Sunday, June 19, 2011

Half the money I spend on advertising is wasted; the trouble is I don't know which half.

John Wanamaker is attributed with saying "Half the money I spend on advertising is wasted; the trouble is I don't know which half"

Perhaps if Groupon was around in John's era he may have had a little more insight. Before I go on I need to stress I am in no way advocating the use of Groupon as a sales tool. However, I always advocate measuring how a business spends its money....in any department.

I recently came across this article on Techcrunch which I think is fantastic. Have a read - http://techcrunch.com/2011/06/18/ribman-groupon-bashing/

So, why did I love the article? Simple. Look at the level of analysis that Carey Friedman, the restaurant owner of Grandpa Eddies BBQ, goes to in understanding the success of the campaign.

Marketing managers are forever chastised for wasting money:
http://www.marketingeye.com.au/blog/when-your-marketing-is-a-waste-of-money.html
http://www.1to1media.com/weblog/2010/10/stop_the_marketing_waste.html

and if you are keen for a little academic reading:
http://www.sciencedirect.com/science/article/pii/S0167811696000365

If you read the Techcrunch article comments you will see a number of posters are critical about the ROI of the campaign. That may be fair enough, but how many small business owners spend money on advertising (I am using the term advertising loosely here) and have no idea of the cost, outcome (at the detailed level) and hence ROI.

It is not only small businesses that waste marketing money. Anyone remember the $500mil impact the Microsoft Vista campaign. Here are many many more examples of poor marketing spend execution - http://tinyurl.com/3uyoasu

I tip my hat to Carey Friedman. If more small business owners were as fastidious about their marketing spend, as Carey Friedman, then there would be far fewer business owners wondering which half of their advertising was wasted.

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