you’ll never see them again.

Never be out of stock

A recent industry poll put ‘out of stock’ as the key deletion reason. Way ahead of poor customer service, products that didn’t work, no technical back-up or over-priced goods.


Media Options for hardware suppliers

Product placement

As I said earlier, there is nothing that compares with TV. But product placement can’t give you frequency – there’s only so many times you can get a mention on a renovation show (the exception is Kennard’s Hire, who seem to be in every show I ever watch). So consider serious TV – 30 seconders run as real, paid for ads.

Direct Mail

I’m a VIP member of three large hardware chains. I said on my ‘application’ form I was renovating two homes. That must translate to ‘spending thousands on hardware’. I’ve never had a letter.

Telemarketers

Tradies and domestic consumers alike are very rarely targeted with telemarketers. I can’t understand this, given tradies numbers are in the pages of the local paper, and most of you have the warranty cards of consumers.

SMS

“50% off Dulux paint for trade accounts at Home stores this arvo” would really work.

Local Papers

All tradies read the local paper to check if their ads have run. And where do you find a plumber? When you really just need a sealant, if you saw the ad, wouldn’t you just Do It Yourself?

Daily Papers

Blokes read the sports pages. Tradies are blokes, you figure. If you want women, try the horoscope or the news sections.

Magazines

The traditional media for hardware products, both trade and mainstream. But use a decent designer/photographer or the Belle, Home, Vogue Living’s etc, won’t have a bar of you. Co-ordinating with the related TV show works very well, especially if you’re running a competition etc.

Videos in stores

DVD’s, repeated at infinitum may bore the hell out of the retail staff, but a small screen, in the aisle where the product is, can have a crowd watching and then buying all day long.

Radio

Tradies listen to radio – especially duff-duff and (sexist) talk-back. Which is why John Laws is still in business. Women make a lot of purchases. Try the 3-4pm pick-up-the-kids time.

Use other outlets – supermarkets, newsagents, direct

Only a few hardware players have moved into supplying other retail chains, but with the demand for some products, it’s quite justifiable. You can now buy No More Gaps at Coles.

And if you’re a small hardware store, look at the writing on the wall. You’re probably potentially a mid-sized flower shop or nursery and quite a large specialist tools store. Because where there is a sea of mediocrity, the specialist floats. Wouldn’t you prefer to have your own chain? Call me if you want a strong brand.

A guide to Outdoor Advertising

October 16, 2013

Outdoor advertising is the original media. When our ancestors were chopping down trees for a living they’d have scratched a note on a stump announcing “Firewood 4 Sale”. And Outdoor advertising was born.

Yes, it’s local. It’s flexible. But its power is frequency. Its power is frequency. Other than getting lucky on the internet, there is nothing that gives you the number of hits Outdoor can deliver. Nothing. Not even a package in their pantry comes close to seeing an Outdoor ad 10 times a day for months at a time.

Outdoor advertising used well is a viable alternative to TV if you can afford to play, but it does have limitations. TV sells them with colour sound and music. With radio, you can get into their imagination. Direct Mail allows you long copy and you can intrigue them with the adventure of the bits of paper unfolding. Outdoor just flashes past. It either connects with the punter, or it don’t.

There’s another serious drawback with Outdoor advertising. The public, in the main, hate it. They’ve hated it since that first sign. They’ve got a legitimate beef too. It’s making a mess of the suburbs, let alone the highways. The public think the suburbs ought to be lined with trees and nice houses. While the Trump in you says ‘Don’t mess with business’, surely the hippie in you agrees with me? Outdoor cops it more than most media. So if you’re not careful, you’re potentially putting yourself in the firing line. The public are much more likely to get irate over a suggestive Outdoor ad (“They shouldn’t be allowed to put up ads like that!”), usually pumped up by other media like radio or TV who love to have a go at a competitor.

Why Use Outdoor Advertising?

Besides the frequency, Outdoor can achieve heaps of reach, if you believe the statistics the industry puts out. Mind you, most of the data is based on the premise that if a person drives past a site, they clock it. This is the same logic that has thousands of companies buying space in big magazines on the basis that their ad is going to be the one remembered of the 200 or so in the mag.

Outdoor advertising can also give you some serious impact, given it’s done with a decent slice of creativity. And obviously it’s a good visual media, which is critical for brand building.

What options do you have?

I’ve only tried to cover the major options here. There are so many versions of Outdoor, I could be here for months just trying to list them all. Trains, buses and trams have enough sizes and shapes that I can’t get my head around them, let alone some of the weirder formats you can book Outdoor in. The terms used vary by those flogging the medium. They all like to invent their own name for their versions so a complete idiot might think they are getting something completely different. I’m sorry to tell them this, but a sign is a sign.

Landmarks

Huge. Mainly one-offs, like the ones bolted onto the Glebe Grain Silo. The biggest is currently the one at Sydney Airport which is something around 40 metres by 10 metres. These massive statements are horribly expensive at $20-55K per month with production costs of the skins being about $5-10 K on top, but they are very noticeable. You’ll only need a couple per city to do the job.

Spectaculars

A bit more common, these are up to about 20 metres by 5 metres. They’ll sting you an additional $3K for producing the skins, and at $15-25K per site per month, for say 4-6 per city for a campaign.

Super Sites

The most common form of the big sites. Again, big impact. Huge cost. At $5-25K a month, with a need to roll out say 8 -10 across a city to work…plus about $1650 per skin for the production component. Still, they are becoming the norm instead of the more traditional 24 sheeters, I guess because the cities have become even more highway oriented, and shopping is not necessarily as localised an affair, we need bigger Outdoor signs to have the same effect.

24 sheeters

Once all Outdoor was this simple. This is the still standard size and shape. It still works just as well and it’s a damn shame, given it’s efficiency, it doesn’t command more attention. But old, and a touch shabby, is rarely sexy, as I know too well. The rules apply here in force. Use incredibly simple ideas. Be very visual. Be fun. ($1200 per month, by say 40 sites per city, and production about $500 per site, it better be fun.) Voodoo did a really good job using these and so does Windsor Smith.

8 Sheeters/portraits

Smaller, different shaped versions of the above, usually put where they can’t find space for larger ones. Prices vary enormously.

Street (Rock) Posters

The unsung heroes of Outdoor. Cheap, cause it’s a touch illegal in some states and shires. A campaign might cost say $10 – $20K including printing to cover Melbourne, Sydney, Brisbane with 2 x 1.5 m posters for a month. Incredibly good value for money compared to anything else. Very well targeted for youth and fashion markets. Used by all sorts of clients, from government departments to bands, where they started. Some very successful fashion brands were launched using this, including Feathers.

The right locations can really help. If you’re trying to be groovy, be in the inner suburbs like Mosman or St.Kilda not deadly dull Dandenong or parochial Parramatta.

Lamp Posts

A smaller, even more affordable form of street posters. Somewhat risky as even the most lax Councils will want them taken down, still, for a bit of ambush marketing nothing beats owning a street or a suburb for a day or two. This was the format that launched 26 Red.

Little Stickers

Look, I know you rarely get out of your Merc to stretch your legs, but there are people out there who actually walk more than 20 metres a day. They can be hit very effectively by cute little stickers placed in intelligent locations, such as bus shelters, post office walls, traffic lights, parking metres etc. Yes, it’s naughty. Yes, per sticker the placement cost is horrific. But if you’re in retail and they keep walking past you to go to the guy two doors up who’s using TV….

Train stations

The rules don’t apply here. I remember reading an ad at a London tube station that took me four separate visits to finish. The punters are there for ages. They are bored out of their minds. Here you can give them the sort of detail dreamed of by your agency’s copywriters. Let them go to town. There are still millions of people who use public transport daily. They still buy groceries. They still vote. And they’re not expensive to hit.

Metro Lites/Bus shelters etc.

Even ten years after their introduction they are still a more sexy/fashionable Outdoor than most. Sold in weekly or fortnightly blocks, it costs around $1000 or so a month per site. Bloody expensive I’d say, dollar for dollar. But if you want to be hip and hit both motorists and tram/bus commuters, I’d seriously consider them.

Lamp Post Flags – Main Shopping Strips

A nightmare to organise – you have to get it signed off by the power company, the council, and God, by the way they red-tape it. But a hell of a way to claim ownership of a whole street for a smart retailer, don’t you reckon? Can work really well with a couple of contrasting designs being repeated.

Bus/Tram Sides/Ends

I sit in the car. I’m stuck behind the blessed thing for 5 minutes. I read the ad. It works. Cute for a two/three part message. Hit thousands of people a day on the right route. Can be a bit of a pain to organise, but that’s what an agency is for, besides shouting you lunch. Use big type. Be very visual. Be rich.

Whole Trams/Buses

More impact. Much more cost. Can be bought on a per route basis but at $50,000 per month or so, you need deep pockets to be in the game. I wouldn’t recommend a client go into this sort of thing as a sole media for a campaign, but I’ve seen some do it.

Taxi Backs/ Tops

I’m again in the car. If the taxi had stayed still instead of changing lanes so much the passenger is vomiting in the back seat, I’d have read the ad.  Let’s hope your ad is in front of your customer when the lights change and he has to stop.

Truck Sides

The most under-utilised, virtually free, media space large and small companies have at their disposal. It scares me how few companies use their truck sides effectively. Even if you contract out delivery, just put the use of their sides into your contract negotiations.  Yes, it costs to do the trucks up, but they work for you often 24 hours a day. At $2,000 per month or so for similar ad space, it’s often worth hundreds of thousands.

Cars & Vans

Smaller than trucks, you can rent space on the sides of Courier vans and the like. I can see more frequency still, but less impact. But there’s also scooters, Harley’s… I get sick of options constantly being invented by people with a trailer in the back yard and too much time on their hands.

Supermarket Parking Areas

Touted as a big new media a couple of years ago, these rather small, 1.5 x 2 metre notices are one of the last thing your average punter sees as they trundle in for their usual supply of Coke, Cigarettes, Nappies (the three biggest sellers). If you want a slice of the customer dollar, it’s a reasonable argument that these might do it for you.

Mobile Billboards

Big fuss about these about ten years ago. Bloody expensive per day when you consider you’ve got to pay for the driver as well. The trailers are less so. Great for specific one offs, particularly nice ambush stuff, like say Tooheys running a truck around the car park during the Fosters Melbourne Cup, but has nothing like the inherent frequency of major stationary sites.


