Advertising on a budget

Marketing costs money, but doing nothing in tough times is not an option. Edwin Smith talks to advertising guru Rory Sutherland about creating cheaper, more creative ways of interacting with people

Before the Great Depression, the best-selling soft drink in America – shifting more than Coca-Cola and Pepsi – was a bitter, carbonated concoction called Moxie. But have you ever heard of it?

The answer is probably ‘no’, because when that recession sank its teeth into American businesses and money had to be saved, one of the first things the Maine company did was to drastically reduce its advertising budget. Moxie lost market share and although it still exists as a sort of regional curio in New England and Pennsylvania, the brand never recovered. Its competitors – whose names we know today – didn’t make the same mistake.

Anecdotal evidence like this doesn’t necessarily mean that advertising in a 21st-century downturn is an effective use of money, but the case has been persuasively made. Based on the findings of a report published in 2008, the Institute of Practitioners in Advertising (IPA) estimates that firms tempted to cut marketing budgets would end up having to spend four times the amount ‘saved’ in order to regain their position.

As the body responsible for promoting the interests of brand communications agencies, the 
IPA would press this claim, but as its president Nicola Mendelsohn explains, the statistics come from substantial 
economic research.

“Around 30 years ago it might have been difficult to prove the actual value of advertising,” says Mendelsohn. “But you can do that now. With econometric modelling you can strip out everything, including the effect of the weather, regional variations and other factors, to establish the net contribution that advertising made to the bottom line. It can be enormous.”

A change in how the effects of advertising are measured isn’t the only way the industry has moved on, says Mendelsohn. “Today we have so many more channels to market than we’ve ever had before, which allows us to be so much more creative and do things in a more affordable way. Internet, email, social media – these are much more affordable forms of communication than we’ve had before.” Without doubt, there’s an opportunity for companies without big budgets to make a big impact.

Doing more with less

One organisation to have done exactly this is Tourism Queensland. It might 
not sound as though the body responsible for bringing people from offices and cities to the Great Barrier Reef and the surrounding area has a difficult task on 
its hands, but its campaign budget in 
2009 – only £840,000 – was a drop in the ocean compared with many aiming to reach a truly global audience.

The New York advertising agency 
Nitro came up with a campaign that began with a simple classified job listing for “the best job in the world”. The idea was to offer one fortunate applicant a six-month, £72,000 contract as the caretaker of Hamilton Island, just off the coast of Queensland. Attracted by the prospect of duties that amounted to little more than cleaning the pool in their own, rent-free villa and writing a blog about the island experience, 35,000 people from 197 countries submitted video applications.

The story was immediately leapt on by newspapers, magazines, blogs, social networking sites and TV, and went on to generate £230 million-worth of media coverage and prompt 8.5 million visits to the Tourism Queensland website.Crucially, Nitro had realised that with little money at its client’s disposal, other people had to do the work for them, and with a fantastic ‘and finally’ story of escapism up for grabs, media outlets across the world were only too happy to oblige.But exploring new territory like this and placing your company’s fortunes at the mercy of people in cyberspace or elsewhere can be a daunting prospect for a marketing team with a reputation to protect. Indeed, speak to people in the industry and horror stories – about social media campaigns started on Friday, left unmonitored over the weekend and found in ruins on Monday morning – do rear their heads.

But, says Mendelsohn, brands are becoming more and more sophisticated 
in the way they interact with people. Having spent time with the management teams of Facebook and Google – both comfortable developing ideas and strategies on the bleeding edge of progress – she’s in no doubt that companies risk more by standing still.

Take the example of US electronics giant Best Buy. Confronted with a sea of complaints and negative comments about its products posted on the web, the company set up Twelpforce – a Twitter account dedicated to answering customers’ queries. The answers come from a team of 2,000 store employees with expert knowledge and never amount to sales pitches, focusing exclusively on helpful advice.

Harnessing the potential of social media and seen as a cheap way to use existing resources and communicate effectively with its customers, Twelpforce has been a monumental success. With around 50,000 tweets since it started in 2009 and 39,000 followers in its first year, it has helped to reduce Best Buy’s customer complaints by 20 per cent and generated 
a groundswell of positive feeling.

Modern times, enduring principles

But even though companies now have more numerous, more cost-effective, more direct methods of communicating with their customers, some things do remain constant.

“In one respect, the rules of the game haven’t changed at all,” says Rory Sutherland, creative director of OgilvyOne, TED (Technology Entertainment and Design) conference speaker and much-acclaimed advertising guru. “Underpinning everything is an understanding of human psychology, how people make decisions, what enables people to confidently buy one thing rather than another thing. Really, the whole business shouldn’t start with an appreciation of the media and technology. Actually, it should start with an appreciation of people.

“You can then use that understanding to employ anything from social media to television commercials, design and indeed anything else that works.”

For Sutherland, a former classics teacher who joined Ogilvy in 1988 during the industry’s golden age, much of the success a product or brand enjoys can be put down to familiarity.

“A very powerful human heuristic [motivating factor] is fame,” says Sutherland. “We’re much more comfortable buying things which we’ve heard of. Another heuristic would be the social heuristic – we’re much more comfortable buying things that other people seem to be buying.” For example, he asks, which restaurant are you most likely to go to – the one you’ve heard of that seems to be busy, or a quiet one that you know nothing about?

Of course, there are myriad layers 
to human behaviour and the consequences this has for business and economics. But there is something to 
be said for simply making a fuss and getting the word out. Good old-fashioned PR stunts can work wonders.

Some of these, such as having Tiger Woods hit golf balls off the helipad at the Burj Al Arab hotel ahead of the Dubai Desert Golf Classic, or opening a pop-up shop in London’s hip Covent Garden as Tommy Hilfiger did in 2011, might be expensive. But similar ways of exploiting behavioural economics, says Sutherland, “can be very, very inexpensive 
to deploy”.

Small is beautiful

According to Simon Dodd, founder of the Dorset-based creative agency Digger, small and medium-sized enterprises need not be put off by the feeling that successful campaigns require big budgets. “Almost ironically, it’s the reverse,” he says.

“The smaller the budget, the better the work has to be to cut through. Big agencies, because they’re spending so much money, can afford to do average or below-average work because it’s going to be on TV 400 times.“It’s not unusual for brands and companies to feel neglected inside 
big agencies,” he continues. “Rather than a famous name and an office with a postcode that begins with W1, companies need to find people 
who really understand their business, their sector, who can 
add insight and value.”

To go about finding such people, Dodd recommends heading to the IPA website, since its member agencies must meet certain criteria that increase the chances of them producing good-quality work.

The next thing to do is 
narrow the contenders down 
to agencies that have done the kind of campaigns that your company aspires to. This, combined with the opinions of peers and other marketing contacts, should be enough to zero in on a few options. Then it’s time for a ‘chemistry meeting’.

This is an opportunity to discuss ideas and narrow options down further (asking your favoured agencies to pitch their ideas may or may not be necessary). It’s also a chance to speak about money.

If a prospective agency believes in 
the client and themselves, they may 
well be amenable to a payment structure that, using various metrics, takes into account the success of the campaign. But, warns Dodd, this is only likely to happen with clients who are brave, who provide 
a simultaneously useful and inspiring brief, and who build a healthy, two-way relationship with their agency.

Admittedly, following the process all 
the way through and producing a finished campaign will cost money and take 
a great deal of effort. But the returns can 
be vast – one campaign for Morrison’s is 
calculated to have generated £21.57 for 
every pound it cost. And if an investment 
like that doesn’t make sense right now, 
it never will.

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