When you turn on the ignition and start your car’s engine, it goes. While increasingly complex, most cars still use the good-old combustion engine. But regardless if you’re driving a 35 year old gas-guzzler or a brand new EV, your car needs fuel.
It’s that simple.
In business, advertising is the fuel that drives companies forward..
It’s that simple.
I have the chance to work with a wide range of clients: From major retailers to small non-profits; from start-ups to new organizations. Without a single exception, every one of these companies needs an ad budget.
Unfortunately, some do not allocate any resources to advertising. Still more either underfund their ad budgets or target this line item as the first-to-go when they run into tough times.
In working with clients to develop ad budgets, I often present them with three questions:
- How will you get people to come to your party? Whether you’re selling a product or providing a service, companies need customers. Start-ups companies need to attract new people to their doorstep (sometimes by taking them from someplace else). More established business need new customers need to replace old ones all while maintaining existing customers.
If you don’t invest anything (or if you don’t invest enough), how can you expect anyone to show up?
- How much can you possibly afford to invest in advertising? Sometimes it is difficult to ask the “budget” question. Talking about money is somehow delicate or impolite. But as good stewards of client dollars, we need to be upfront and ask this question.
Moreover, we have to be prepared to deal with the fact that it’s likely not enough. Major brands and large companies frequently cut their ad budgets for bottom line savings. Smaller organizations or non-profits frequently struggle to afford effective advertising, and so, ad agencies are expected to do more with less.
But given the technology today and given the nature of media, it is increasingly possible for even the smallest of start-up non-profits or the most niche of new business ventures to find effective ways to “be big somewhere.”
- Can you afford to not advertise? Not advertising is actually really, really expensive! Especially in the long run. Reducing or cutting advertising is an easy way to add to the bottom line. But it rarely works out.
Companies without adequate ad budgets (or with no budgets at all) realize this too late. And frequently, the respond with last-minute pushes. There is no time for strategy. Last minute advertising cannot be effectively negotiated. Creative is slip-shod and slap-dashed. This is an ineffective waste of money, costing the advertiser real money and in real opportunity.
I often refer to case studies when meeting with clients. Some, in particular, tell the story of a major local brand that annually cut their ad budget in reaction to a drop in the previous year’s sales. As a result, they entered a death spiral where sales declines led to ad budget cuts, resulting in more sales declines. You see where this is going. This company stopped inviting people to “their party,” they invested less and less in advertising (not more and more). T
They went out of business.
You’d never try to start your car without gas in the tank. It will ruin the engine. Not only will you never get to where you’re going, but it will cost you more to try.
The same is true for organizations large and small. By not investing in advertising (or by not putting enough gas in the tank) retailers, non-profits, major brands, healthcare companies and the like will never get to where they are going.
It’s just that simple.