How to buy

Like all media, Outdoor does not like to be vacant. However, it’s probably one of the easiest media to sell. At a low price anyone will rent a site. They know it’s of some value, because they can reach out and touch it. So yes, it’s a negotiable thing, but no, they won’t take their knickers off as easily as TV, radio or press when the deadline’s fast approaching. With Outdoor, there’s no deadline.

Be sure which you want

Always keep in mind that you can hardly miss any Outdoor – it’s really a question of who the seller of the site wants you to think sees it, not what segment sees it. They all do. So don’t assume an option won’t work with your targets. Make sure they know you’ll be considering them all.

Be Serious

Commit to it. Buy for 3 months plus. Like I discussed above, there’s something about Outdoor that actually burns a message into our consciousness when it’s been there a while. It could just be that mind-numbing repetition works on our brains. I’ll try it now. Appoint Starship. Appoint Starship. Appoint Starship. Appoint Starship…. Working?

Be Judgemental

Compare apples with apples. If you can, buy on the basis of traffic numbers, with comparable sites. If some company’s buy is promising you 250,000 passing traffic a day, surely that’s better than 150,000? Don’t buy it just cause the rep smiles at you that way.

Hit the Right Spot

Position is everything. Even angle to traffic is vital. Don’t be conned into taking any site unless you’ve seen pickies from a couple of angles. Buy in the right streets/suburbs. Work out where your best customers tend to come from and plaster that area. And be smart about it. One of the best examples of intelligent Outdoor buying was done on behalf of Sheridan Sheets some 12 years ago. As I understand it, the only target they needed to hit was the Manchester buyer from a well-known department store. They knew he took Toorak Road home, so they bought sites along the route.  Apparently he thought it was a huge national campaign and ordered up big.

Buy Stories.

A one punch, two, three punch set of ads that build up over, say a kilometre, is best.

Buy Near Retail

Maccas always try to buy a few hundred metres from one of their stores.

Buy Major Roads Only

The name of the game is lots of passing traffic.

Buy a Good Deal

Nothing is a deal at full price. Negotiate. Argue. Tell them you’re buying the other Outdoor option, or TV, unless they drop price. Do anything to get a better deal.

How to do Creative

The massive amount of times that most people will see your ad means that good Outdoor is defined as ‘good’ if you don’t come to hate it over the course of the campaign.

Less is much more

They are travelling past so fast the message has to be very simple. I mean so simple most people in your company will ask ‘Why bother’? But simple is loved by the public, so tell them to heave off.

Shock

There are thousands of ads in the average person’s day. Bland does not work. Plus for some reason, you can be assured of a good PR spin-off with the ‘wrong’ approach. Not a bad idea to get your Mum to ring up the ABC to complain.

Use Visuals

Wherever possible, make the thing physically interesting, if you can afford it, consider 3D. Like the dress blowing up in the wind for the no knickers ad. I couldn’t get a pickie, but you remember it, don’t you?


Before you approve the company spending thousands of hard to get dollars on this bit of art, ask yourself these questions:

  • Is it so simple that even someone, who doesn’t give a hoot about my product, can understand it?
  • Are we saying something that is interesting and convincing to our customers?
  • Am I using a typeface/colours/imagery that stand out?
  • Do I want this on my resume?
  • Can I imagine someone seeing this a hundred times and still bothering to read it?

The issue is not ‘Does it meet all our objectives? The issue is, ‘Will they love or hate us in a month?’.

Where’s Outdoor heading?

Bigness. Outdoor is growing faster than the list of US accountants who’ve committed corporate fraud. At the big end, it will continue to get more powerful as other media are dissipated by diversity. It’s almost untouched by the web and it’s undergoing some cute technical advances like screens that change every few seconds. It’s almost TV now and with the developments I’ve heard are coming, may soon actually be able to give you full, sharp TV quality.

Buy Outdoor for massive frequency. And, recognising your customers will no doubt see it a lot of times, pleeeease make it a nice experience for them.

Going down to the Local – How to use Local Advertising Effectively

October 16, 2013

It’s a Tuesday night at Graeme’s. I’ve got a glass of warm beefy red in one hand. It’s my second. Next to me is Nancy, who’s about 93 but could still pack a good punch and is sharper mentally than an artists scalpel. Next to her is the woman from the corner who I’ve never met before, but she’s very well-spoken and her husband is a Judge, I think. The next couple are a real couple – finish each other’s sentences, nod as the other talks etc. My eyes go on around the room. All of them are wearing slightly shabby, casual clothes, all of them extremely friendly – hell-bent on bonding – coming together for the common good. Ie. Ours.

This is Hawthorn, it’s 8.25 pm at night and we’re just getting into the decision making part of the little drinks session called to halt a development in our street. The blood is boiling. The argument heats. We need to up the ante against the developers. We need to scare them into thinking we’ll go all the way (with a Judge or two in the street, I assume that means the Federal Court – I’m wondering how much my family would have to contribute if it got that far – do Judges get discounts?). The meeting of neighbours collectively decides it would be worthwhile if we could interest the media in our plight.

Suddenly, all eyes turn to me. I’m in that terrible predicament where you know you should have heard the last sentence and have a snappy answer, but you’ve been staring out the windows cause it’s such a lovely day and now the teacher is about to throw something at you and you don’t know what to say. The same dry throat and skin-prickling sensation hits me like it used to so often at school – moments before the duster slammed into my head.

I swallow a mouthful of wine, knowing that it would slow down my expected rate of reply a touch (not thinking it probably confirmed my status as the street’s worst drunk) while I struggle for an answer. I leap in the deep—end. ‘Of course’. I say as if I knew the question.

“So you’ll tell us when we need to be somewhere for the photographer?’ I nod again. I now know what they want me to do. To speak to one of the local paper’s journalists and see if I can wrangle a story.

Nothing better to scare off the developers than an all-out brawl in the local paper. One of the other blokes reckons he knows a Councillor, so if we can get an interview with them as well, they could comment on the situation from a Council perspective. In a few more minutes we’ve got a workable angle – and I’m ready to make the call the next day. ‘Oh goodo’ I can hear someone say as we all clink drinkies at the decision. ‘Oh, whacko’, I’m off again, I think to no-one in particular…

What is this? A lefty political stance in Marketing Magazine? We’re on the side of developers and capitalism in Marketing land. “Don’t you go getting all hippy-trippy on us Geoffrey. Give us useful tit-bits on how to manage marketing issues or go back to your bean soup and bong party” more than one of you are thinking, as you read this.

Yes, I do get involved in political things when it looks like they’ll impact on my hip-pocket. So would you. If they put up a three-unit development on the land opposite my place they’ll de-value the street by about 10%. With some 30 families all holding properties worth about a million, that’s us, the street, losing 3 million. The developer’s might make about $300,000 profit. Which they’ll take somewhere else and spend. The Council’s understand this – they make their money from charging rates based on house value. They can charge less in developed streets. So everyone gets interested.

And the main vehicle to have this argument? The main media? The local free into home paper. The last media left for communities that can be relied upon to support the common good. Local papers are one of my favourite media. Not because they can be influenced by some un-known bloke calling up the journalist with a decent story, but because you as a marketer can stand out.

You can dominate a local for not a lot of money – a couple of thousand for a full page in one of the big ones. A few hundred for smaller spaces in big papers or big spaces in smaller papers. You can build a brand effectively in a local. You can use one of the oldest and most reliable vehicles – simple basic print, to hit almost every home in Australia if you need to, and you can do it one suburb at a time, which means you don’t need a huge budget to slowly take over any market in Australia. You only need two things – reasonable creative and a bit patience.

Cause if you’re dealing with local paper reps, you’ll need patience. And plenty of it.

A few days later I’m on the phone negotiating page rates for a newish client who does developments out on the edge of Melbourne – (God I love being in Advertising, people are never surprised by my blatant hypocrisy) you know those suburbs that pop up between the weekend you visited Aunty Audry’s place and the week-end later you returned to pick up the kids swimmers and your wife’s sunglasses? In that week they’ve built another 2,000 homes and flogged them off to struggling young families and golden oldies escaping from the inner suburbs and pocketing $500,000 to retire on in the change over.

Anyway, I’m on the phone to the local paper rep and she stops me in sentence two. “Oh, it’s real estate. You can’t put it in EGN (Early General News  – the first 30 or so pages are declared EGN’ to justify 20% extra on the rate card) it’s Real Estate. It has to go in the Real Estate section.” “But we don’t want to put it in the Real Estate Section – we want it in the EGN – we know our targets are people who aren’t actively looking for a house – this is virgin land. We’re happy to pay a reasonable loading but the client has specifically demanded EGN.” “No. If I let you put anything in EGN all the developers would want to put things in EGN and we’d have no Real Estate Section’. She replies so sweetly, with a voice like a truck driver taking oestrogen. “We used to do lots of work for local papers – you charge a very low rate in your Real Estate Section and a premium, in EGN. It’s a very good thing to get big advertisers to take ads out in the EGN – it’s hugely more profitable for your owners.” I try, as humbly as I can, to explain. It’s like talking to cold porridge.

“No.” This goes on for another 2 or 3 minutes. I give up. “How about if we just put a pointer in the EGN to keep the client happy and we point to the big ad that’s in the Real Estate Section?” I try. “Would that be about Real Estate?” she asks. I think we’ll, derr. But I say, quite convincingly “Of course not – it would just say Look at Page 72.” I lie. She buys the argument, we move forward and complete the booking process.

This is what you have to deal with. Someone whose idea of big-time advertising is an eighth of a page with 10 different stars on it and 6 typefaces all screaming for attention. Who last week ran a beauty salon but burnt someone’s hair off, and so is now selling 10 x 2’s in 6 week contracts. Ah, the professionalism.


Why go local?

You are where your customers are

Locals reflect the issues concerning the community they serve. Given that national issues are debated on a national stage – like the GTV 9 News, the locals handle and are relegated to arguments about building regulations, thefts in shopping strips, whether you should be able to turn right at that black spot intersection, local kinders being understaffed. All the stuff that you as a big-wig business professional think you’re above until it’s your kid’s kinder or the intersection on your way to work. Similarly, this deeply imbedded impact on the local people allows you to get your brand into the hands of locals in a much better way than bigger scale media.

