Alleviating Advertising Anorexia

In two phone conversations on the same day, e-business executives tell me that their companies have never placed an ad. One company is two, the other almost five years old. Yes, they've done marketing, some of it rather effective. But they've never placed an ad. Sales are poor, they say, but they think they can hang on. These are lean times, and they may get leaner. Budgets are tight. But they've never placed an ad.

"Describe your symptoms," I ask.

"Advertising is too expensive. Advertising isn't effective. Advertising eats into the high margins we are used to. We can't afford to advertise."

I ask one caller to open his mouth and say, "Ah." I check his pulse -- weak and "thready." I pump up a pressure cuff and then back it off until blood begins to spurt through the artery. I listen until the sound dissolves and write down my findings. Pressure is low. Hmmm. This can mean just one thing: Advertising Anorexia.

Saying, "I can't afford to advertise," is like saying, "I can't afford to eat, so I eat as little as possible." There's not a lot of future for an Advertising Anorexic.

It's either feast or famine. One minute dot-coms are throwing around advertising money like it is going out of style, and the next minute it IS out of style. And since there is now no advertising money left, companies are getting thin, pale, unhealthy. A number have died, and I begin to see signs of an epidemic. There must be a cure for the thousands of large AND small companies afflicted with Advertising Anorexia.

Now when I say "advertise," don't think I'm talking primarily about banner ads. These days they're not very effective compared to text ads in targeted e-zines and opt-in e-mails. Marketing through affiliate programs must be considered "advertising." While you lose control of the placement and timing of the advertising, you do gain control of the costs, paying only when a customer makes a purchase or takes an action.

Complication: the Freebie Jeebies

Part of the sickness is complicated by an addictive dependence upon the freebie-jeebies. I get this question a lot: "How can I get traffic to my website for little or no money?" Millions have come to the Internet expecting to pay little or nothing but at the same time make a great deal of money. It doesn't work that way in real life. What makes us expect it will work that way in cyber life?

The truth is that you CAN get a great deal for little or nothing so long as you are willing to spend your own time, and lots of it. And let me be the first to encourage you.

1. Search engine optimization. Only registering with the search engines is next to worthless these days. You must boost your ranking in the search engines if you ever expect to get significant traffic. If you have time to spend (and that's a big "if"), you can use WebPosition Gold software to achieve these high rankings. I've done it; you can do it. http://www.webposition.com/d2.pl?r=AQH-55E7 Search engine traffic brings targeted "free" traffic to your site (though the word "free" masks all the time you spend tinkering to achieve this). You might be wise to outsource Search Engine Optimization (SEO, it is called) to firm that specializes in this. (See the "Search Engine Placement Improvement" section of Yahoo! Directory" for companies.)
2. Reciprocal links. Though it is time-consuming, trading links with complementary websites can help you two ways: (a) increasing traffic through links on other sites, and (b) increasing perceived site "popularity," which raises your search engine ranking on some engines. This, too, is free but time-consuming.
3. E-Mail newsletters. Getting site visitors to sign up for your own company e-zine helps you conserve the traffic that comes to your site. Then, every time you send out a newsletter, you can actively market to this list of proven interested people. See "A Guide to E-Mail Newsletters" (www.wilsonweb.com/ebooks/email-newsletters.htm). You can use a free service such as Yahoo! Groups (www.yahoogroups.com) or Topica (www.topica.com) to keep costs down.
4. Send News Releases. If your business has something newsworthy going on, new releases can carry your marketing message to news media that can spread the word for free. Though free press release services such as www.PRWeb.com are available, I pay to use Xpress Press. http://www.interferenza.net/xpresspress/al/affiliates.cgi?112

Of course, there are other free techniques, such as banner exchanges and FFA (Free For All) sites, but I don't think they work as well any more. The problem with "free" techniques is that they aren't "free" if you consider your time to be worth anything. One of the symptoms of the freebie-jeebies is delirium. They delude you into thinking that they are somehow less expensive than advertising, that is, paying to get your marketing message in front of people. Not necessarily so.

Done well, advertising can take your marketing message to places that "free" can't easily propel it. Advertising can bring you new, willing customers. Advertising can move you from a state of anorexia to a normal weight. I believe you and I will need to rely more on advertising as we face three formidable Internet trends.

