Over the weekend advertisers spent between $1.65 and $1.8 million for a 30-second commercial during the Oscars.
That’s a lot to spend, however if the economics are right spending that much can really pay off for a business. Especially if their competitors aren’t willing or able to do the same.
Years ago, I thought about building a multi-million dollar company like Nightingale-Conant.
However, I learned through painful experience the impracticality of building a mail-order business without the ability to “go negative” on the front end. The simple truth was I didn’t have the financial resources to do so which meant I had to abandon that idea and go in a different direction.
I often teach that even great marketing can’t make up for bad economics. It is equally true that neither the greatest product or the greatest marketing can make up for insufficient capital.
Smart marketers at the Oscars, the ones who had the right message, the right audience and choose the right media, could pull ahead of a competitor that wasn’t willing or able to spend that much.
You might remember when Pepsi dropped out of some major advertising for a few years while Coke stayed their course and continued spending. As a result Coke overtook Pepsi as the leader.
The business truth many people insist on ignoring is that most businesses are built by “buying customers.” That means that if you are restricted to only acquiring new customers through means that deliver a first sale, front end profit, you cannot grow a business quickly. In fact, you probably cannot grow a business at all.
Conversely, the marketer with the willingness and ability to invest in acquiring customers, even losing money on the first sale AND with an effective strategy for maximizing customer value has an enormous competitive advantage.
Business owners have difficulty accepting this message. In fact, when determining budgets, marketing is often one of the first areas that businesses believe they can reduce their spending.
The rationale is that the business can maintain the customers they currently have or that their competitors may be facing the same economic challenges and therefore do the same. What really happens is that you open up the market and make room for your competitor willing to advertise to move in and take over some of your market share.
Really the question should NOT be, “What’s the least amount you can spend to acquire a customer?”
The most important question you should ask is, “What’s the most that you can/will spend to acquire a new customer?”
(Dan Kennedy Talk About This At Length In His Newly Released “Marketing To The Affluent” Course…Available For 33% Off Now.)
That number determines what can and cannot be done, which media and marketing tools can and cannot be used, and virtually dictates your marketing plan.
Ultimately, the business that can spend the most to acquire a customer wins. In the U.S. recessions from 1980-1985, McGraw-Hill Research analyzed 600 companies. The businesses who continued advertising and outspent their competition during the 1981-1982 recession hit a 256 percent growth by 1985.
There is more evidence to support the same. If you expect to make a profit on the initial sale only, you will grow slowly, if you grow at all. You must make sure you can afford to buy customers, outspend your competitors and have an effective strategy for maximizing your customer’s value on the back-end.
NOTE: This is just one of the money-making rules you’ll learn how to apply at the GKIC Fast Implementation Bootcamp. If you’ve been flailing around, growing slowly or not growing at all, take advantage of our Free FAST Implementation Bootcamp. It’ll get you out of the gate and running FAST.
Note, this is NOT about getting more information. It’s about showing you how to use GKIC marketing and helping you develop an actual marketing campaign. You’ll actually leave bootcamp with a complete campaign ready to send to your customers the minute you get home.
Or hear what one of our recent Bootcamp attendees has to say here.