You look like you care

Supporting local papers means your retailers and customers think you’re in touch with them. Retailers always want support and like local papers because they do work at a retail level quite effectively and they can put up the ad in their store. If you are a retailer reading this, it’s your local paper, read by your local customers, so get behind it.

Vary the campaign by location

You can, in fact you should, do different campaigns according to localised needs in locals. With a community like Moonee Valley’s which has more than 32 languages spoken, with a large slab of Somalians and people from lots of other African, Asian and South American (read non-English speaking) countries, you could test appeals, and run whole campaigns, that are very different to those you might use in blonde, blue-eyed Brighton.

More size for less money.

Few advertisers can afford big spreads in big circulation magazines or daily press – they are forced to give their ads less size than desirable. In locals, you can be the biggest fish in the pond easily.

If we love them, how do we buy them?

Use as a low-cost tool into selected areas

When you are seeking to hit an area because they have a high level of an attractive demographic – lets say your health department has a responsibility to assist single mums, you might use the Cranbourne (low-priced fringe suburb South East of Melbourne, full of single mums living on the baby pension – God I’m a bitch sometimes) local paper as a stand-alone media, or if needed, to support radio or leaflets or outdoor, depending on what you need to do.

Buy big slabs

You can run big ads. Try a four-page lift-out or wrap-around (additional 4 page large sheet of paper, around the outside of the actual newspaper) if you want to really stun a small paper audience. Or a two-pager. Or, if you’re a small retailer who needs your local customers – go for a ¼ page every second week, followed by a smaller buy. It’s still only $300-400 bucks.

Buy regularly

A regular space, whether it’s on a local billboard, or in this case a local paper, works to ensure faith – if you’re always there, you’re reliable.

Buy at odd times

There’s 52 weeks of the year. There’s lots of weeks when nothing is happening and the paper is thin. That’s the right time to run a big ad and it’s the right time to ask for editorial. Mind you, given they are Real Estate based and the selling season is Spring, don’t expect it to be between September and December.

When in doubt, go twice

Nobody does double ads in locals. Nobody does small ad then big ad. Nobody does consecutive pages (like you see in B&T when some recently formed agency’s art director gets her head. “I know, why don’t we spell ‘creative’ one letter at a time? It will take 8 pages of consecutive right hands”) mainly ‘cause you’ve got to get that past a blindingly dumb art department. Don’t try anything that’s too cute. They contract out most space on most pages, so they have very little flexibility and will often promise a page 15 and you’ll end up on page 35.

Use colour where you can.

While most of the larger groups like Leader or Cumberland Papers now have colour on many of their pages, the smaller groups will often be running B&W and just have a few pages in colour. Colour gets better sales. So if you can’t get full, use spot colour. But be careful with your branding, though. Many companies logos etc. do not work in certain colours – NAB’s warm red isn’t too good reproduced as pale blue.

Go in the wrong spot.

Almost everyone flips through the first 5-7 pages, before they get bored and go into the singles pages or the cars review.  Therefore an ad in the early general news will out-score an ad on page 45. And an ad for real estate will invariably stand out better amongst the food section than it will amongst another 400 house ads.

Buy near the singles section

The most read part of a local paper is the ‘Male seeking Female, Female Seeking Male’ bit, I guess cause it’s funny. Buying an ad on the same page or adjacent works better for that reason.

Buy distressed

Be the company they can always rely on to take the big bit they couldn’t sell. Talk your agency into doing a whole series of different sizes and shapes at a bargain price cause they’ll get the media commission one day.

Creative

As few normal advertisers in locals have an agency working with them, and often rely on the ‘creative’ talents of the staff designers (who last week were working for the local printer doing wedding invitations) the quality of ads is often not too good. Therefore, if you do strong creative, you will stand out like dog’s balls.

Buy to theory

Yes, right hand page is better. Yes, white space works. Yes, have the phone number near the logo at the bottom corner. Yes, one or two typefaces out-does more every time. Yes, I’m boring myself.

 

Budget Advertising: Creating the best campaigns for less

October 16, 2013

Milo has entered my life. Not his real name, but you get the personality instantly, don’t you? I’m not very attached to Milo. Milo and me are like oil is to water. Instantly repelled.

Milo has to have everything carefully measured, everything approved to the last cent. Everything checked thoroughly. Milo explains everything at least three times. Milo could literally bore you to death with detail. Milo scares away creativity like a dog chasing seagulls.

Milo has come from a big insurance company, where I have to assume he was very happy until his management realized his personality disorder was causing them real pain. He’d had a staff turnover of about 100% in a year, and I guess someone did a profitability analysis on him (15% in cash the for head hunters, plus the effort of training up all the new people) and worked out he’d cost more than Swine Flu cost the Mexican economy. So they sacked him subtly by getting him a more ‘challenging’ job in another suburb.

Milo sits there, well manicured. Nicely, if a bit safely dressed. Recommended weight for height. Neat little wedding ring on the correct finger. Tapping his perfectly clipped nails on our boardroom table and fretting worse than a greyhound at the start of it’s first race. He’s virtually dribbling – balancing anger and anxiety at the same time. His desire to seem businesslike, uncomfortably attempting to combine with his desire to be totally in control.

I wonder what his big brothers must have done to him in his cot to make him so bloody insecure, so desperate to manage every little element of his life in the fashion he wants. I’m imagining them tying him down and putting ants in his mouth, or electrocuting him with nine volt batteries to his balls, or simply leaving him in the girls department at Target and telling their Mum he’d run across the road to the bus shelter. “Milo’s gone to Sydney again Mum…” (Is the rumour true? Did Milo really spend 4 hours in Target’s women’s changing rooms, alone, desperate, scared to go to the counter, dressed in a bright pink tank top and yellow and green stripped leggings?)

Milo wants a complete analysis of the last year’s media, with a full explanation of each entry and what was agreed and what ran and a cost estimate of impact vs. sales and all of it by Wednesday. These couple of bits of added detail are not going to kill anybody at my end, but they will cost his employers a couple of hours of additional administration. More striking evidence of his control-freak nature and inability to judge cause and effect.

Milo wants to save money and by going about it in an absolutely inept way he’s costing his company more instead. This article is about how to save money and not give everybody at your company or your agency the total shits at the same time. Please keep reading Milo, I know you think this is not about you.

If you have a Milo in your department, I suggest you photocopy this article and stick it on the wall of the department’s toilets, or if you’re really in a smart mood, get a subscription to the mag for your Milo. There’s one in every company, lurking, sniffing undies from hand-bags while their owners are in meetings.

People like him/her need a blunt dose of reality and often while they won’t listen to people, they will absorb it in written form. I guess to their twisted minds, printed type is inherently much more trustworthy than listening to those who actually write the words.

Why is an ad agency worrying about cost saving measures? Isn’t it an oxymoron – ‘efficient agency’? Like ‘professional real estate agent’ or ‘honest lawyer’, ‘caring doctor’. Ad agencies live or die on their ability to keep their clients believing that they are getting value for money. This comes about in several ways: More profits than they’d otherwise make. Management feeling safe. A perception of growth or at least stemming of decline. The most efficient methods being applied. Fun. Better than the last agency. Relationships that satisfy needs.

The most critical of these is the first. If an agency loses the perception that their methods (creative, media etc.) and processes are failing to generate profitability, they usually also lose the client within a very short while.

The following list is provided with one rider. I’m not actually trying to save you total money here, although you may save a few dollars, could even save 50%. What I’m really pushing for is focus on best use of money. In most cases it’s way more important for you to get a much higher return on your advertising dollar than to simply shave the dollars in your care.


How to save money

Set goals

The one good thing about Milo is he is very strong on goal setting. Treat your marketing like your sales department. Align call rates, web hits, conversion rates etc. with money spent. Set goals say 3-6 months in advance. Include media rates, frequencies, awareness, brand values if you have time.

Research the critical

Give your marketing a reality check. Where are we getting them? Expand this. When are we loosing them? Fix it. Sometimes, to decide what to research, it’s best to get your cleaner, your grandmother, someone who doesn’t give a fig about the whole operation, to ask the screamingly obvious questions. Listen to them.

Target better

I can’t tell you how many companies out there in OZ are operating without a precise definition of their target markets. Yes, it does mean you have to focus a bit more and in some cases ‘anyone with a mouth’ is a reasonable call, but most companies do way better when they think through their targeting and narrow it down to say the three most critical groups. Don’t just go for the basic demographics. Overlay obvious psychographics – older people who are scared, younger people who want to fly….I could reverse the order; younger people who are scared, like Milo…

Re-assess brand values

Does your brand really solve problems? What are they? Does it mean something? Is it desirable, or just another second-rate idea, a copy of someone else? What can I say about what we do that makes it exciting, necessary, vital? Ask yourself if you need research to achieve this? How old are these assumptions? Do we have any information that is current – how do people feel about these issues today? Change your brand values to those things that are either perennial (ie always there) or fashionable now.  I note BP is a ‘sustainable energy’ company supposedly…..I guess that means they are no longer sucking oil out of the ground and burning it in cars? And on that note, never bullshit the public. Only promise what you can really deliver.

Drop peripherals

So many marketers get hood-winked by the cute idea from the promotional company or the additional run of ads by the radio station given to them at less than half-price. Good on those marketers/sales people. Bad on you. If you need to save money, save it, dumb nut.

Buy certainties

Yes, the new media sounds great. I’ve always thought lots of people would fly over my factory and read those ads on the roof. I’ve always wanted to have an ad on the back of my phone. But would my hand cover it up? There are thousands of media out there and new ones launched every week and only so many work and that ain’t many. There are only so many types of ads that work for you too. Only so many pricing structures that work etc.

Experiments are OK in limited number (ie. Try a new media but with only a small spend and be able to measure it effectively). Just jumping into new media or new anything for the sheer sake of it is a bad thing now. Changing cars mid-highway is difficult to do and you can end up bouncing on the bitumen very easily.