Trends, Curves, and Change

The Internet has changed a lot in the past year. And I'm not just talking about the falling price of tech stocks and the dot-com funding woes. I see three important trends that affect e-business:

Trend 1: Slowing US Internet Growth

The first trend is a slowing of Internet growth in the US. The gold rush growth of the Internet in the US is finally slowing. Many US businesses are seeing a plateauing of visitors. The following chart, compiled from a variety of studies, shows Internet users from 1995 through December 2000 (in millions of users).

Graphs of Internet users worldwide show strong growth from 1995 through 1999 both in the US and outside the US. But in the year 2000 the percentage growth in the US slowed to 25% compared to 102% growth outside the US. And what is happening in the US will impact European countries in a few years, too. Without a natural increase of new users to feed your business, you'll need to consider advertising to bring new customers.

Trend 2: Webpage Saturation

A second trend is webpage saturation. The number of webpages is exploding.

Cyveillance's "Sizing the Internet" study found that the Internet is growing by 7 million webpages every single day! In January 2000, we passed 1 billion webpages. By July 2000 the number exceeded 2 billion, and Cyveillance projects more than 4 billion webpages by early 2001. There's no way search engines can keep up. A huge percentage of webpages are unindexed -- some of yours and many of mine. Though I believe in Search Engine Optimization -- it's essential to be found at all! -- I don't believe it is enough for many businesses.

Trend 3: Intense Competition

Solomon said (about the Internet, I am sure), "There is nothing new under the sun" (Ecclesiastes 1:9). It seems like every kind of business imaginable has already staked a claim on the Internet. Some industries are absolutely saturated. Of course, many of these so-called online businesses are phantoms, shells of a good idea a couple of years ago that didn't work out. The lights are on but nobody's home. Things are not exactly as they appear. But for your business to rise above the clutter and begin to move out towards the front of the pack, you'll need to advertise.

What this means for e-businesses is that sustained growth will require additional efforts. Just doing what you are doing is likely to maintain you in a plateaued or even declining situation. Business growth won't be as easy from here on out (unless you position your company to ride the international e-commerce wave).

Growing Businesses Advertise

Growing businesses have found that effective, continuous advertising pays for itself. What are the leading businesses in your city? Do they advertise, or do they just expect to grow from drive-by traffic? The key is to spend the "right" amount on advertising that works.

We've just come through a period when paper profits in dot-coms were unrelated to company revenues. Greed fueled a lot of stupidity. But our goal as e-business survivors is to create healthy and balanced e-businesses that can survive the ups and downs of the business cycle. This requires spending the "right amount" on marketing. Not too much. But certainly not too little.

Start-up companies might spend 50% or more on marketing the first year, but for more established companies, 20% of revenues may be in the right ballpark. This is an Old Economy rule-of-thumb that will probably serve well for New Economy businesses, too. That whole 20% shouldn't be spent on paid advertising alone, but advertising should be an important part of the marketing mix.

The economy and market don't remain static. Your company will either become stronger or fade, depending upon your deliberate marketing strategies. Consider this 20% of your revenue spent very deliberately for marketing as a way of maintaining or increasing your market position and your business health. Advertising anorexia certainly won't make you profitable. Like an eating disorder, trying to succeed without advertising is an unhealthy, unrealistic way to approach your business.

Experimenting and Testing 

Of course, you can't just throw money at advertising. We've had plenty of examples of how that can backfire. Instead, test, test, test to find cost-effective forms of advertising, and then develop a deliberate program of advertising month in and month out.

This takes a lot of experimenting. My philosophy is: Throw enough mud against a wall and some of it is going to stick. Next, go to the wall so you can examine the mud to see what made it stick. Then adjust what you are doing to make it stick every time. In terms of advertising, that means trying a number of approaches, a number of websites, a number of newsletters to see what gives you your best response. Eventually, you'll find the marketing mix that works well for your company. Don't fall under the spell of Guru X or Guru Y who offer 100% guaranteed, money-back-if-you're-not-satisfied success. Extract the principles they are using that work, but don't expect a cookie cutter program to work for your web business. Your business is unique. Apply the principles, not "sure-fire" programs.

Pull up your cyber shirt to see if your ribs are showing, a sure sign of Advertising Anorexia. Then vow to develop more normal ways to feed your business through regular, effective advertising.

Note: I've told you what to do -- advertise -- but haven't told you how to judge its effectiveness. I'll be discussing tracking and evaluating advertising effectiveness in future issues of Web Marketing Today.