The Cable Guise

Craig Reumund

Cable sales teams have lead auto dealers to believe that broadcast TV is wasted coverage and reaches outside their primary trading area. “Why would a customer drive past other same make dealers to my store?”

Here’s why: You ask them to.

A dealer can deliver a believable message that gives them a reason to drive past their competitor’s store to their store, and an efficient delivery system (broadcast TV) to distribute that message to more potential buyers for less money.

There are over 23,000 auto dealers in the US. The average store sells 100 cars per month. The primary trading area is a 10 mile radius. The manufacturer wants the dealer to sell as much of the primary trading area as possible. The dealer wants to sell as many cars as possible both in and outside the primary trading area.

When a customer chooses a dealership, they are selecting dealers for perception of best price or selecting dealers for convenience to service.

If a buyer is selecting a dealer based on the dealer’s convenient location for service, (a very small segment of buyers) the buyer finds the dealer closest to their home or work. The dealer does not need to advertise to bring this customer in. The customer searches and finds the dealer.

If a buyer is motivated to get the best price, as most buyers are, that buyer will travel for the perception of saving perhaps thousands of dollars at a dealership many miles from home.

This is where a destination mindset is critical for the advertiser.

A dealer that advertises only in their primary trading area, will lose the opportunity of luring buyers from other counties outside the trading area. Cable claims it is wasteful to advertise outside the primary trading area. Cable is wrong.

If a dealer wants to grow sales larger than average, i.e., if they have destination mentality, they must use a media that has the following mathematical criteria:

1) Delivers the largest audience within the demographic per dollar spent; i.e. the lowest cost-per-person in the demographic.
2) Has a high reach capability in the demographic.
3) Has the largest geographic footprint in the local DMA.

Broadcast Television is that medium. It delivers the lowest cost per thousand on any major demographic. It has virtually no “glass ceiling.” It has the largest geographic footprint of any local media. Broadcast television is everything a destination store needs to grow their business most efficiently.

Cable has one of the highest cost per thousands of any media, low “glass ceilings,” and smaller geographic footprints. Cable is a perfect media to increase the cost of buying new customers and losing market share. Cable is a great media to use to remain average or less than average in sales (and profit).

How could Lynn Hickey Dodge sell an average of 2,400 cars per month from one store in Oklahoma City? By inviting every potential customer in the Oklahoma City DMA to their store. This would not be possible on cable. Lynn Hickey Dodge was 100% broadcast TV during their reign as the world's largest Dodge store. Lynn Hickey was sold to a consolidator who stopped using TV and drove the store down to 80 cars a month in less than a year.

Auto dealers aren't the only business to benefit from the largest footprint, lowest cost-per-acquisition, highest reach media of Broadcast TV. All destination stores can benefit. Furniture stores, floor covering stores, in fact, most durable goods stores, financial institutions, medical practices, and legal practices can be destination businesses that grow faster and cheaper on Broadcast TV.

Don’t let cable steal your retailer’s growth with bad logic and an inefficient media. Tell them the truth about growing a destination store.

Craig Reumund is a Senior Consultant with ESA & Company. He meets with hundreds of local business owners each year and has significantly changed the fortune of thousands of local businesses over the past 20 years.

TV Central in Mixology of Multimedia

Adam Armbruster

Are you a media multitasker?

You are if you need to watch the TV news at the same time you read a newspaper. Or if you can’t drive your car without checking e-mails on your BlackBerry. Or if you’re compelled to surf the Net on your laptop while you’re on the phone.

Gary Drenik, president of BIGresearch, says 41.2% of people who watch television commercials are surfing the Internet simultaneously. “Consumers seem to be seeking information from digital platforms, while TV has traditionally been viewed as a brand-building medium,” he adds.

Why are we doing this to ourselves? Another recent study from the folks at BIGresearch, called the Simultaneous Media Survey, says the only way people can keep up with the amount of media pumped into their world is to blend their own “media mix” and monitor several media sources at once.

Mr. Drenik says, “Media that can target, be timely and deliver value to consumers, such as coupons/direct mail, radio, Yellow Pages, newspapers and newspaper inserts, all increased in influence to purchase as consumers are looking to stretch budgets in a slowing economy.”

What about television? Although television has proven itself to be the world’s finest brand-building medium, its awesome power to drive high frequency of message and measurable sales and profits for advertisers is often overlooked.

Used properly and consistently, television trumps all media, new and old, in generating massive immediate retail consumer response. If television were only a branding medium, then politicians would not spend tens of millions of dollars on TV ads to quickly influence opinions just prior to an election. If television were just a branding medium, then the iconic Macy’s One-Day Sale would not be part of our national vernacular. No, television is much more than a branding medium; TV builds sales and profits. But there is a real discipline to it all.