Be integrated

A lot of companies fail to get their radio ads working with their web site working with their banner ads, PR working with their CEO’s statements etc. Get the lot lined up and you seem like a sensible, brainy bunch of people rather than a two headed snake or worse, a disorganized rabble. I’ve said this before in this esteemed publication. The public will not forgive ineptitude and obvious mistakes and to be perfectly frank, unaligned marketing is your own bloody fault Miss Marketing Manager. I don’t care if the outdoor media seller has given you two more months for nothing on that site in Nunawading. The public doesn’t forgive you just cause it’s a good deal. The ad on there is still a message that does not relate to your current TV ads and it makes the company look stupid. They actually love catching companies out. ‘Hey, check that out – they’ve fucked up’. Be integrated or be damned.

Creative that lasts

I know the agency thinks it’s a really good idea to change the ads twice a week. In some cases that’s vital for freshness or just to get calls. But in many cases an ad can last for months or even years if it’s well constructed and hits a nerve.

Calls to action

You need action now. Think of a way to get the public to act. This does not mean dropping your prices dramatically. Go down to the white board. List every single possible offer and deal and debate them with the good-looking person from logistics or accounts you fancy (or take a hotel room) and see if you can get some decent ideas mapped out before dawn…. Why would you buy a widget right now? Does it have to be an expensive incentive? Could it be an extended warranty? Could we not use fear? The two most powerful stimulants are greed and fear….of losing out.

Capture calls/convert leads

Many web sites are running at around 1 or 2% capture/conversion. The best of breed are up around 14%. Yes, it’s often very specific sites, like Roses Only, but the fact is even with a site like that, by definition they are still losing 7 out of 8 punters. Don’t listen to the IT geeks who, because they built it, reckon it can’t be made better. Ask yourself how do we get this to work? How do we get the phone calls to become sales? How do we get the people who walk into our shops to walk out with our widgets? What do we need to say to get them to hand us their credit cards? If you do not know, spend a day on the floor/on the site and just try different appeals, different tactics.

I used to work at an antique shop in High Street Armadale when I was at Uni and the owner used to tell me to be rude to customers. (Some nasty people have intimated that it was a natural talent I had anyway.) The richer they looked, the ruder I had to be. “We don’t have anything you’d like in here.” Or “Have you gotten lost on your way home to Footscray?” Worked a treat. Never find that in a marketing book. But they’d laugh and become friends in seconds or at least trust you. The ones who didn’t laugh were never going to be able to pay $5,000 bucks for a brass lamp anyway.

Screw suppliers

Go see them, or get them in. Be very calm and quiet. Seem depressed. Ask them what they can do to keep your business. Then shut up.

Spread payments

The best way to stay solvent in difficult times is to pay everyone a bit of what they are owed, rather than only pay a few and leaving others. The others will come after you with lawyers or guns or big hairy bikers. You need everyone in the circle to stay loyal or you’ll have to find new suppliers and that takes much more time than you have spare, so stretch payments, pay half or two thirds. When they scream, make another payment. Or use the old and nasty ‘we haven’t sighted the invoice yet’. Note: that lost invoice angle will only work once or twice a year, you can’t keep up the same bullshit line too long.

Enlist staff involvement

Theoretically anyway, there are no people who value the company more than those who work for it. The practical is that many actually hate the company but can’t be bothered to move on cause they are either lazy, amazed they got this job, or running a porno production house or drug smuggling ring out of your warehouse in Boronia. The staff who are left are a good source of promotion if you can scare them into it. Must be careful though or they’ll think the ship is sinking and jump like rats. Having ‘call a cousin’ day or neighborhood post box marches (they are all asked to drop a leaflet into all the houses within 200 metres of where they live) or asked to send out viral emails to their friends etc. are a good thing to get them involved and save you a lot of money, especially if you’re say NAB with 30,000 of them taking a pay cheque each month.

Go simple

I know everybody says this. I know no-one gets it. I know it’s hard to do. I know legals will put a 14 word sentence when ‘conditions apply’ would do. I know you hate trying to get a simple idea past your simple boss, cause he simply doesn’t get it. But it works on the public, it works for integration, it works on most target markets and it works to make money and it usually works for years. But what to say that is simple?

Little wins

It’s not the sacking the big agency for the little one, although that has its appeal, believe me. It’s not the NO MORE TV or some other big decision. It’s usually the little ones that add up to big savings over time. It’s disciplines and attitude and not giving up and not getting tired that gets you through tougher times and allows the company to be ready to go as times improve. Wear your cost saving hat every day, not just on Thursdays. Chip away at the big picture, like a good artist chips away at a bit of marble to discover the statue inside.

Media bargains

There is a lot to be said for exploring your media options in tougher times. Do more digital. Try TV – it’s so cheap at the moment it may as well be free to air. Go DM – when was the last time you got a letter in the mail that wasn’t a bill? Punch PR – there’s lots of media hurting (especially magazines and TV stations) who’d happily do an alliance just to get the deal over the line.

Sack the Milos

Life in successville is about working with people who other people like/respond to. People like Milo suck the life out of an organization. They piss off customers, suppliers and staff. You are way better off to recognize the Milos in your life and avoid/sack them, than try to train monkeys to write poetry.

Get the pros involved

When all else fails, call in the experts. Negotiate a good rate first. Limit the spend. Ask them for help and get a second opinion to keep them honest. This could be an agency, a design group, a football coach. I don’t care who you get involved, but it sure helps make decisions if other people have an input and it keeps you busy for weeks with exciting thoughts and good lunch spots and that’s really what makes marketing more fun than any other profession.

Getting more to play with – Increasing Advertising Campaign budgets

October 16, 2013

I’m sitting in my office cause my board room is being renovated and the other meeting rooms are full of eager sales people and even more eager art directors finding out how to make cute things out of paper. ‘Oh, can we print on this? It’s gorgeous’ I can hear someone virtually screaming with excitement. It’s like I’ve traveled to OZ and the munchkins are discovering food for the first time. Ah, the creative day….

This is all the more ironic because I’m sitting with three over muscled, over dressed under-aged company directors (think 50 cent meets your local nightclub bouncer, with a double degree in I.T.) who have stumbled across some very cool technology and are about to launch it on the unsuspecting Australian public. They are used to getting their way, but only have limited experience with mainstream advertising. They are telling me ‘how it’s going to be’. It’s almost as if we’re being shaken down. Which is being asked for money by a hood with a gun.

They mention a figure for TV. Let’s call it $500,000 for fun. They tell me this is what they are going to spend, and ask me what they can get for it? They expect me to be able to say ‘Two TVCs and 300 x 30 second spots on these shows X, Y and Z’, or similar. This is simply the wrong way around – and almost every amateur does it in Australia. What they should say instead, is that they have a target of X, and ask what will it take to get there?

I tell them they need to spend more money. They react like I’m trying to rip them off. They shuffle in their seats and I can see their knuckles appearing on their fists. If it wasn’t for the fact that there’s girls in the room, and no-body fist fights in front of girls during the day, I’d be really scared.

Does your board get upset when you tell them it won’t work? Or are you like most marketing managers and just humbly accept that you have 4% of some mythical sales figure that you quietly agree to reach and you’ll do the best you can to get there? Are you tough enough to be asking for more yet?

Most of us want more. Some want more muscles, more cars, more friends. More hair – in my case. Most common is more money. With more money, everything becomes easier.

Those idiots who say ‘money can’t buy happiness’ have obviously never been hungry, never had to scrape up the money to pay the rent or never had to give the kids clothes from the op shop cause they couldn’t find the money to visit Target or David Jones.


Is the more thing important with your marketing budgets? How important?

Why do we need more money for marketing? Because it’s not a matter of being greedy. Money for marketing works like fuel in the truck of life. Money drives the marketing machine and the marketing machine drives the rest of the business. ‘Give us more’ should be stamped on our foreheads along with ‘trackable results’ and ‘accountability’. Frankly, why worry about accountability if you’re not going to reward success with more money spent on that campaign?

More ad budgets get more sales, which gets more employment, more director’s bonuses and more shareholder value. Economies of scale (the fact that other inputs cost you less as you sell more widgets) helps real profit leaps become achievable objectives.

Advertising fuels growth like water boosts gardens. You are able to dominate markets, control pricing, dictate to distributors, make huge savings on media and other inputs and maximize the dollars in your care. Pumping bank accounts fuller than a 15 year old’s jockeys on his first date.

In America, UK, Europe, even little ol France, the civilized spend around 10-12% to raise market share. But in Australia we are so much cleverer than that.

We want to only spend 3-5% because we’ll make more profit that way. Because, we are much smarter, some how. The result is we get about half of what we were really hoping for, cause we have collectively managed to get a simple mathematical sum wrong.

Spend 1 dollar. Make 10. Spend 50, make 500. Not difficult. Works every time. The ten for one rule. Write it on the back of the loo in your office. 10 for 1.

If your marketing is very good, your branding, media buying, creative, whatever, you may get to 15 or 20 to one sometimes, even 100 to one is possible, but very rarely.

I’ll translate that into negative accountant talk. 10% works. 5% is possible. 1% is like a miracle. Stick to aiming for 10% and you’ll be a hero when you get to 5%.

I’ll give you a weird, but concrete example of a situation, which may give you an idea of what we ought to do.


Tradies don’t under-quote

If you’re getting the gutters fixed at home, you organize say 3 plumbing quotes.

The first guy turns up and says ‘Mrs. Jones, that’s a big job, the gutters need replacing, so do the down pipes and the whole lot will be about $4,100” You say ‘Christ’, you tell him he’s dreaming and off he goes, disgruntled.

The second plumber turns up, says, “Mrs. Jones, that’s a big job, the gutters need replacing, so do the down pipes and the whole lot will be about $4,600”. You say ‘Jeeesus’, you also tell him he’s dreaming and off he goes too, grumpy you’ve wasted his time as well.

The third plumber turns up, says, “Mrs. Jones, the gutters need replacing, so do the down pipes and the whole lot will be about $5,300”. You say to yourself, may-be the first guy wasn’t so silly after all, where’s his number again?

My point? Accountants have been trying to get us to agree to doing work with too little money for too long in Australia and it’s about time we collectively told them what was more realistic and/or our professional bodies took on that role. I don’t suggest you hold your breath while you wait for them to help.

To say ‘We are aiming at a ten million turnover and you have to achieve that with $500,000 is a joke. It assumes the ten million is there in the first place, ready to be harvested like ripe wheat in the field. The reality is that unless you spend money on very professional marketing, there will be no harvest at all.

