Advertising Primer 4: Branding vs. Promoting

All advertising can be broken into two major categories: Brand Image Advertising, and Promotional Advertising. While many ads often present a mix of these two approaches, understanding the differences is crucial to creating effective ads.

Brand Image Advertising

Brand image advertising seeks to increase brand equity. The goal is not to create immediate sales, but to establish your product or service as the preferred offering in your product category. It's all about standing out from the competition in the minds of your buyers.

Preferred brands enjoy more brand loyalty and higher prices. And brand image advertising makes it easier to sell your product because buyers actually seek out your brand, instead of the other way around.

So what's the drawback to brand image advertising? Time and money. Building brand recall and preference doesn't happen overnight. Usually, brand image campaigns are measured in years. For this reason, this form of advertising is most often employed by larger companies with deeper pockets and a longer view of marketing.

What makes for effective brand image advertising? For starters, you must understand and define your own identity before you can push that identity to your target market. If you don't have a clear understanding of what defines your brand, your audience won't either. Don't try to sell 10 different features of your product. Find one or two benefits and drive them home in every ad.

Good brand image advertisements are professionally produced. It may work fine to use clip art and 10 different fonts in a "Big Sale" coupon, but that won't cut it for creating a memorable brand. Make sure your creative work is clean and appealing.

Finally, make sure your brand image ads are truly focused on your brand, and not on some cute or clever concept. When an advertisement captures people's attention, but nobody can remember the actual brand being advertised, this is called borrowed interest. I'm amazed at how many ads fall into this category. Sometimes it's okay to see an ad and wonder, "what in the world is this crazy commercial advertising?" But most of the time it just means nobody will remember what you're selling, and that means your advertising investment is a waste. Make sure your brand is truly front-and-center.

Promotional Advertising

This type of advertising is all about short-term sales. Promotional ads come in the form of free coupons, sales, big headlines, and long lists of features. These types of ads get feet in the door. A properly-executed promotional ad campaign can result in an immediate boost to the bottom-line as customers react and respond.

The drawback to promotional advertising? Too much can actually dilute your brand equity. If you push sale prices for an extended period of time, consumers will come to view your brand as the "cheap" brand. And if you stop offering discounts, they will simply move on to your competitor's brands. You haven't told them why you're better, just that you are cheaper.

But what if you aren't promoting low prices? The same result can happen when you merely promote features vs. core benefits: all your competitors have to do is list the same features (and maybe a couple extra ones), and your buyers will go elsewhere.

Still, promotional ads can be effective in the short term and with the correct execution. Be sure to emphasize new or free products, unconditional guarantees, or other incentives that compel the audience to respond. Make sure you explain the features and benefits of your product or service. Don't be afraid to be informational and direct. Include testimonials or awards to show potential customers your product is a good value.

Finally, make sure you have a clear call to action—urging the customer to buy now and explaining why they can't wait (the offer expires soon, they will save more if they buy now, etc.). And don't forget to prominently include multiple forms of contact. If you are advertising a retail establishment, make sure you list directions or a map to your location.

One piece of advice regarding promotional discounts: In our experience, consumers don't get thrilled about percentage-off promotions unless the percentages are big. People just don't get excited by sales of 5% or 10%. Discounts of 40 or 50% off are another matter—be prepared to handle the deluge of business.

On the other hand, dollars-off sales can get more results, even if they don't equate to a large percentage discount. For example, if a 5% discount on a $1,000 product amounts to a $50 discount, advertise the $50 discount rather than the percentage. People tend to give the dollar sign more attention than the percentage sign. It's easy to visualize the value of fifty dollars, but not so much the value of five percent.

Loss Leaders: Don't Offer Dinky Discounts

I believe it was Jay Conrad Levinson who said in his Guerilla Marketing series that you should never offer a discount unless that discount will be nearly impossible for your audience to resist. What's the point of a "minor" discount? It won't move skeptical buyers. The only business you'll see is from people who already prefer your brand. They might appreciate the small discount, but they would've bought your product anyway. If you can't come up with a discount that hurts a little bit, don't do a discount at all. What's the point?