So when the economy cools, why don’t all advertisers run to television instead of printed coupons and direct mail? Simple: Many marketers think of television as a great brand-building medium but not as a good tool for helping to build immediate and measurable market share.

We think that’s just plain wrong.

Consider this: Coupon redemption rates have plummeted as female consumers balk at the prospect of clipping a coupon to save 25 cents on a can of hairspray. With 60% of American women working full-time, it seems her time is better spent on activities other than clipping printed coupons from the local newspaper.

Next, direct-mail return rates have declined from 2% to just under 1%, a cataclysmic drop. We feel this is a result of the consumer getting better at using the Internet and thereby less influenced by direct-mail pieces. The Internet has created a commonly held belief that free information about any advertiser is easy to find. This knowledge has significantly impacted the “Wow!” effect of direct mail sent to the home. Why read direct-mail pieces when all you want to know about buying anything is on that business’ Web site?

Also, since television is ranked as one of the top influencers in triggering an online search, it makes sense that television and the Internet are moving into one appliance. The Internet has created a blur in the traditional retail shopping patterns, thereby affecting the rational retail buying windows.

During the 1970s, car-buying consumers shopped up to four dealerships before buying. In the 1980s that number of dealerships shopped declined to three, and in the 1990s the number of stores shopped dwindled further to just over two. Today, many car buyers shop just one store before buying.

Delayed Effect
I remember when we could air a television commercial for a big-ticket-merchandise retailer and that very day retail outlets would buzz with store traffic. Now, because of the Internet, interested consumers spend some time on the advertisers’ Web site and may also surf related blogs before actually using their valuable shopping to visit the physical store. So today a delayed effect to a television campaign can be expected.

We need to give the consumer time to do their homework on your business. Assuming you pass the “Web preview,” they will phone you and set an appointment to shop.

“Unfortunately for marketers faced with the challenges of an uncertain economy and the need to increase marketing ROI, new-media options are impacting how consumers use traditional media,” Mr. Drenik says.

If you buy into what he is saying, then you need to look at old media and new media as just plain media. And the real world demands that advertisers use a new cocktail of electronic media tools to help turn around lagging sales.

Since Nielsen reports that the average American consumer spends a total of 5½ hours a day between television and the Internet, the solution is right in front of us.

That solution is high-impact levels of targeted sales promotion with a retail ad that drives immediate sales, married to Internet tools including, but not limited to:

• Media partner web banner ads
• Topic blogs
• Self-blogging
• Limited paid search
• Free "how to buy" information on you own website.

All of these elements combined interrupt consumers in the middle of their shopping pattern. This pleasant television commercial interruption effectively deflects “now” buyers to your business. Let the other guy get the window shoppers; you want serious buyers ready to buy now.

Bottom line: Consumers don’t want to work so hard anymore for information about how to buy from you. Make it easy for consumers to buy and they will reward you with a purchase.

Adam Armbruster is a senior partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Company. He can be reached at adam@esacompany.com.

The Media Party

Dave Eckstein

Here we are, in the first quarter of 2007, at a point in time when virtually anybody -- and I do mean anybody -- can buy and sell advertising. This isn't a new phenomenon. If you don't believe that's true, just check your email right now. Or visit Google. Or read a blog. And look at who is buying and selling advertising.

Everybody is.

This notion -- the decentralization of the advertising and media sales functions -- scares the daylights out of many people in media. It makes them fear for their clients, for their share of the market, and for their jobs. It makes them wonder about the evolution and extinction of media in general. It may even predicate a quick glance to the future and possible escape routes.

I think I speak for many of my colleagues, and many of the readers of this commentary, when I say this energizes us.

I can't imagine a better time to be here, doing what we do. This is not a motivational speech. It's a reality check.

Media sales is akin to a big rollicking party. It's easy to see the similarities between media sales and a big party. No, not the wild and crazy atmosphere, although, truth be told, those who really enjoy selling media (as they would a party) are usually the ones who outperform their peers.

Think of the last time you were at a big party. Strip out all the formalities. Imagine the big party, in a dark room, with dim lighting, smoke fills the air, there's lots of noise. You can hear multiple conversations, see lots of silhouettes, and you know there's plenty going on. But you can't make out much.

This is advertising. At least, this is the advertiser's perspective. They have been at the party long enough and aren't really having much fun. Their senses are bombarded. They can hear and see as much as they'd like, but nothing with any clarity. In a word, it's chaos. This is why today's adveriser is frustrated. They have more options than ever, with less performance to show for it.