We need an industry statement that says 10% is an acceptable/normal amount to spend. Not 5% or 2%. Just 10%. We need to think like tradies and tell the bastards the ugly truth.

When they hunt you down to string you up because they needed a hundred million and you agreed to work with five million (five percent). When your sales haven’t made it and your job’s on the line. When you’re hiding in the toilets hoping the boss has gone home early, you’ll remember the ten for one rule.

We all under budget

Could it be that many of us often oversell the results and undersell the need to fund things? Why does this happen, I hear you think? The reason is simple. When anybody plans anything they never account for what could go wrong. They assume plain sailing. How would you know the helicopter would drop the celebrity on the way to the opening? Or there’ll be a power failure on the refrigerated truck that wipes out all of the frozen packs before they get to Coles main warehouse? Things happen and they often blow out a budget. No-body has campaigns that go smoothly and no-body knows what will go wrong, so things always get under budgeted. Lesson? Always put in a big contingency and if absolutely nothing goes wrong, then throw a massive party with some of the budget you’ve saved. You might get a party every second or third year.

Make the issue a simple one

Most times it’s best, at some stage during the proceedings, to simplify the argument to the core issue of ‘what do we want’? We want 10 x, then we need to spend x. Then you sit down. Next question?

What’s everyone else doing?

According to an article we found the other day, when this was being researched, revenues to advertising work like this, globally:

  • Under 5 million 7-8%
  • $ 5-10 million 6-7%
  • $ 10-50 million 5-6%
  • $ 50-100 million 4-5%
  • $100 million plus 2-3%

What this means is there is a minimum to do any campaign of about $400,000 and most campaigns peak in OZ at about $3-4 million.

Pharmaceuticals and some retail spend up to 20% on net sales but the overall spend, including little companies, is a staggering 6%. By definition, if you are seeking to do anything better, given everyone is on the same playing field, you need more than 6% to succeed against your competitors. That’s why you should insist on 1 for 10.

How to say we need more

There are so many ways of saying more, an ‘adjustment of forecasts’, a ‘sink’, a ‘set-back’, a ‘timeline change’, ‘cementation of direction’, ‘upping the firepower’, ‘taking an aggressive stance’, ‘checking the spend’, ‘driving in the knife’, ‘taking an opportunity’… Don’t those little phrases give you pictures of situations and even what you were wearing or had for lunch that day? Do you drill down into your experiences? Most of us do all the time. Here’s some of the things I remembered as I drilled down into the issue of raising budgets.

The key approaches

Ambition – ‘This concept is so exciting we’ll need to spend more on it’. This is best done with lots of compliments about the people on the team who came up with the elements, so they all feel a sense of connection/ownership.

Missing Out – ‘Those other bastards are making all this money’ There’s nothing that angers a board/ team more than the idea that other people are getting more share/ making more money. Try it with your kids. Slice off a bigger part of the cake and give it to one of the kids and listen to the other’s scream.

Copying Heroes
– “Apple/Kelloggs/Toyota do it this way’ This works best with smaller companies who for some silly reason seem to think that bigger companies know more about what is going on than smaller companies. When you work for bigger companies, you know everyone in them thinks the reverse…big companies need to be told that little groovy companies are doing things this way.

Told You So – “After four quotes, here’s the numbers” Exhausting as it is, some people will only believe it either after you’ve actually done the campaign or when half a dozen consultants have told them so. This is most commonly thrust upon the long suffering public servant marketers and/or marketing people working for a qango/semi government.

I’m The Expert – “This is what it costs. Don’t argue.” This works when you are Eddie MacGwire, John Singleton, Harold Mitchell or Peter Costello. If you are anybody else they think you are trying to steal from them.

The Flip
– “Why don’t we just flip a coin? If you win, I do it for 5% and it might fail, if I win, I get 10%, it works and we both get a raise? Works with those who have real balls. But I challenge you to find somebody who’ll do it.

Mathematics – ‘This is how much we need to make this much’. The ten for one rule. I’m pretty sure it will work every time if you show them this article. Try it – I want to get feed-back, please. I’ll shout lunch/drinks (your choice) for anyone who emails me with results – Melbourne/Sydney only – I’m not driving to Darwin to buy somebody lunch.

Sell the money in first

Yes, I know you’re exited about the new layouts and you’ve told your girlfriend all about it and she’s told all her friends and none of them have signed a confidentiality clause, so you need to sell it in today and you’re so excited and you can’t wait to get the boards approval and off you go. But it’s usually best to sell the budgets in BEFORE they see the art work/concept.

The best thing to do is to go see them with an amount you want to raise. ‘This is our target for next year’ would be a good start. You put up $100m on the white board.

“How are we going to make $100m?” What we need to do is very carefully and surgically invest $10m over the course of the year.”

When they say ‘what will we get for $5m? Don’t say $80 million; say $50 million. When they say what about $3 million? Don’t say 40, say $30 million. Don’t budge. Even the dumbest will get the picture after three or four examples.

Don’t undersell the budget

Unless you have a track record a mile long with your team/board, I’d put as much effort into the budget issue as I did into the concept/campaign. Most marketers are under-doing the selling-in task by focusing on detail of execution, media, research results etc. The thing you need to sell is the bigger budget. The details you can go into next time, once they have signed off the money.

Pitfalls when asking for more money

A pitfall is, in graphic terms, falling six feet onto sharpened wooden spikes and lying there for ten minutes as you die. They are unpleasant.

Do not:

  • Get nervous
  • Hestitate
  • Run words into each other like you’re going to vomit
  • Agree to what you don’t want to
  • Give up
  • Be ugly/loud/stupid unless you want to seem it – see tactics

Tactics that work

I love, in descending order:

  • The door close – as you walk out, you say, what if I…..
  • Only blink when they do
  • Copy eyebrows. They raise them, you raise them.
  • Two pages, along side each other, with graphs
  • Power point – 10 slides only
  • Spreadsheets printed huge, spread out on a table
  • A five page report
  • A 20 page report

I discount, due to the fact that it doesn’t work:

  • Begging
  • Asking Mum if she can help
  • Threatening to kill them/yourself/the cat
  • Being unprepared

If you’re going to do the report thing, and look all professional and serious, avoid specifics and go for percentages or totals (depending upon which seems easier to swallow) and use the fewest words you possibly can in explanation. An abbreviation is even better. When is SV a type of a car? Sales Volume? Sick vandalism? Spread variable? You’d have no idea if you were an accountant. And chances are most won’t dare ask for fear of looking stupid.

The locations – pros and cons

Where is a board member most at home? The boardroom. The golf course. His house. Never ask in these places. Try your office, your house or during something he’s very uncomfortable about, like a hang gliding lesson.

When all else fails

Split off items that don’t come into your budget. Sales force remuneration. Promotions at store level. Rebate to retailers. You’ll know what these things could be. Every time you get them put into another budget, yours grows to a more workable size.

How much contingency?

I won’t go near a budget that does not have a decent contingency. I think most of us would be safer if we put in 50% for unknowns. That takes a 5% budget to being 7.5% or even 10%, where we started. Realistically, put down 20% as a minimum for what can go wrong.

Frankly I'd like to be direct – The rules of Direct Marketing

October 16, 2013

Some people get half a dozen letters and A4 brochure things. Others get one or two. Somebody in Creative gets a thing that flies around the room when you open the envelope. This happens every day. Someone from the office goes down to the Australia Post and gets our mail. Same thing is happening in every office in Australia, every working day.

I open mine. Of my three A4 things, two are Real Estate For Sales notices, one a big brochure from a mailing list company called The Impact Advantage, a joke of a name, three direct mail letters with a DL in them, one thank-you note for something I shouldn’t have done and finally one cheque from a very nice, but slightly old-fashioned client whose system spits out checks instead of direct debits – our only client which still uses them.

All paper. All could have been done electronically. All, except for the cheque, basically unwanted. Weigh? The whole office’s lot weighs about 1/2 a kilo. Not much of a tree – hardly a sapling really. Plus a few ounces of phosphorous and chlorine to bleach the paper white. A few ounces of nickel and cadmium and ferrous oxide to colour the pages. Some kilo’s of green-house gases; carbon dioxide, methane, nitrous oxide etc. to generate the power to smash that little tree up and crush it into paper to power the mac that did the graphic work, to power the mobile phone of the agency suit who talked to the marketing managers for two hours about the strategy…….

What strategy? It’s direct. You just send out enough of them and some suckers will buy, you’ll may-be even crack over the magical 1% effectiveness mark, to justify you doing it again three months later.

I bleat on in this column about strategy all the time. About the big idea. About changing the mind-set of an industry to have (real) IMPACT, to get results. But I waste my time when I talk to direct mailers because they don’t work on that wave-length. They are happy to do the mediocre, just because it works, just.

I’m kind of pleased to say, direct is slowly dying. And it’s dying because the public want it to. The public see the writing on the wall.

This is not to say all Direct is doomed. Just the undeserving, wasteful, paper-based bit.

Direct emails are booming. So are direct phone calls, direct walk-in-off-the-street-and-ask-for-the-order is booming. Direct TV does nicely. Direct from the-website-to-you is booming. But Direct in a letter, with a DL, a return envelope and a couple of little cute snappy things that fall out and get your attention? The way of the dodo.

And yes, we always read about the doom of an industry in these types of magazines. People are always predicting the demise of Outdoor or the ruination of TV because of ‘fragmentation’, whatever the F that is, but I can feel the mood swing against direct mail more than I’ve ever felt any predicted demise before. People bristle on the neck when they see wads of paper being delivered to their homes. Clients don’t brief us on direct mail much anymore, and if they do, they do it feeling guilty. Creatives are leaving direct in droves – they phone mainstream agencies like us looking for gigs – saying the business is stale, work is slow. Does it show yet in the DM industry figures? I doubt it, but it’s there.

Sheer Waste Part One

This is because, as grown ups on a crowded planet, we need to be able to put aside ‘in-balance’ sheer business arguments and look at things in a mature fashion.

We cannot in all seriousness condone the huge level of waste for the sake of a few short-term dollars. (Well, the public can’t and that’s your biggest problem – doing something the public doesn’t approve of is death) Yes, for the next few years you will be able to put a business case forward for the use of direct mail, like you could for Uranium mining. But in the long term, like with the use of nuclear fuel, the pros do not outweigh the cons.

