How Losing Money Can Increase Your Sales

Throughout this past recession, I’ve been amazed by the amount of off base brand advertising telling me how much I’ll save by buying their product.

Telegram 1 – People are more interested in ways to make or avoid losing money than saving money.

A window replacement ad that proclaims, “Stop losing over $1,000 dollars a year with your old single pane windows,” will always outsell an ad that states, “Save $3.00 dollars a day in reduced energy consumption.”

It’s a big reason why buy one/get one offers work so well. People interpret the gain as a benefit – not the savings.

Interestingly, another insightful key to prove this theory is to conduct a Google search to determine popularity and interest.

When you do a Google search on the terms ‘make money’ (web – 931mm/892mm images) vs. ‘save money’ (web – 533mm/images – 436mm images) making money beats saving money by a 2 to 1 margin!

Also, keep in mind that losing money is more closely related to making money than saving money.  And, because losing money is more painful than saving money, promoting how people can avoid losing money will always outperform a savings claim.

Telegram 2 – All things being equal, people will do more to avoid pain than to gain pleasure.

Here’s proof.

I’m offering to flip a coin and have you call it heads or tails (equal odds) and promise to give you $1 million dollars if you win, but if you lose you have to pay me $100,000.  Will you take me up on it?  99% of average people (not multimillionaires) would not.  Why?  Because it’s so painful to LOSE $100,000.

OK. How about instead of 1,000,000 vs. $100,000 what about a bet on:
$100,000 vs. $10,000 (uh, no) or…
$10,000 vs. $1,000 (hmmm..no) or…
$1,000 vs. $100 (hmmm, OK) or…
$100 vs. 10 (Sure) or…
$10 vs. 1 ? ABSOLUTELY!

Same odds, same ratio but varying levels of pain!

The key is to test your customer’s levels of perceived and actual levels of pain and loss.

When you understand this simple exercise you cannot lose!

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Don’t Waste Your Marketing Dollars

The famous merchant John Wanamaker (b-1839 – d-1922) is credited with saying, “I know half the money I spend on advertising is wasted, but I can never find out which half.”

I’m sure he meant what he said over 100 years ago, but I’d bet if he was living today, he’d certainly would not be wasting 50 cents on the dollar with his ad campaigns with the various ways you can prove the impact of marketing investments.

The sad thing about Wanamaker’s quote is that marketers today continue to use it and hide behind it. See my Super Bowl Ad Blog rant from yesterday.

Speaking of quotes, I’d like to quote some troubling facts about the crisis in mass marketing per the book – Connected marketing: the viral buzz and word of mouth revolution edited by Justin Kirby and Paul Marsden — Oxford : Butterworth-Heinemann, 2006.

Here are just a handful…

  • 3000 Ads Reach People Daily
  • 256% Increase in TV Ad costs (CPM) over 10 Years
  • 117 of ‘02 Prime TV Spots = 80% of Adults – 3 in ‘65
  • 100% Increase Needed in Ad Spend to Add 1-2% in Sales
  • 84% of B2B Ad Campaigns  = Negative ROI
  • 54 cents = Ave. Return in Sales per $1.00 spent on Ads
  • 18% TV Ad Campaigns =  Positive ROI

And, here’s a few more…

  • 90% – People Who Can Skip TV Ads Do
  • 80% – DVRs w/Ad Skipping Tech 2008
  • 69% – Interested in Skip/Block Ad Tech
  • 95% – Failure Rate for New Product Intros
  • 65% – Are Bombarded w/Ads
  • 56% – Avoid Brands Who Over Promote
  • 14% – Trust Advertising

The book was published in 2006 and most likely researched and written over the prior few years making the data at least six years old.

So, do you think any Super Bowl ad last Sunday returned a profit on its $3 million dollar investment? If so, do you think they can prove it?

Now, can you see why these Super Bowl ads offend me as a marketing professional?

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Super Bowl Ads Are a Waste of Money

As a diehard Pittsburgh Steelers fan, I certainly was disappointed with my team losing Super Bowl XLV.

However, I was more disgusted as a marketing professional when I viewed the number of lousy television commercials. What a waste of money, time and space.

When you consider the average Super Bowl commercial placement cost over $2 million and another high six figures to produce the spot (net about a $3 million investment per spot) do you really think that the majority of these so-called top brand marketers effectively took advantage of the highest rated Super Bowl ever?

Talk about opportunity lost!

Nielsen reported that Super Bowl XLV was the most viewed television show in history with a record breaking audience of 162.9 million viewers!  And, for the life of me, I cannot understand how some of these ads were approved to run.

Where’s the exciting new news? Where’s the compelling reason to buy? Where’s the interesting campaign launch? Where’s the accountability? Where’s another ETrade Baby Campaign for other products?

For me, I don’t buy into the argument about the “view buzz” metrics on YouTube. If brands think that “bigger is always better” and marketing is all about awareness and buzz, they’re way off track.

You want the awareness and buzz about your product or service to be about people having conversations such as, “Hey, did you try X? It sounds like an awesome product…let’s check it out!” I’d bet there weren’t many (if any) conversations like this happening during the big game.

Hey, I could put a dead body in the window of a restaurant and drive buzz and awareness, but I don’t think you’d want to eat there!

I can’t recall one ad that has or will influence me to inquire about, buy or refer their product. Not a one…can you?

And, if I hear one more person say that an ad is ‘cute’ or ‘funny’ without remembering the brand name I swear I’m going to choke on my Terrible Towel…much like my beloved Steelers did!

P.S.: Having said all I want to say about the total lack of accountability, campaignability and creativity (I subscribe to the old adage…’it’s only creative if it sells’) in this year’s Super Bowl commercials, I am looking forward to seeing where the Chrysler 200 heads with it’s Imported from Detroit effort. I am interested and hopeful it helps drive them business. It seems like an interesting platform to work from. But, what do I know, it ranked low on USA Today’s Ad Meter. Go figure.

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