And speaking of pain, consider offering a loss leader. These are items discounted so steeply, you may actually lose money on their sale. But because the discounts are so attractive, you will almost certainly attract other sales. At the very least you will introduce your product line to new customers—customers who will hopefully return after the sale has ended.

Still can't swallow slashing profits or losing money on a steep discount? Think of the lost revenue as a part of the cost of advertising. The bottom line is to make more sales and attract new customers, even at a short-term cost.

Promote For Sales Today, Brand For The Future

As mentioned in the previous primer article, products or services with high brand equity are considered specialty products. Products with low brand equity are called commodities. As mentioned, one aspect of promotional advertising ("Sale! Sale! Sale!) is that too much can actually drive down brand equity. This can quickly turn specialty products into commodities.

Most products and services will benefit from a mix of promotional and brand image advertising. However, most companies—especially small and medium size companies—do far more promotional advertising than brand image advertising. Many never do any brand image advertising whatsoever, and their brands are left susceptible to aggressive attacks from competing brands. Because they build little long-term equity for their brands, these companies must constantly work hard to gain—and keep—their customers.

Want to make sure your organization gets the most short-term and long term value for it's advertising dollars? Then make sure you have a proper mix of brand image and promotional advertising.


Some content for this series was derived from course notes from Introduction to Advertising, UC Berkeley Extension.

Advertising Primer 3: The Value of Branding

Marketing—and advertising in particular—often seems like an intangible science. If fact, it seems more art than science most of the time.

However, brand equity is one aspect of marketing that is exceedingly tangible. Brand equity is a balance sheet metric that plainly shows how well a given organization has applied their marketing efforts towards their brand.

Nearly every day each one of us purchases certain preferred name brands when comparable generics sit inches away on the same store shelf. This is brand equity.

But how does brand equity show up on the balance sheet? Well, consider the difference between a publicly traded company's book value (the value of their assets minus liabilities) and their market value (the total worth of their stock). McDonald's, for example, has a book value totaling around $14 billion. McDonald's stock, however, is currently worth more than $75 billion. This means investors are willing to pay more than five times more for a share of McDonald's stock than the value of the real-world assets behind that share of stock.

At the end of the day, the only "real world" value that companies care about is whether markets are willing to pay more for their brands. Similarly, nonprofits succeed when supporters and funders feel comfortable supporting and funding their organization.

Brand Image Advertising

Brand image advertising is a type of advertising which seeks to improve brand equity over time. Note, I said "over time." Brand image advertising, unlike promotional advertising, does not result in overnight sales. The goal is not feet in the door tomorrow, but a long-term growth in brand awareness. The kind of brand power that means when people do buy, they will buy your brand, support your nonprofit, or choose your service, no matter if your brand is more costly or harder to find.

And that last concept is called "price elasticity," a measure of how much more a consumer is willing to pay (in cost or inconvenience) for a given product or service in order to obtain that product vs. other similar products. The higher the brand equity, the higher the price elasticity a product will enjoy.

Products or services with high brand equity are considered specialty products. Products with low brand equity are called commodities, and brand image advertising takes brands from commodities to specialty products that can practically name their price.


Some content for this series was derived from course notes from Introduction to Advertising, UC Berkeley Extension.

Facebook Takes Over the Web Today

If you were paying attention to the Stage 2 Studios homepage, you maybe noticed a little Facebook "Like" button. Of course, you've seen this before if you use Facebook along the rest of the world...but notice this "Like" button doesn't appear on Facebook!

That's right, as of today Facebook has introduced a new "Like" plugin that can be integrated with any page on the web.

It's hard to over-state how huge this is: now Facebook users can share their "likes" of pages from sites all over the whole big world wide web. Of course, this could be done in the past through 3rd-party modules or by users simply copying the page url. But neither of these methods were truly integrated with Facebook, and the difference is huge.

For example, you'll notice the "Like" plugin on the Stage 2 homepage shows exactly who likes our homepage...actually you won't see who else likes it unless they are your Facebook friends. Yes, this plugin is facebook-profile-aware, not only sharing your "likes" through your Facebook feed, but also displaying which of your friends also like this content right next to the Like button. If so configured, you'll even see tiny profile photos of your friends under the button (we disabled this for the Stage 2 homepage).