I’m using the nuclear debate because it is such a strong example of similar short-term dumb, accountant-style thinking. Run, like many Australian political arguments, by people who have a vested interest in the outcome, rather than taking an objective view of the issues. I point the finger firmly at Ziggy Switkowski, a man with a PHD in Nuclear Physics, who was appointed by John Howard, (who’s parties income in turn comes from groups like Rio Tinto, the largest Uranium and (and Coal) miner in the world, “Hey guys, looks like they caught us out on the coal front, whoops, let’s just shift our cash-flow to Uranium – we won’t even have to skip a beat”. What a decent group of chaps don’t you think?) appointed by Johnny as the task force leader on the Uranium debate – like he’d be objective – a Nuclear physicist! What kind of society do I live in?

Nuclear fuel could power us as a planet-load of people for a few years in total – may-be 10. As a percentage of our total fuel needs, may-be for about 30-40. (Ziggy’s figures – I was at a lunch recently where he spoke about it.) For that 30 years we would benefit from slightly less carbon emissions. But for the next million years plus (Uranium has a half-life of 300,000 years – it’s nasty bit shrinks by half each 300K – meaning for a tonne to shrink to a kilo, which is still dangerous enough to kill everyone in Sydney, it would take around 3 million years and there’s how many tonnes being made for the kind of power we need?) someone would have to look after that spent fuel. Let’s look at human history a bit to get this into rock-solid perspective. We do not know what the Pyramids were built for. We don’t know much about their secrets, even how they were built. We only started to be able to read the hieroglyphics on their walls in the 1920’s because an Italian called Stefan Rossini managed to translate them by luckily connecting them with a dead language, Sanskrit. The point is, they were built only 5-7,000 years ago. And we know nothing. How can we expect people to look after some concrete bunkers in 200 years let alone 200,000 years, if they’re getting no benefit from doing it? As if they would? ‘Oh, we’ll just make sure no-one goes in here, because an ancient God called Ziggy Stardust told us it would be bad JuJu’. Imagine trying to get that past a parliamentary expense committee? And keep in mind, the pyramids don’t leak into the ground water and kill everything on the planet.

The Sheer Waste, Part Two

You cannot justify wasting 99 items for one to work. It’s lunacy. I know direct mail is a guaranteed certain return and can be rolled out across similar segments for similar results and that makes it nice for the accountants to justify to the board because they can’t stand things that take a little more sophistication of mind.

And I’m a big believer in mail. So I feel sad writing this stuff. It’s like loosing a friend to cancer; watching them slowly die. I like getting a letter. Xmas cards are one of my favourite ways to be reassured that printers still love me. I’m happy to open a brochure that’s relevant to me. I might even buy something in it. But justify to my kids why we waste forests every day to sell a few extra cars? Nup, can’t do it.

So I’m not going to waste more paper on the subject. I’m going to concentrate on those aspects of direct we can justify at Starship and leave the other forms for your conscious and your children’s.

Emails

Becoming the groovy environment-conscious directee’s weapon of choice, emails are cheap to send out – normally free, got to love that. Can be cheap to put together, will often generate better returns, faster than any other method. You can literally have an idea this morning, brief the creative team, get some art work up inside of an hour or three, send them out and get sales back the same day. And you can measure what category of customers responded to what creative, so you can change the story/emphasis regularly to do a better job. I challenge you to think of anything that comes close to being that effective dollar for dollar.

It will really boom when the Federal Government changes and/or Telstra or a consortium decides to spend the 4-5 billion needed to up-grade our lines to optical fibre, like any country worth noting. But, there’s the interests of TV to take into consideration and who would want our people having another viable media option, certainly not the Packers or the Murdochs?

To do emails well, stay very flexible. Be prepared to adjust your creative according to what is going on in the world market at the time – topical is very powerful – if there’s been a good bombing or Peter Costello has just resigned, Nicole Kidman’s won an Oscar or whatever that day, use the news of the day for maximum effect.

Be right for the time. It is an instant medium. If you’re sending out to Australia at 8am, mention coffee or cereal, not wine and roast dinners.

Be cyber-oriented. It’s not a stuffy old letter typed on a manual type-writer in 1956 by Edward G Letterman (ask your 60 year old direct agency copy-writer, or look it up on Google). Use short words, SMS short-hand.

Use original pictures. Anyone using obvious stock shots gets a much lower response than real shots. Does the word cut-through mean anything 2 U?

Think Tumblr. Moving footage of real people doing silly things gets huge results. It’s good now to hi-income customers or business, and will be very popular for the masses when we get real broadband.

Don’t over-jargon. I know you corporate marketing types out there can’t help yourselves, God knows jargon is your only defence against the accountants in corporate land, but the public doesn’t respond to jargon. They have too much going on in their lives to worry what you’re on about, so they just move their short-concentration span eyes to another less painful subject and you loose sales.

Customise campaigns – make sure the gender is correct, the prizes worth winning, the tone of the note right for that audience, the fact you’ve contacted them before, it’s been on this subject etc. Your I.T./data base people can tell you these things, but you have to be nice to them.

Re-gig things if they are not working – don’t run hundreds of thousands out to people, you’ll only piss them off if you’ve got it wrong – do a 1,000 person exercise, wait a few hours, check responses, change it, change it again, eventually get a good level of response, then roll it out.

Permission marketing is the only way to go, especially in OZ where we have Privacy Laws, which I have to say are an abomination in their current state. But that’s another whole article, and over-due I’m sure.

A recent Kinston Uni (U.K.) study found the following ‘amazing’ results –  higher response rates correlate with more appealing subject lines, with more images, with a higher monetary offer, more appealing incentives and, shock horror, are inversely affected by the length of the email. In other words, make it topical, offer lots, keep it short.

The same study, which covered 371,072 individuals and their responses, found a click-through rate of only 3% in outbound emails. So don’t feel so bad if yours aren’t getting much better than that.

Television

My favourite direct. Worked with decent creative, a well–designed, easily navigated, heavy selling web site and a room full of telemarketers to close the deal, damn near nothing can beat it as a way to get vast volumes of sales at full margin. (Never forget – retail is invariably a discounting medium today) We have a client called I-Select, who do this so successfully the Libs, who want to float off Medibank Private for a mint, have established a government department to try to kill them off. I-Select has grown 100% per annum, week on week, the last 3-4 years using this approach.

Flying the Coop – Starting Your Business

October 16, 2013

I’m on a boogie board. Crashing into my 11 year old as he spins around on the wave next me. He banks left then slams into me again. This time my sunglasses fall off and I have to slip into the surf to find them. With my eyes open I reach down and grab them as a second wave knocks me over. I’m bounced along for a while and I feel myself smiling. Middle-aged, balding, overweight (like I note, are most Australian males) but surprisingly happy. And I reflect on why.

Cause it’s a beautiful day and I’m here having fun. And it’s a Friday, just after lunch. Yes, the kids were taken out of school early. Yes, I’m a bad Dad. Yes, I should be at work….

And I would be if I was employed by a big company. This is the fundamental reason you set up a business for yourself. So you can decide how and where to spend your time. It’s not the money, although it can come. It’s not just the fuck you to your current employers. It’s the freedom to steer your own ship. Or not, as the case may be, for a few hours…

Are you a chicken? A battery hen? Are you sitting there, coffee slowly going cold. Laptop slowly wearing your eyes out. Seat, slowly making your bum sore. Life slowly dribbling away. Bored.

Is it time to free-range? Time to do something that may change the world, or at least will change yours? Is it time to put yours on the block. To start your own operation? I can feel a tingle coming on all over my feathers. I’d better close my office door.

Every marketing person I’ve ever met did their course or started their career with this goal firmly in their mind. (Not firmly in their hand.) One day they would be their own boss, be the chief engine and steering wheel of the great ship ‘Existence’. Most marketers want to run their own show and so, I’m betting, you do too.
But what to choose?

Assuming for a moment you are not a single-minded git with a burning desire to set up something truly off the wall like panty-sniffing vending machines on railway stations (Very popular in Japan) Assuming you are interested in a few different options, how do you choose which one to start?

Many people start with personal preferences. Having been given a book on managing your life called something like ‘Six steps to Success and Sexiness’ for Christmas – there’s always a chapter on ‘do what you enjoy doing’.

Do what you love?

So say you like fishing. You say to yourself, ‘I could just go buy a boat and map out where to get whiting or snapper, then hire myself out as a fishing charter boat and off I’d go. Only need a couple of extra rods and an ad in the Yellow Pages…’

This is true. And a commendable venture, given you can take me out and get me near them. But the ‘’cause I love it’ approach has several major draw-backs for the true marketer. Firstly, there’s often stuff all marketing in it and you’ll have that intellectual side of your career totally frustrated. And there’s often stuff all money in it, so your spouse will murder you in about 3 months. But the worst part of it, which is why almost everybody who sets up a business around their hobby hates it eventually, is that if you do what you love too often, it destroys it. Try listening to your favourite song 200 times in a row.

Do what you like

You need to find something that you can still get kind of excited about, but all the analytical bits of your brain think makes sense too. Hard call, I know, but it sure beats doing something that no analysis says works or that you already hate to start with. This leaves about 2 million businesses, so we should get to analysing what to choose.

What to look for

To be very serious for a moment, the business to look for has four key elements going for it.

Firstly, it should buck a trend. A contrarian, or someone who runs against a market flow, invariably does way better than a fashion follower. Ie. If everybody is getting out of an industry, get into it.

Secondly, it ought to be inherently big. A volume game. An old saying is ‘If you make for the classes, you eat with the masses. If you make for the masses, you eat with the classes’.

Thirdly, it ought to scare other people off – by it’s complexity or by the cost or by the technology needed or something else that stops other people competing with you. There’s 1200 personnel companies in Melbourne alone. Cause they’re easy to start. Ask yourself, do we need another?

Lastly, the other players ought to be vulnerable. Look at what Virgin targets. Airlines were inflexible and had ugly old hostesses. Credit cards were too expensive and up themselves.

