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The Upcoming Fork In Business Boulevard


An Open Letter to Business Owners

Type business plan into Google and youll see an impressive array of articles from BusinessWeek, the Wall Street Journal, Forbes, Entrepreneur, and Everyone has a business plan. Almost no one has an advertising plan.

And you are coming to a critical fork in the road. I want you to choose your fork consciously rather than unconsciously. And choose you most definitely will.

Im talking about your choice between brand-building and direct-response advertising. When you sell a product or service with a long purchase cycle something purchased only once every several years your business will be best served by brand-building. Do everything in your power to become the company people will think of first and feel the best about when they finally need what you sell.

Good brand-building also stimulates word-of-mouth, the original viral. But brand-building requires patience, confidence, and courage. If you sell a product or service with a short purchase cycle something that most people will purchase every few days, weeks, or months your business will be best served by direct-response ads. Create an extremely attractive, limited-time offer, then add an additional incentive for those who act now. Then add a third incentive. This is called benefit stacking, and it makes a massive difference. Direct-response ads are exciting, but to be really successful, you need a big-gap offer.

The goal is to create a big gap between the perceived value and the asking price. The more impressive that gap, the more attractive your direct response offer. Big-gap offers are most easily made when the public has no ability to shop and compare.

Companies that make money with big-gap offers are the ones that can sell products with a perceived value that is at least 10 times their actual cost. Im betting that you dont have that kind of profit margin. Am I right?

Write a direct-response ad for a product with a widely known price and the public wont be impressed unless youre selling that product below your cost. This is known as a loss leader. The idea behind a loss leader is that it can drive customers into your store who might make additional purchases while theyre there. Grocery stores have used this technique since the dawn of time.

Direct-response is not a style of ad writing. It is a style of offer packaging.

Businesses with short purchase cycles can jump from offer to offer, item to item, incentive to incentive indefinitely. But may God have mercy on the ad writer who is expected to generate immediate response for a product or service with a long purchase cycle.

There are times when its possible to run a direct-response offer within a brand-building ad campaign for a product or service that has a long purchase cycle. For example, a jewelry store might make an enticing offer to finance engagement rings right before Valentines Day. Add the additional incentives of a romantic dinner and a limousine filled with 12 dozen roses and you might see a bump in engagement-ring sales.

Googles ability to identify customers who are immediately in the market for products and services with long purchase cycles has all but eliminated the Yellow Pages, and it is rapidly eroding the publics need for in-store experts as well. Googles unique ability to do this has caused many business owners to believe they have a right to expect immediate results from traditional mass media.

Business owner, the fork in the road is before you: brand-building or direct response.

If you sell a product or service that at least 50 percent of the public will purchase within the next 12 months, you might do well to consider running direct-response ads in mass media. But please be careful to make a highly impressive offer, or youll be horribly disappointed.

If you sell a product or service with a long purchase cycle roofing, HVAC, jewelry, boats, major appliances, etc. you must use direct-response techniques with extreme caution, or youll just be teaching your customers to wait for your next big sale.

Or you could just bet the farm on your ability to stay at the top of Google search results.

Ill be intrigued to see what you choose.

Roy H. Williams is president of Wizard of Ads Inc. E-mail:

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