And there's more: advertisers will be able to gather public profile data from the users who click these Like buttons. Soon, a whole new level of psychographic data will be available to internet advertisers. Not simply data about what sites you visit, but what sites truly interest you.

The best part? The Facebook Like plugin is easy for website owners to integrate with existing pages through a simple iFrame tag or (less simple but more rich) xml/javascript code. Learn more here: http://developers.facebook.com/docs/reference/plugins/like

Advertising Primer 2: Differential Advantage

When you think of Priceline.com, you probably associate the brand with low prices on travel purchases. In fact, "price" is in their name! And every Priceline ad emphasizes one main benefit: low prices. Low price is an example of what marketers call a "differential advantage"—the exclusive benefit(s) that a brand offers to potential customers.*

The key here is "exclusive." You must be able to convince your audience that the benefits you offer are not available from the other sources. This is not so easy to achieve with a differential advantage like "the lowest price," unless you actually offer the lowest price. However, if you claim to offer an advantage like "the most sophisticated product line," you stand a better chance of staking a claim. "Price" is objective (your prices are either lower, or they are not), but "sophistication" is subjective (one person may think Mercedes is sophisticated, but another will only consider a Rolls Royce).

A second concern is that your customers must care about the differential advantage your product offers. For example, wealthy consumers will not be concerned with the lowest prices, generally. You must choose your differential advantage based on qualities your customers care about.

Finally, potential customers must be willing to pay for the differential advantage your product offers. Most people would agree a Rolls Royce is a sophisticated automobile brand, but few of us have the means or desire to lay down the cash required for this luxury item. Conversely, if your differential advantage is having the lowest price, you might find customers won't buy your brand if they believe your quality is too low. In other words, their primary concern might be price, but they see the "cost" of an inferior product as too great to justify a small savings in price.

A product or service may have multiple differential advantages. You may claim both the lowest price and the most sophisticated product. But be careful: often such pairings will seem mutually exclusive to customers, even if they are valid claims. Consider how rare it is, for example, to find the most sophisticated product at the lowest price.

Ultimately, a differential advantage is what companies use to "position" their products or services. Positioning defines how a given product will compete, the competitors it will compete against, and the target market for which it will compete. Positioning a product line is based on it's "competitive strengths," which are the proofs to support the differential advantage in ways that are clearly understood and valued by the customer base.

If you position your product effectively, using competitive strengths to support a differential advantage, you will have the best chance of attracting loyal customers. These customers believe they can't obtain the elsewhere even if "parity" (equally beneficial substitutes) products are available.

So let's look at some other examples of differential advantages besides price and sophistication and their supporting competitive advantages:

Differential Advantage: Highest Quality

Example: Dyson vacuums

Competitive Advantage: Performance. Dyson claims their vacuums outperform all other brands because Dyson vacuums never lose suction. Their website boasts, "Other technology might look like Dyson technology, but it doesn't work like it." Dyson TV ads claim every other vacuum design is fundamentally flawed because dust and dirt reduces airflow and decreases performance.

Differential Advantage: Broad Product Line

Example: AutoTrader.com

Competitive Advantages: Convenience and customization. AutoTrader's website says, "Our site is designed to give you more control of the buying process and make finding a vehicle easier than ever before...AutoTrader.com is the only website with more than 3 million vehicle listings from 40,000 dealers and 250,000 private owners. We provide the largest selection of vehicles." A recent TV commercial claims, "When you search from the largest collection, you get the car you want at the price you want."

Differential Advantage: Innovative Technology

Example: GM's OnStar service

Competitive Advantages: Safety, reliability, and convenience. A 2006 TV spot presents some of the many benefits of a Chevy vehicle with OnStar: remote door unlock, vehicle diagnostics, emergency services, stolen vehicle location assistance, and hands-free calling. Versus other similar services, the OnStar website claims theirs is the "most comprehensive in-vehicle security, communications, and diagnostics system."