Why franchises are for the cannon fodder

Franchises, a worthy consideration for a blink, are set up for people who have neither marketing or organisational skills. So they buy something that requires little analysis and no branding/operational brains. I’d like to think everybody who reads this magazine is way above franchises, unless it’s to franchise their own business, which we could all probably do in a year or two. But the politics of running a franchise operation, with all those trumped up little bosses…

The first few steps

Plan out what you have in mind on one piece of A4 and on another, do a mud map of what has to happen in what order. This will take about 20 minutes, if you’ve spent a few weeks giving it real consideration while you’re on the loo, in the shower etc. You could even call it a ‘business plan’ if your spouse ever asks if you’ve done one…

Once you’ve done a game plan, register a business name and open a bank account. Put $1,000 in it. Most importantly of all, get some business cards/letterhead. They give everything else legitimacy. Now you’re off. Good luck.

Oh, I forgot to mention maintaining a cash-flow by staying in your current job until things are really swinging, or at least keeping a part-time income going on the side, like a ’consultancy’ gig with the old company.

Now get out there and sell your idea. I’d suggest you look around for some customers and work out how they are going to be persuaded to put their business through you. Have you researched the market? Have you worked out how to make your widget or where to locate your shops? Are there any competitors and how do they operate? Good hint – go and buy a book on starting your own business (or go on the web), there’s thousands of them. They all say the same stuff.
If you can’t sell, don’t bother

This may come as a surprise to many in the corporate world, veiled from the messiness of actually having to ask for an order or shake hands with a smelly customer, but if you can’t close a sale in the real world, you’re dead. This extends to every aspect of your new business, from talking the bank into extending your home loan to employing your first subordinate.
Selling like you aren’t.

On the subject of selling successfully, especially to the bank manager or the first few employees, let alone customers, do it like you aren’t. The best sales people are enthusiastic and know the issues and are good at being friendly, and never seem like they are selling at all. And a tip. Don’t ask if they want to buy something, just hold out your hand and say ‘savings or credit’?
Cashflow is king

Make no mistake, the thing that kills small businesses is cash-flow, or lack of it. Change your payment terms from 30 to 7 days. Take cash if you can. Reduce your out-goings or make multiple payments of larger bills. Stretch it out, make it smooth. Don’t over-commit. Manage your money, or you won’t have any.
Managing people and time

These are the other two key variables. Time management is critical. You need to get the most done in a day you can, without exhausting yourself. If you are tired you make mistakes. And mistakes cost money. And this time it’s yours. Which brings me to the other critical issue, people.
Nobody can do it all

If you find yourself doing something too often, or for too long, hire someone. I know it seems impossible to pay them. I know you could do it and it will only take 3 hours or so, but the little jobs fill up your day and you’re better to have other people doing them.

Hire people (who meet all your criteria) on gut-feel. Do you want to work with them? Will your customers like them?

How many really fail?

The story you get from the corporate world is that 9/10 small businesses fail in the first 12 months – losing their owners their homes, destroying their families and thus scaring the hell out of any employee who thinks the grass might be greener in self employment land.

I saw an interesting (confidential) report a little while ago from a bank. They’d analysed their own records and found something truly amazing. Yes, on the surface, the businesses had ‘disappeared’. They’d changed. Many had gone from a personal name to a trading name. Or a trading name to a P/L. Or to a trust. Or re-named themselves, because it worked better for sales etc. Which means the name on the cheque book had changed and hey presto, the ‘business’ no longer existed. My business was originally …anon advertising, which was very clever, while we were still working for other ad agencies etc., but was unknown by anyone else. Changed it to Starship and more people remembered it. Point is we didn’t fold, we just changed our name. Way fewer start-ups actually fail than the stats would have you believe. Have confidence in yourself and don’t let the bastards scare you.

When is it not a start-up anymore?

a)   When someone offers to buy you for a big sum

b)   When your Mum stops asking you how your hobby is doing?

c)    When your spouse stops pushing/selling the business at school barbeques, and gets the guys in to quote for a new pool

d)   When your HR manager tries to stop you hiring pretty young things at cocktail parties

e)   When you get bumped instantly from a local bank manager to an area manager whenever you have a problem

f)     When people ‘vet’ your calls and say you’re too busy to see mates who’ve dropped in

Momentum – businesses have a life of their own

Something few entrepreneurs believe until it just happens to them, is that businesses have a life of their own. When you get to work and you’ve got 5 or 10 people already there and they are making phone calls and ordering widgets and ringing back customers, you suddenly one day realize that it’s not just your hard work that pushes things forward. You’re not the only little pony carrying a load. Companies of people live for themselves.
Is an entrepreneur the best manager?

There comes a stage, and often it’s only a few years after starting, where really successful people recognise that they would be better on the board than making every decision every day. This is the grown-up approach. Get a general manager in. Make it her responsibility to make a profit. Give her guidelines and incentives and be bloody generous with her remuneration if you want her to make you a fortune.

How to Manage

Live by two rules. One, never ask anyone to do anything you won’t do yourself and two, if you’re prepared to anything, you never have to do anything very long. These of course virtually cancel each other out, but it does make my life interesting and it does make for a happy work-place.

Something else to keep in mind is that people respond better to praise than telling off. If you’re not enjoying yourself at work, give up or go home. Oh, I could keep on going for weeks with management philosophy. So can anyone else. If you want to read that sort of shit, go to Readings or Dimmocks and check out the ‘business’ section or buy BRW.
When to get out

Many of us see a good exit strategy as negotiating to be bought out by a bigger player. This can work. They will usually value your business on the basis of anticipated returns. Expected risk affects this. How surely is the income going to be there and does it depend on you? Or is it rolling along like a freight train and doesn’t need anybody’s help? Typically they’ll value it at a multiple of your earnings after tax. Could be anywhere from three to ten times or more what you’ve made the last couple of years. Then there’s floating, which is more expensive to do, but you can keep control of your baby.

Can I get it back if I change my mind?

Richard Branson ‘cashed-out’ some years ago, but got sick of ‘them’ stuffing around with Virgin, so he bought it back. And I think he actually made a profit on the deal. (Some five hundred million dollars?) Not all of us can afford to do both. It does require good lawyers and helps if you sell the business in the first place to bad managers.

I know most people say ‘it’s a big risk’ and they’ll give you a lot of reasons why your idea will fail and stories about how Uncle Harry  started his own fruit canning business and they ended up living in a caravan park and drinking metho. But do it anyway.

When things get tough, and you wonder if you’ve done the right thing, remember this immortal saying. ‘When the going gets tough, the tough get going’ (Animal House?) ‘It’s better to live like a lion for a day than a lamb for a hundred years.’ (Bible?) or ‘I did it my way’ (Frank Sinatra) or ‘If you can make one heap of all your winnings and risk it on one turn of pitch and toss.’ (Rudyard Kipling). Or ‘Ask not what America can do for you, but what you can do for America’ (J.F.Kennedy). I guess you should insert Australia where it fits…Most entrepreneurs know lots of these quotes.


 

Your Own Business: Greener Seas?

So you’ve decided to become the master of your own ship – but where to sail it? Here are some of the more well-chartered waters of entrepreneurial ex-marketers…

An advertising agency

Yes, I can write a brief. Yes, I can hire a creative. Yes, I can put together a proposal. Yes. I’m an agency head in a day.

A design company

I always have my pens neatly in a row and haven’t worn a colour other than black for 10 years.

Market research

I’m shy. I’m happier asking than telling. I am good with numbers. I write a nice report. I should be a market researcher.

Marketing consultancy

I’ll take an hourly rate, but I ought to be on your board. What does the research say? Have I told you how I saved Astra Corp from being taken over? Yes, I’m still sleeping in my car.

Promotions

What is it you want? Coloured hats? Chicks with big knockers in tight t-shirts? 250 school kids in yellow on a beach singing the Banana Boat song? No problems.

Food

Everyone wants to start a franchised vegetarian falafel bar. Or a Museli Bar that says ‘healthy’ on the front and has chocolate on the back and sells in Coles.

Fashion

My husband is a whiz with a sewing machine. (If it gets big I can send the designs over to China.) I can hit 20 stores a day and they’ll all pay. They all really liked me. They wouldn’t rip us off.

Web brand

I can sit at home. I can buy Dreamweaver and email people to supply me with pictures of their products and build the site myself.

Now what to sell? Roses only. Oh, someone’s done it. What about wine? Holidays? Wot if I…Kids’ toys?

Importing

Fashion, farm products, food, anything that takes work/profits/power away from Australians and gives it to Asia is a good thing.

Retail

If you go overseas you notice a significant change. All the shops are nice and friendly and people help you without grumbling. Almost any retail idea, run by a decent marketer, will do well here.

Cleaning/plumbing

Things people don’t want to do make money. Look at Pratt’s Visy – they just collect (and make) rubbish. He’s not short of a quid.

Farm

Just cause everyone else is in Olives (Wine, Ostriches, Tulips, insert your own over-supplied product) doesn’t mean it’s wrong. I’ve done all the research. And the property is only $750,000 – it’s a bargain.

Why Small Businesses Can Use Flexible Marketing

October 16, 2013

I’m down at the beach house. It’s Sunday morning, about 7am. There’s a Sou’Easter blowing about 20 knots, whipping up a choppy surf. I can’t go for a paddle, I can’t fish. I’m stuck with the prospect of having to wake up the kids for my own amusement. I turn on the ABC radio 774. The last independent, objective station left. On comes Macca’s Australia All Over. This instantly paints me as a basic redneck Aussie to many readers. I struggle with whether I should write that in an article (do they want the smoothness , rounded vowles and balanced advice that come from a sophisticated marketer with an MBA and 10 years experience in London and New York, or do they want biased messy stuff from old researcher/ ad man with a bad attitude?) I decide in the interests of fair play and honesty I’ll leave it in.

Macca reads out a few letters. All of them about the need to buy Australian. The people calling in complain about Asparagus from Peru. About drinking Orange juice from California. What are the farmers to do? They plough in their orange groves themselves because they can’t get people to pick the fruit “Australian’s are above a bit of hard work nowadays, we all want to be dot.com billionaires” and the customers want those perfect bright, big oranges from the USA. The ones grown on irrigated country with more chemicals than Karg Island. One phone call suggests we ought to set up a web site that lists products needed – so people doing business plans can find out what to make. I vote for that, but I’m sitting in my torn shorts on my own, in a cold kitchen and no-one sees my hand go up.

