Marketing isn't advertising.  Selling isn't the same as marketing.  And advertising isn't selling.  But no matter what your company does, it needs them all – at least in one form or another.  Based on observing and working with lots of companies, this is easier said than done.

Most companies – and, indeed, most entrepreneurs – readily recognize that effective marketing, advertising, and selling are critical to the success of a venture.  Yet once this importance is acknowledged, there appears to be little parallelism in the way these three critical functions are actually implemented.  In fact, there appears to be great divergence in the way these three critical functions are even defined.  The differences are not explained simply by different companies (with different objectives) coming up with appropriately different strategies.   In many instances, young companies seem confused or just plain inaccurate (this means "wrong") in the way they understand these three critical functions.  This mini-paper is intended to provide a few quick insights about the linkages between marketing, advertising, and selling.

Advertising ABCs.  

"Our company would really love to do more advertising but we don't have any money."  Too many companies say this because they allow themselves to get into the situation where it is the truth.  To put it in perspective, imagine an advanced technology company saying "We'd really love to offer products for sale but we don't have any money."  The company would simply not be viewed as credible.  No matter how small or how new, companies that are worthy of commercial success in the marketplace are expected to have some level of advertising built into their normal operating framework.  Here are the three most basic realities of advertising:

1   Each industry and product group has evolved a well established ratio between annual advertising expenditures and targeted annual sales.  If a company wishes to sell $1 million of product next year, then, to be at parity with competitors in its own product class and market, the company must have an advertising budget that is equal to some knowable percentage of its annual sales target.  The ratios for a wide variety of product classes are reported annually by Schonfeld & Associates (www.saibooks.com; 800 205-0030) and are published in Advertising Age (go to the commercial or business section of a library or contact a savvy ad agency); 

2   When a new product is being introduced into a given market, it is normal for a company to spend more than the ratio that is typical in that product class (i.e., instead of an advertising budget that is equal to X% of targeted sales revenue, the product introduction may require a launch budget of 1.2 x X%); 

3   If a company is not already an established player in a given market (i.e., if it has no "brand equity"), it is often necessary to spend a multiple on top of the special product introduction ratio in order to gain visibility and market credibility (i.e., instead of spending 1.2 x X% of targeted first-year sales revenue on advertising, a new company with a new product may have to allocate an amount equal to 1.5 x X% of its targeted first-year sales).  This is a specific instance in which advertising is marketing.

To make matters somewhat more problematical for young companies, the money that must be allocated to advertising must all be spent "up front," i.e., prior  to the realization of sales.  (Hey, I didn't invent these tough realities; I just promised to report them to you.)  The concept of "promotional cash flow" is shown in Exhibit 2.

Advertising is the process of communicating information to your targeted customers.  The content of what is communicated – product features, benefits, value statements, reasons to buy, who's behind this wonderful company, your 800 number, pricing, competitive comparisons, your pretty logo, your distinguished customer list – are all variables that can be used and combined in various ways depending on your program and overall strategy.  What is essential is that each company communicate to appropriate potential customers.  Everything else  about  the  advertising  function  is details.   The  need for the advertising  function is absolute.   Advertising cannot be ignored (or deferred until cash flow magically picks up because the company sees the virtues of its product as "virtually self evident").

Want some other ideas about advertising?  Exhibits 1, 2, and 4 (back cover) are taken from the May 1995 Workshop on Advertising held by the Entrepreneurs' Forum of Greater Philadelphia.

 

Exhibit 1 10 ways that Advertising issues play a pivotal role in your venture from Day 1 Develop a product with specific utility – functions, features, and potential benefits that are relevant for an identified set of potential users. Identify such users as specifically as possible – in the form of an actual means for reaching them – names, titles, addresses, phone numbers, common "events" where you and they can be face-to-face, either individu­ally (an in-person “call”) or collectively (an industry conference) or through some intermediary (direct mail letter or via print-media or other types of advertisement).  Truly understand the issues that your intended users see as “hot.” Relate those issues to the functional capabilities of your product and then back to the potential benefits that users would realize if they were to start using your product. Figure out pricing and terms.  Figure out any additional “collateral” to be associated with selling/purchasing the product (added benefits, incentives, etc.). Communicate the simple facts that the product exists and that it is available for purchase and is ready to use immediately. Help the targets identify their own situation with the characteristics of the product.  Motivate the targets to take some type of pro-active action (calling for more info, calling you to chat, inviting you to come see them, inviting you to call them, showing up to participate at an “event”).  Ask for the order.  It's amazing how many companies never actually ask their targets to make a purchase decision. Design and implement your sales follow-up program (1) to cement this present sale, (2) to establish that your company is the solution source (to support future sales opportunities), and (3) to get referrals and personal introductions to other likely sales candidates.

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