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Saturday, September 01, 2007

The advertising paradox

Our business earns 99 per cent of its revenue from advertising. Yet the services that we provide which generate the highest degree of value don't cost recipients a cent. Our advertisers, it seems, pay freight for a whole lot of great free stuff for the majority of readers, yet the question that has always challenged me is: "How can we be sure our advertisers receive real value for their money."

This is something you need to think about in your own business, both in terms of the overall framework question, and the specific issues of advertising expenditures within your marketing budgets.

Google and Craigslist have, for example, caused havoc within traditional advertising markets. Both provide powerful, free services. As an example, today, I found that my evaluation period for winzip had expired and they wanted me to pay for the software. I don't like wasting $30 if I can get around the problem, legally, so I googled "free winzip", saw a reference to an advertising-supported website listing alternatives, read the editorial comments, selected my alternative, downloaded it, and, voila, the alternative open source (and not advertising loaded) freeware is doing the job. You can find this at

At various times in the process, advertisers were available for me to 'buy' but since I was looking for something totally free, I declined to click on any of the ads.

Clearly, this use of Internet resources is distorting markets and causing havoc to traditional practices.

But there are ironies here. I sought a free decompression software to process a data file from Dun and Bradstreet that I had paid $1,000 to purchase. Almost all of the data is freely available and I could have most of the information on the file for no cost -- but D&B had one piece of critical information, available possibly from public sources, but for which I have no easy access. I analyzed the costs for the information and determined that the data -- with the crucial information to our business -- is worth every cent. (And yes, since the application of how we are going to use this data is proprietary, I am not going to share it on this blog!)

So, how do you plan your advertising and marketing budgets, and determine the right way to proceed:

  • If your advertising as it is currently conducted works -- that is brings in measurable business in a systematic and logical manner -- then of course continue -- but be careful, you may find better and free alternatives. For example, if you are using the Yellow Pages, consider the Internet options especially with the search engines directly rather than through intermediary providers.

  • If you are invited to spend money on advertising by sales reps, ask yourself if the advertising is justified and fits within your budget framework. If it doesn't, pass. (Note your budget framework may be "Keeping our current clients satisfied and loyal is the most important thing, and they w ant us to advertise to support them," in which case, yes, advertise! (Self serving plug: That is how we sell most of our advertising.)

  • If you are thinking of longer range issues like brand protection and soft marketing issues, can you obtain some extra value and benefits from your current advertising media partners? Most will be happy to help you -- if only to enhance your loyalty and commitment, and willingness to spend more on their media.

  • Finally, consider non-advertising options to promote your business. The highest and best promotion is through great connections and service to your existing clients, followed by effective publicity and media relations.

So, indeed, we give away most of our valuable services for free, but for advertisers (who ask for it!), we go out of our way to provide consultation and advice especially on media relations and publicity. This blog, in fact, originated from that perspective. If you are a non advertiser and are reading and enjoying it, that is great, as well.

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