Advertising
Marketing is defined as "running a first-rate business and letting people know about it." In the contemporary sense, every action a company takes sends a marketing message, not merely those actions intentionally undertaken to create an image.
Statistic: two-thirds of small businesses do not advertise at all, and still operate profitably. Moreover, advertising is deemed inappropriate for a small business:
- It is not cost-effective on a small scale
- Customers lured by advertising are not regular customers and do not become loyal customers
- If you depend on advertising, you'll lose your market to anyone who is better at advertising
- Consumer skepticism makes advertising counterproductive: your message as seen as deceptive, and your company as dishonest
The Myth of Advertising's Effectiveness
In marketing circles, advertising is self-serving: if an advertisement results in higher sales, it is effective. If not, it is ineffective - so you should try another approach, or maybe more advertising. There are no metrics whose result would point to a conclusion that it is useless or counterproductive to advertise.
What's more, the myth of effectiveness is so common that advertising is taken for granted. It's hard to get a small-business loan for a company if there is no line-item in the budget for advertising costs.
The connection between advertising and revenue is tenuous at best, and tends to be short-term. It can be proven, or at least suggested, that an advertisement attracted people to a business, but not that it incented them to become customers. Even when success is alleged, it is self-lived: there are no measures of the long-term effects of advertising.
Why Customers Lured by Ads Are Often Not Loyal
Customers who respond primarily to advertising do not usually return: they buy a product because of a discount - and the next time they're in need, they will respond to whomever is advertising the best discount at the time.
Moreover, it has been statistically demonstrated that customers who buy a product or service for the first time, lured by advertising alone, tend to be bad customers. There is far higher incidence of returns, cancellations, or non-payments in the period following an advertising blitz.
Why Dependence on Advertising Is Harmful
Advertising is referred to as an "addiction" - business who advertise keep advertising, and are fearful of the harm it will do to their sales figures if they decrease or desist. Moreover, the companies tend to neglect other aspects of their business that build and reinforce customer loyalty.
Also, advertising tends to have a grandiose tone: it creates an expectation of service that the company cannot often achieve, and customers lured by advertising are more often disillusioned than delighted by the product they receive.
There is also an adverse effect on customers who are already loyal to the company: advertising "cheapens" the company image, and special offers made for "new customers only" makes them feel unappreciated.
Advertisers: Poor Company to Keep
An estimate: the average American is exposed to over 1,500 advertising messages per day, and have become conditioned to ignore them.
Even when advertising gets one's attention, it is not often taken as credible. In the present age, people have extensive experience with advertising, and most individuals have regularly been disappointed when advertisements set an expectation that the vendor could not fulfill.
Devious advertising is so rampant that, by default, customers consider any advertising message to be deceptive, and tend to be more dubious than impressed by the offer. They associate this sense of doubt to the company that advertises, and this impression tends to have greater longevity than the explicit information offered. A company that advertises at all is seen as less trustworthy as a result.
There are laws that govern advertising, but they have not been effective in the USA: advertisers generally get around them, tailoring a message that is deceptive, but does not violate the letter of the law, and enforcement fo advertising laws is minimal.
By contrast, Japan and Sweden have been more aggressive in ensuring the integrity of commercial messages. Advertising remains effective in those countries, though companies are held to a strict standard of compliance.
Listings: "Advertising" That Works
One form of advertising that does work are listings: presenting basic information about a business (location, services offered, hours of operation, etc.) in the local yellow pages, business directories, and newspapers. Even postings in high-traffic areas can be effective in attracting customers.
In some instances, listing and advertising have merged: display advertisements in the yellow pages not only provide the basic information about the business, but often also make advertising claims or promotional offers. Newspaper advertisements are a mutation that evolved from "bare" listings.
It is often assumed that the promotional message is what makes some listings more effective than others. However, the prominence of a listing has more to do with its effectiveness than its content. A large ad that provides only the name and a location of a business will attract more customers than a smaller one full of advertising messages.