Branding VS. Direct Response Advertising

Posted on: December 28, 2012

Recently, a local landscaping company asked me if I thought it would be worth it for them to advertise in Bethesda Magazine. I suspect that a lot of business owners find themselves asking similar questions about their own advertising.

I’ve outlined my response below in the hope that this framework helps you make better advertising and marketing decisions in 2013.

My response:

Broadly speaking, I lump advertising and marketing into two different categories—branding (name recognition) and direct response. With direct response advertising, you invest money and hope to generate (you guessed it) a direct response (typically in the form of leads and sales). Brand-focused advertising is about building awareness of your product/company with a target audience.

Building businesses is my passion, and I’ve got a nice formula for doing so (to be fair, I got “my” formula from Bob Perini). Not only has my formula helped Blue Corona grow from zero to $3.5 million in sales in just over four years, but it has helped many other businesses generate similar levels of rapid growth. (Update: Blue Corona did $7.4 million in 2017.)

My marketing formula is simple and it goes like this:

1. Determine the value of a new customer/sale.

2. Determine what you should be willing to pay to acquire a new customer/sale.

3. Track everything and know your numbers.

4. Use the Track > Test > Tweak > Repeat marketing model to find three profitable marketing strategies.

5. Go “all in” with these strategies (as cash and capacity allow).

6. Invest in your building your brand (optional).

From my perspective, and I’ve been doing this a long time, you cannot intelligently market your business without going through steps 1 through 4. If you’re just starting out in business or you’re running a small company, cash is king. For this reason, it’s critical that you make it one of your initial priorities to find at least three profitable marketing strategies. These strategies are going to be the foundation of your company’s marketing system—they are the equivalent of an economic engine for your business.

Typically, all your initial profitable marketing strategies are going to be of the direct response variety—things like SEO, PPC, email marketing, direct mail, etc. The only investment in “branding” you need to make will come from failed direct response campaigns—i.e., think of branding as the thing you get from your advertising and marketing when you DON’T get what you really wanted (leads and sales).

Once you have two or three profitable direct response marketing strategies in place, you’ve got options. One option is to turn one or all of the dials UP and see just how quickly you can grow your business. Another option is to keep your direct response campaigns going at a level you are comfortable with and start to test some new advertising channels—including some campaigns that may not necessarily generate a direct response.

I believe in the power of branding. I believe that it takes multiple impressions (probably five to eight) before you become familiar with a brand/company. I believe that the more times you see a new brand, the more you tend to trust that brand—especially alongside other trusted/recognized brands. I believe that display advertising (including print advertising) can be an effective way to increase your brand recognition with a target audience.

But my warning to business owners is this: Don’t accept “branding” and “name recognition” as advertising success metrics until you have identified and are investing in at least two (and preferably more like three or four) profitable, direct response/lead generation advertising strategies.

It also probably goes without saying, but you should still attempt to track and quantify branding-type marketing efforts. At a minimum, you should use a tracked phone number and URL specific to the ad and monitor the volume of branded search traffic you receive before/during/after the branding campaign.

So, should the local landscaping company run an ad in Bethesda Magazine?

If they already have at least three profitable, direct response lead generation campaigns running and they have some extra cash, it might be worth testing. If they still struggle with lack of consistent or profitable lead flow, I’d suggest that they’re not ready for any broad-based branding efforts. They’re going to get some of that from the testing required to identify a few profitable direct response campaigns.

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