A guy is interviewed who’s a printer, Richard someone. Started his own business in the early 90’s. He talks about industry change, about competing with the big companies. About trying to maintain the Australian culture, by printing books about Australia. The printer says the plight of Australian businesses is about at the bottom. He talks of a change in direction. The presenter, Macca, plays ‘Stand up and fight’ from Carmen, making a joke about the brawl in NSW parliament that happened that week. The point is palatable. I can hear fervent Aussies, from Marble Bar to Manly, fists clenched, crying into their sweet weak teas.

Small businesses employ more people than big businesses. They are the backbone of this country. They work harder, buy more. And they contribute everything they have back to the economy. Where else would they send their excess profits anyway? Bosnia?

If we’re going to have any industry in the country, we need to encourage smaller businesses. Businesses which are obviously based in Australia. And if I know anything about you marketers reading this, you probably harbor plans to run your own business one day. While your career choice often comes down to what sort of company you think would sit well next on your CV, I’d like to think you also decide according to where your heart wants to go, what you’d actually like to do with your four score years and ten. Even if you work in a big business now, you need to keep one eye on smaller business, and how it operates differently. So I’m going to wander in that recess of my mind that harbors my experiences with small business.

This is another of my gross generalization articles. Obviously not all small or big businesses behave the way I describe below. If you think I’m inaccurate, as the Yanks say, write me.

Small, nimble brands

Fast moving attack craft

Smaller businesses must move quicker. They need to make decisions in hours, not months. The best smaller business people I meet are ‘fast reads’ – they get the point in seconds, don’t quibble about the detail too much and then go golfing or whatever it is they actually want to do that day.

Their businesses react faster too. They must be prepared to change in direction in relation to a wide range of issues, but most importantly in product range, distribution and advertising. This is not something you do in a few hours on a Friday morning, but being prepared to be flexible and explore other tactics is a fundamental of good small business.

To survive they often have to accept lower margins sometimes, more focused target appeals. A small business can often survive, even here in Australia, on a very tiny market segment. Like a local area, or particular kind of car enthusiast. But where they do focus in on a small segment, they doom themselves to remaining small. So you must choose carefully who you wish to appeal to. If it’s a psychological head-set which is likely to grow amongst the population, like say environmental sustainability, then work it.

If it’s a demographical sub segment that’s likely to shrink, it’s less attractive. It could well be a rich seam for a while, like say Elvis impersonators outfits, there’s still thousands of them around, but eventually they and the people who know his songs will die off, and you’ll be left with a business that’s only catering for people with sequins set in their grave stone.

Closer to market

Smaller businesses are by definition closer to their market, more aware of what’s happening. If you chat with your customers regularly you have much more opportunity to ask their opinions, predict their needs.

Fight for flexibility

As I said above, to keep alive, smaller businesses need to be more open to change than large businesses. This however fights with one of the most ingrained of the general characteristics of small businesses, conservatism. Which in Australia means doing what you’ve done before, that’s worked. You can’t blame people in a vulnerable business to want to follow the proven. They have to. But there are many instances, particularly in marketing aspects, where copying another business or asking another small business person, or doing what you have done before, is not the best approach.

Keen staff

Staff in smaller companies are often keener to compete. There is a different kind of person who applies for a job at a small company. They are less scared of failure, less scared of being out of a job. But it goes both ways too, often people who try working for a small company find their lives are more roller-coaster like. Many more highs and lows. If you suffer from bi-polar syndrome, this is where you’ll feel most at home.

Satisfaction

Small business people talk about the great sense of satisfaction they get running their own show. They like being at the tiller, with the wind in their faces. Interestingly, that analogy is very accurate. If you look at the owners of yachts in Australia, small business owners dominate their ranks.

Sentimental favorite of public

The public love the underdog. The angst that erupts when a big player moves into a market that has been dominated by a small, independent business is often powerful. When the bigger business does the job better, the punters move over slowly. When they stuff it up, as often happens, the public grunts with satisfaction to itself about that big group needing to stick with what they do instead. Quite a lot of people today hold a serious grudge against big businesses, regardless of the reality of better service, lower prices or more sophisticated technology etc. They get a real kick out of a big business failure, I think because they only ever see themselves as the little guy, battling the big corporation, not the other way around; a cog in the wheel of the giant machine.

They have a point. It’s hardly romantic to think you are account manager number 46 in a company. Much more exciting to think of yourself as a lone cowboy, out on the plains of life, sleeping under the stars and shooting varmints for dinner…there I go, redneck again.

Realities of with working in or owning a small business?

Less budget

If there’s one thing that kills your dreams of power and growth in most smaller businesses it’s the harsh reality that you just can’t afford all the things you want, to play against the big guys. The harder thing is not the lack of budget, it’s the decisions you have to make about what to spend whatever you have on. What will be the better investment? Why can’t I do both? What’s a minimal spend and what’s far too little and a waste of money? Can I crib that out of next month’s budget?

Poorly trained

Because small businesses need to hire multi-skilled people, it means they are often less trained in certain core tasks than the team would like. And they often can’t get specific training for say IT management, when it’s only 5% of their day. Which means smaller companies often need to bring in consultants for all sorts of aspects of the business, IT to accounting to sales agents etc. which again affects profits. Consultants are more expensive than internal staff. But who’s going to learn to fix that machine? You’d have to be a PHD before you can get near it.

Dependant upon few individuals – vulnerable

A small business which depends upon a few key people is as vulnerable as a big fat worm on hot bitumen in the morning sun.

Low awareness

The key complaint and major hurdle to get over ,mentioned by all small business people, is awareness. “I’d like to go to bar-be-ques and tell them my company name and have them nod, not say ‘what do they do? all the time.”.

But what really matters is not necessarily public awareness, it’s awareness amongst your target market, I hear you say. Bullshit. That’s nice on paper in a Marketing 101 exam, but that’s it. What public awareness does for small business is boost their credibility so much that people just trust them. Financiers, lawyers, distributors, even customers. Which means they get better treatment and their own self confidence goes up, which makes a great difference to the work place atmosphere and everyone’s enjoyment of the average day. And if you were looking to sell your brand to retire on, which most small business owners intend to do, wouldn’t you prefer to sell one with a house hold name? But how to get there…

Unestablished relationships

When companies have been dealing with each other for many years, there is a kind of invisible bond between them. With smaller companies these bonds often don’t exist. This isn’t helped by short-term thinking owners who swap and change suppliers on the basis of minor differences in cost. It is folly to ditch suppliers. Reliable suppliers are harder to find than customers and the work it takes to train yourself, your staff or the next supplier, just to save a few dollars, is almost never worth it. Better to just ask the current people for a discount, or to improve their service/quality in the aspect you are concerned about. If there’s a genuine reason for prices to rise, all suppliers will most probably have the same problem.

Heavily sales oriented

Because cash-flow is key, most smaller businesses focus more heavily on sales and put less weight into brand building than do bigger groups who can afford to build a market more carefully, and can afford to go into a new market with bigger budgets and longer time lines.

Role of owners/mgt

As owners and managers are closer to the business, and they are multi-skilling, their role must be much more hands on, much more efficient. I have a policy that if I find myself doing something for more than a few hours a week, I hire someone to do it instead. Owners must be like barmen, part psychologist, part sale person, part general, part cleaner.

Thinking big, spending small

With smaller turnovers, come less resources. Small businesses need to decide that they will grow and how. This often only takes a few hours of debate with some legally available stimulants, like alcohol and coffee. Add to that a white-board, and imagination and a smattering of basic market theory and off you go, conquering the universe. If they do commit to growth, the next steps are simple. They need to budget in the same proportions as do bigger companies, I mean 10% of anticipated turnover of new products or services on promotion, not 2%. They need to buy media and creative more efficiently. (That sounds easy, doesn’t it? I just thought I’d throw it in to give every decent marketer the shits) And they need to be twice as aggressive in their market as their bigger cousins. It ain’t the size of the dog in the fight, it’s the size of the fight in the dog.

Tactics you can use

Be small and humble

Smaller companies do very well using the underdog appeal. Lots of apparently little companies in far off places like Queensland (Herron) do well against their bigger adversaries claiming Australian made, little company etc.

Most smaller businesses try to look impressive. They do it by calling themselves ‘Incorporated’ or listing offices that don’t exist, using ‘corporate’  typefaces etc. This is because they want to be taken seriously. They miss the point. ‘Serious’ and ‘credible’ don’t get you sales or loyalty.  To grow big you’re better off to look small.

There are some huge American companies who do this really well, with dumb little ads in magazines etc. who often turn out to have turnovers bigger than the State of Tasmania. Mind you, there are milk-bars in Moe who have the turnover of Tasmania.

Poke Fun

They can make jokes about the bigger groups, like Grill’d, who’ be lost for marketing tactics if they couldn’t poke fun at Maccas.

Dare to have personality and an opinion

One of the most fundamental truths of life on this planet is you can’t please everyone. If you polarize by siding with one group or just doing the different, while you won’t appeal to as many people, those who do think like you, will love you.

Become the expert

Nothing better than taking the expert role if it presents itself. You could be the expert company on several aspects of your business. If you’re strong on accounting in small business, be the small business operator on the radio accounting show. If you’re strong on weather and tides, be the small business that sponsors the report on surf conditions.

Get decent branding – hire the best designers you can find

But be consistent. Whatever you do, be sure to build your brand with the same colours, logo etc. Do not bounce around. This doesn’t mean you shouldn’t experiment within that. One smaller client of mine found they got many more sales calls when we lightened off the blue in their logo on press ads. They seemed more approachable, less expensive.

Systemize

Track how you handle phone calls, quotes, accounting issues. Find out what works and make them formal systems. Boring but true. Try getting someone in your business you don’t like much to do it.

Plan, but not to excess

Yes you need business plans. Yes, it’s the grown up thing to do. Yes, many people from big businesses move to small ones, write a business plan and think that’s it. They go broke thinking someone else will implement it. Short, basic, easily followed, easily changed business plans are fine. Best kept to about 10 pages max.
Achieve something every day

No matter what industry, the people who succeed are the ones who get something actually completed every day.

Learn from other people’s efforts

It’s often best to copy bigger businesses when you are small. I don’t mean their branding or their business model. Although it wouldn’t do any harm to work out what you think they are doing.  I mean the percentages they put aside for one issue or another. If they spend 1% on legals, put that to one side. Same with advertising and bank costs for that matter.

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