Every time a new form of adveritising media evolves, the experts from the ivory tower (as well as the number-crunchers in the back office) hail this as the "dawn of a new age in advertising", with new efficiencies for advertisers to reap. These same experts then begin digging a grave for "traditional media" right then and there.

Actually, they couldn't be more wrong. With more selection has come more inefficiency. This is a statement of fact, founded in the numbers.

Just check out the average cost-per-lead for some of advertising's largest categories. Over the past five years alone, most major television categories at the local level (think durable goods and services like automotive, furniture, home contracting, carpet, financial, elective healthcare, and so on) have experienced dramatic decreases in their advertising efficiencies. Cost-per-lead, cost-per-up, cost-per-new-customer ... whatever measure you use, all of them are up over the past five years. Some as much as 50% or more.

Home contractors, who once enjoyed cost-per-leads in the $200 range, are now forking up an average of $241 per lead. Auto dealers once paid $200 per unit sold in their tier-3 (auto dealership) spending. That figure is now well in the rear-view mirror.

Hey, now that media is so much more measurable, shouldn't we be measuring the things that really matter? That's like being a consumer in the market for a new car and forgetting to "measure" price and MPG.

Back to the party. Now imagine for a moment, a newcomer to the party walks over to the giant switch on the wall and pushes it to the "ON" position. The switch controls the floodlights in the room. Light pours into every dark corner and under every chair and table at the party.

We have this thing called the internet, the new kid on the block (thank you, Al Gore), and it is the self-proclaimed most measurable medium of all time. Don't get me wrong. The internet is great for business and advertising. Those that embrace it correctly have seen the results. It has a place in the media mix which grows stronger every year. Most importantly, for those of us in media sales, the internet spotlight has cast a beam of accountability and measurability upon the media landscape that is inescapable.

Thank goodness for that. I'll ask again ... Is there any better time to be selling what we sell?

In other words, the party is over. The chapperones have arrived. And many are running for cover. When accountability and measurability are paramount, when numbers mean more than promise, when the true measure of advertising is front-and-center ... that is, advertising as a profit center ... does it not make our job clearer? Does it not energize us all? Does it not make a clear statement about the selection of media for destination businesses in our markets?

It's really the best thing that could've happened. Whatever measures are trumpeted from ivory towers or server-dominated back-offices -- ROI, Cost-Per-Click, Cost-per-action, etc -- the primary criteria for media planning will always be a declining cost of customer acquisition coupled with real market share growth. Period. Good advertising is a profit center, not an expense line, not an experiment, nor is it an exercise of measuring the minutiae.

If I own a destination business in any market, and I want to buy more share for less, the decision has never been clearer. This is not a generality or a statement of hyperbole, it is the numerical reality of comparitive media today. Run the numbers, see who wins. And please, encourage your clients and prospects to do the same. Actually, be so bold as to challenge them.

You might also want to listen to these words from ESA & Company's ROI2007 conference:
Main Street Math (MP3 audio, Time = 8:18, Size = 7.7MB) Well put, Craig!

Simplicity has triumphed over chaos. Can we bring this simplicity to our clients and prospects? If so, they win, and so do we.

They are ready to leave the party and would like to hear from us soon.

Dave Eckstein is not the shortstop for the Toronto Bluejays. He is a partner in the firm ESA & Company, based in Red Bank, NJ.

Main Street Math

Craig Reumund

Not to oversimplify terribly, but your prospect's decision to use broadcast television should be clearer today than ever before. The decision based solely on three simple "maths", three criteria that underscore broadcast television's superiority versus any competitive medium in growing a business and increasing profit. And the beautiful thing about this approach is the information and criteria needed to make this important decision is readily available.

It all boils down to a key point:
Good advertising is the acquisition of a new customer at a lower cost per acquisition.

Any advertising that doesn't accomplish this is not working like it should.

Which is why broadcast television is the clear answer for any destination business today as the dominant element of their media mix. It not only passes all three criteria on the local level, it wins each head-to-head battle with any other competitive medium. In terms of unit cost, demographic penetration levels, and geographic footprint, broadcast television is the numerically superior. This is evidenced in the number of market-leading businesses that have been created through the correct use of broadcast television.

Listen to this MP3 for a full explanation, as delivered at ESA's ROI2007 conference:
Main Street Math (Time: 8:18, File size: 7.7 MB)

Craig Reumund is a Senior Consultant with ESA & Company. He meets with hundreds of local business owners each year and has significantly changed the fortune of thousands of local businesses over the past 20 years.