Morris Saffer, founder and head of one of the first successful retail ad agencies in North America often said “It does not take a genius to increase sales, just put everything on sale at half price and your sales will increase. The genius is in increasing sales at a profit.”
Your clients cannot send their kids to college or pay off their mortgages with traffic or sales….. the bills can only be paid with profits.
Early 20th Century retailer John Wanamaker is credited with saying “I know that half of my advertising budget is wasted. I just don’t know which half.”……maybe it was the half that was hardest to measure…the half that created top of mind awareness, built customer trust and loyalty, and generated the most profits.
Have you every tried to measure trust or loyalty? And if it can’t be measured, does that mean it has no value?
It’s up to us as managers to educate our staffs and our clients on how to measure R.O.I. And in any R.O.I. calculation we MUST take into account any discounts or rebates offered because the brand was not strong enough to stand on it’s own. Every penny discounted from the top line must also be accounted for at the bottom line as a marketing cost.
I have a concern that in this alleged “new-found” responsibility towards ROI, we will loose sight of what intrusive vehicles like radio and TV can do for
branding and top of mind awareness and what they in turn can do for profits.
If R.O.I. gets measured by traffic and short term sales, rather than on relationships, profits, brand identity and lifetime customer value, than the media which naturally attracts the bargain hunters will win. Media which attract disloyal bargain hunters, such as coupon envelopes, flyers and penny-savers, could get a reprieve from their sentence as “profit-killers” and become the darlings in a new R.O.I. world.
It is up to us at the local broadcast management level to ensure that neither our staffs nor our clients and prospects fall into the trap of confusing “traffic” or “sales” with profits.