Not Everyone Should Advertise. Should You?

Ashtan Moore / November 5, 2020

My company, Model B, is an end-to-end advertising shop. Organizations come to us when they want to modernize by deploying digital advertising to scale their core revenue streams, reach new marketplaces, and bring new products to market. Our clients are executives and marketers who won’t accept the status quo – they’re obsessed with the idea that something new and something more is possible.

We work with our clients to brainstorm, ideate, create, launch, and optimize digital OmniChannel campaigns across search, social, and display for our clients; we help to understand their target audiences, build compelling creatives and messaging for them, and then drive ads to these target audiences to sustainably increase the growth of their company and impact of their brand.

Sounds exciting, right? So you might be surprised that I tell at least two companies per week that they either aren’t yet ready or just aren’t right for advertising. So what makes you ready, and what makes you right? I’m going to break the below down into these two buckets:

  • Aren’t Yet Ready. You have material challenges that a digital agency like ours can solve.
  • Just Aren’t Right. You have product or market challenges that a digital agency can’t solve.

Aren’t Yet Ready

Are your online properties built to showcase who you are as an organization?

Take a look at your social media properties, your landing pages, and your website, then ask yourself this: are you providing a clear, coherent brand experience in terms of who you are, what you deliver, and why you do it? Are your branding elements and key messaging in place throughout the various platforms? If not, that’s okay: an end-to-end digital agency can help you turn your ads, your copy, and your landing pages into something that best showcases your organization online; it’s just going to take some additional up-front creative work.

Are your target verticals and your value proposition distinctive and clear?

Do you know who your best clients/buyers are and why they choose you (versus your competition)? For example, are you competitive because of quality, of speed of delivery, or price, and is this distinctive value proposition clearly being communicated to your highest value market segment, such as C-suites in the energy vertical, or consumers in a target age range who have a specific problem? If not, that’s okay: through discovery and planning sessions with an agency these target verticals can be understood and the messaging can be written to be compelling. Then, the distinctive value proposition can be created and delivered directly to the key audiences.

Just Aren’t Right

Do you have a proven product: market fit, or at least a Minimum Viable Product?

I ask a very simple question when working with prospective clients: how many units have you sold, and what type? This can be a specific product line for a professional services organization or a specific product in a Direct-To-Consumer company. There’s no magic number, but if an organization has sold at least $1,000,000 of an individual product or service then my eyes light up, because it means there’s an existing audience who loves the product; selling more is just a matter of getting the product in front of more eyeballs, which can be accomplished via digital advertising.

If you’re a product new-to-market with no track-record, you can still use digital advertising to understand if the target market is going to adopt it. It’s just important to recognize that this is a research and analysis exercise to understand if you’ll ultimately be able to drive revenues, i.e. whether your target market wants the product, rather than immediately increasing the growth of your organization. Advertising will be extremely valuable, but you need enough funding to keep the lights on while you perform this marketplace analysis.

Is your Total Addressable Marketplace large enough to justify advertising?

If you’re, for example, a local brick-and-mortar pizza joint that already has the literal neighborhood cornered, you have to ask yourself: will advertising bring you to new potential buyers, or is the majority of the target addressable market already aware of you? If everyone’s already aware of you, and you can’t scale your product beyond the market you’re serving, then it’s likely better for you to invest in customer loyalty through repeat-buyer discount programs, crafting and posting beautiful, organic social media, and basic management of local listings on Google and Yelp.

If you’re a pizza joint, one example of “scaling your product beyond the market you’re serving” would be creating a pizza that can be frozen and shipped in a 300 mile radius and launching an e-coms shop; in that scenario, you would be ideal for a digital advertising campaign to spread awareness and drive sales of the new product. Alternatively, it could be bringing a proven product in one market, i.e. Central Ohio, to a new market where you haven’t yet built a customer awareness, i.e. Seattle.

Is your budget sufficient to get to market and experiment/optimize for success?

Companies should invest roughly 5% of their gross revenues into advertising. Some fast-growth companies, especially in the technology sector, invest much more. For successful advertising, we suggest investing $120,000/year into the landing pages, advertising creatives, copywriting, and the media buy across platforms to begin to understand your Return-On-Advertising-Spend (ROAS).

If your company is at $10Mil+ in annual revenue, that means you should be investing $500,000 into advertising annually, which would be an excellent budget to launch a digital advertising campaign. Important note: If you have a proven product it’s much safer to invest more than 5% of your revenues into advertising, so even companies in the $1,000,000 to $3,000,000 range should be able to find a positive Return On Investment (ROI).

So now you know why I (sometimes) say, “no, advertising isn’t right for you.”

That said, I’m always open to a conversation if you’re just not sure, or if you think you’re in a unique position in your market. Don’t hesitate to shoot me an email at [email protected] so that we can set up a time to chat; growing companies through advertising is one of my favorite things and I’m happy to spend some time to help unpack your situation. I promise not to just send you this article as a response to your email.

Note that this piece is directed towards new-to-market and mid-market companies, not towards some of our favorite clients: advocacy, trade, and membership-based organizations. Check back soon for our thoughts on association advertising.

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