What Every Entrepreneur Ought to Know About Traditional Advertising

Back in the 60' up until the 90' advertising could see no end. A self-reinforcing cycle had started:

You ran some ads.
Sales went up.
You repeated the cycle and invested even more in step 1 with the extra capital from step 2.

It was golden days for anyone with a product and the initial capital to start this cycle. Today, things are different. So read on if you want to avoid throwing money out the window.

Expensive attention

2 out 3 Americans feel "constantly bombarded" with advertising, a good indicator it's all just too much. We examine this in greater depth in the storyslide below, let's take a look (don't forget to turn on the audio):

Numbers from the American Association of Advertising Agencies state we are exposed to 3000 message each day. But the study reveals an even more important number, how many ads we can take in a day - turns out, it's only a mere 100. So only 1 out of 30 advertisements is taken in. We can look at this in two ways:

The 1 ad that is taken in has to pay for the 29 other that is not.
You have to run 30 ads in order to get 1 seen.

Whether we chose to look at it from angle 1 or 2, the conclusion is the same (it's a matter of a half empty or half full cup): an ad that actually do get attention in our cluttered world has become extremely expensive because it has to pay for all the others that didn't.

Distrust

Nobody trust advertising. Perhaps nobody never actually trusted advertising, but earlier on we didn't distrust ads to degree we do today. After being screwed so many times by advertising promises that wasn't realized, we are now very skeptical about all types of advertising even though that particular sender haven't necessarily cheated us.

The take-away? When you finally get somebody's attention they are skeptical before even reading the first word.

A dangerous potion

1 part extreme attention clutter + 1 part distrust towards the message itself = an advertising potion so expensive it could potentially be lethal for a start-ups taking a sip. Or in a non-metaphorical language; don't speculate in traditional advertising - that is, ads in newspapers, magazines, TV and radio - unless you can afford to lose the money (our experience says most entrepreneurs can't).

Don't get this wrong, running a full-page ad in the New York Times will definitely yield some sales, but it has become so expensive and inefficient to do this the likelihood of the ad paying off is minuscule. Sure you could win the lottery, but odds are you won't.

Think of advertising as a steak on a grill. It starts out well (1960-1990), but after a while it gets burned (1990-today) and what was a big fat juicy steak is transformed into an expensive piece of charcoal.

But why do companies still run ads then?

Big corporations still run ads for 4 reasons:

Some will still be able to run a successful ad once in a while, it's just harder and riskier than ever before.
Some don't mind the loss as long as it keeps or increase their current customers. They'll gladly see a temporary loss if it means a small but dangerous competitor - like you - goes bankrupt.
The results of traditional advertising are hard to measure, therefore most companies don't have data on what works and what doesn't.
A lot of people still think it works and therefore keep investing in traditional advertising (not to mention all the people who make a living selling ads). Many business strategies is built around this, now, broken system.
If you already have a strong brand like Coca Cola or Starbucks ads are less risky as people trust your message more than that of a company less known.

Now what?

But if traditional advertising doesn't work anymore how do I then launch my business? There are some opportunities, but they won't be as easy and automated as running an ad. The bad news is this requires you to think in new ways and be brave at the same time. The goods news is that if you pull it off you will be greatly rewarded with endless buzz and customers in great numbers.

You can learn this in our next article, "A Vital Part of Any Start-Up's Marketing Strategy".

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