Howdy Friends,
Recently, a client and I fell into a discussion about price & item ads vs branding ads. It kicked off some thoughts that I am going to share and expand on here.
Price & item, branding, or promo ads all serve a purpose. The biggest danger comes when you focus too strongly on one type and forget the others. Let’s dig into the pros and cons of each.
Price & Item – Listing Type Ads
Pros:
- The customer knows exactly what they are getting.
- Can generate sales quickly.
Cons:
- Very transactional.
- Often leaves the customer comparing on price and options alone.
Brand – Warranty; Values; Benefits
Pros:
- Clarifies the values you stand for.
- Clarifies the customer type you serve.
- Attracts people buying based on benefits instead of price or options.
Cons:
- Often slower business growth.
Promo – % off; Buy X, Get Y Free; Limited-Time Offer; Etc.
Pros:
- Can generate sales quickly.
Cons:
- Effects are temporary.
- Often leaves the customer comparing on price alone.
- Can become a cutthroat drive to razor-thin margins.
- Attracts a higher percentage of hard-to-deal-with type customers.
Are any of these ad types bad? No, they all have their place, but you have to know how to use them correctly.
I often see small businesses get tripped up by relying only on price & item or promo ads. They like the instant results these ads produce. It becomes easy for them to start pushing promos all the time to try to beat last month’s sales or lead volume. Their customers become hardened to the continual sales and stop believing it really is a sale. Now they have to push the promo harder and reach more people to attain their goals.
Suddenly, they find themselves in a vicious cycle of price cuts and promos that cut into profits until their finances are scraping bottom. The first bit of financial turbulence puts them at risk of bankruptcy.
Not a fun place to be.
The missing link here is what they should have been focused on all the time, building trust and customer loyalty.
Branding does this. Branding is the foundation to your business. It’s what helps you weather the tough times. Yet, it’s hard for many small business owners to put time, effort, and money into educating people about their warranty, how they think about quality, and what the benefits of working with them are because there isn’t an instant return.
The easiest way to think about this is branding is shaping the way people currently out of the market think about you. Price & item ads and promos are attracting people currently looking for the product or service you have to offer.
To put that into perspective, only about 3-5% of your total market is actively shopping on any given day.
The key is to keep your marketing balanced. The businesses I see succeeding year over year stay focused on branding and use promotions to fill in slow times or get rid of overstocked inventory, if necessary.
If you are struggling to keep your marketing balanced and would like help doing so, contact me here.
Later, Chad Beachy
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