In local business marketing, one of the top questions I get most often is: “What’s the best form of advertising for my local business?”
The question itself at the surface is harmless, and I advocate asking. But, deeper down – it indicates some kind of thinking that a “short-cut” to results (getting more clients or customers) exists.
And, even worse, it shows lack of understanding of advertising in the first place. While I place no blame, the point is – the “best advertising option” is specific.
“Advertising is the ‘wonder’ in Wonder Bread.” – Jef I. Richards
Here is the rule by which you can determine the best local advertising option.
RULE: Whatever option you choose, it must produce results, but ultimately, a positive ROI (return on investment). Nothing else matters.
For example, Groupon and LivingSocial are all the rage these days. (Groupon even turned down Google for a multi-billion dollar buy out deal.) Lots of attention is given to these hip deals marketplaces. It’s a popular and worthwhile platform, maybe. Most often it turns out, not profitable for the buyer (you).
Going Negative Feels Great.
If you are jumping on the daily deals band-wagon, you may actually be hurting your local business, and lose money. After you’ve lowered your pricing, accepted the terms from Groupon or similar, you may end up only with a 25c to the dollar ratio. That means that if you own a restaurant, and your business is accepting these coupons, and you’re actually using what you deem to be the “best advertising”, you are going negative. And, pretty soon – you must stop. (Plus, everybody and your competition can see what you are doing, a dead give-away.)
Another example, with a massage parlor business with a Groupon deal, an $80 massage could be purchased by the consumer for $40 through Groupon, and then Groupon and the retailer would split the $40. That is, the retailer gives a massage valued at $80 and gets approximately $20 from Groupon for it (under a 50%/50% split).
Each Business is Different?
Each business is different, but they are ALL THE SAME when it comes to choosing the best advertising option: it must create a positive return.
However, in the restaurant example… if the owner was able to monetize the traffic and create return patrons that would spend the minimums, bring in friends, family, referrers – the ‘deal of the day’ programs may / will turn positive. The follow-up and monetization over time makes it good. But, initially – consider it a “loss leader”. If that’s ok with you, that is.
The Best Advertising Channel.
So, if your local business is looking for the best advertising channel – just make sure that you do your math first. It may look good on paper, but test it fully via your customer funnel / experience (yes, you need to build that out), and know what your average check size is, as well as your lifetime value of that customer.
ROI is the rule by which you determine the best advertising solution. (read: profits).
I know that brand building, brand awareness becomes part of any advertising & marketing discussion. However, your family will be more concerned about money in the bank, rather than a ‘name’ in the sky. “Hey, honey! We’re on TV! …but not making any money” (… good luck…)