Differential Advantage: Broad Distribution

Example: Netflix

Competitive Advantage: Convenience. The Netflix distribution system brings the movie rental store to your mailbox--or even your Xbox. Users no longer have to go to the store--they order online and movies come in the mail. They can keep movies as long as they want with no late fees. And recently, Netflix has begun distributing many movies for instant viewing through the internet to PCs and even Xbox 360 game systems.

From the Netflix website: "DVDs are delivered free to members by first class mail, with a postage-paid return envelope, from 55 distribution centers. More than 95 percent of Netflix members live in areas that generally receive shipments in one business day. Netflix is also partnering with leading consumer electronics companies to offer a range of devices that can instantly stream movies and TV episodes to members' TVs from Netflix."

Interestingly, it could be argued that the Netflix distribution system actually reduces convenience on the front end: DVD customers can't rent movies the same day. They must order a rental and wait for it to be delivered. Blockbuster claims their own competitive advantage here with a similar service which allows customers to order through the mail or rent from one of their many physical stores. And Blockbuster also offers movie downloads to PCs.

Differential Advantage: Strong Technical Service

Example: H&R Block

Competitive Advantage: Peace of mind. The company's slogan is "You've got people." A 2009 TV ad illustrates this idea with humor. In the ad, an H&R Block consultant watches a man prepare his taxes through the H&R Block website. The consultant compares himself to a guardian angel saying, "if there's a problem, I can swoop in and help him out."

This claim of help when you need it carries to the company's tax preparation software as well. The H&R Block website details two of the main advantages of their software over the competition's:

-Only from H&R Block: One Ask a Tax Advisor session included. An H&R Block tax professional can help answer your tax question via a 1-on-1 phone or e-mail consultation.

-Only from H&R Block: Worry-free Audit Support® offers guidance plus an H&R Block enrolled agent to represent you in the event of an audit.

Differential Advantage: Reputation/Image

Example: Louis Vuitton

Competitive Advantages: Luxury, social status, confidence. French fashion designer Louis Vuitton specializes in luxury leather luggage. The company's 90 second "Journeys" ad exudes image and style. Though it was their first-ever TV commercial, they actually call it a film; Louis Vuitton commissioned a respected film director for its production. The ad barely exhibits the LV product line, focusing instead on the spirit of travel, confidently but quietly suggesting the brand's preeminence.


*Some content for this series was derived from course notes from Introduction to Advertising, UC Berkeley Extension.

Online advertising steps aside for social media

Did your organization miss the online advertising revolution? Do you still spend most of your ad budget on traditional media? Think it's just been too hard to keep up and maybe the online ad craze is a temporary fad? Well, I have bad news for you: the next wave is coming, and it's called social media marketing.

Actually, social media marketing has already arrived. Organizations are using social networking platforms (like Facebook and twitter) and innovative social media (like custom interactive websites and viral video campaigns) to connect with their audiences in ways that were impossible with traditional media. The benefits include more loyal customers for businesses and more informed and engaged supporters for nonprofits.

Of course, online advertising isn't exactly going anywhere. Online advertising now rivals or surpasses every other form of advertising including newspapers and TV. But companies are beginning to put a major focus on social media as a key component of their communications strategies.

For example, Advertising Age reports that Bank of America is reducing their traditional media spending and putting that money towards building their social media properties. We're not big fans of BOA, but as one of the largest banks in the country, their marketing activity reflects a major trend in the business world.

Note that BOA is not spending more money on online advertising; rather, they are applying the savings from traditional media reductions to creating their own social media content.

I'm always advising clients to create unique and interesting content on their websites to draw in their target audiences. The same is now true of social media: if you don't offer ways for people to engage with your organization and the community that follows your brand, you will lose ground to those organizations who do.

I often wonder when will organizations realize "new media" is not a fad. Yes, each wave of progression comes in fits and starts. But in the wake of the dot com bust, online retail has become a cornerstone of world commerce. Early banner ads eventually gave rise to a major advertising platform. And yes, social media is the next big wave that will sooner or later become a critical component to your organization's communications strategy. Of course the sooner you invest, the sooner you reap the rewards.