Know-How Exchange : Strategy

Hi,

I would never recommend against local advertising without first checking whether it works for your company: this is a perfect opportunity to do some experimentation! Here is how that would work:
1) Match each of your local stores to a similar other in terms of current profitability and local market conditions.
2) Next, place one of each pair in the experimental group and one in teh control group.
3) Obtain a reasonable budget to divide among the stores in the experimental group.
4) Make sure you track the performance of each store, and also which local advertising is executed for the experimental stores
5) After you have allowed for any reasonably expected performance benefits to materialize (a quarter if you have a short sales cycle, 6 months or a year if more), compare the performance of the control and the experimental stores. Several experts in this forum, including me, could help you with the statistical analysis if needed.

When the experimental stores show higher performance, and you like the return on investment, scale up the local advertising program.

How does that sound?

Whether the potential good will generated by local ads like you describe is worth it depends partly on the what you're selling. If you're a commercial plumbing pipe manufacturer, probably not. If you're a local plumber, probably worth it.

That said, I would recommend some guidelines along with a local budget, assuming your product or service really would benefit from local goodwill. For instance: back of t-shirt, approx 400 printed, not a good investment. Billboard at ball field, eyeballs = thousands over the summer, better idea. Ads in charity programs, probably not a good idea (unless those who give to charity are your target market); providing/underwriting cost of civic events (local concert series, for example) open to public, maybe better idea.

Categorize the major types of things you get asked to do (ads in programs, ads on posters/shirts to support athletic teams, in-place signs at fields and similar, civic or group event sponsorships) and place a rank on each from most desirable to least. Give your store managers a local ad budget and require at least 50% of any $$ spent must be spent on the top two most desired tactics. Will eliminate $1000 a year in sponsored pancake feeds and t-shirts with 40 other logos on them, too.

Hope it helps. Yes, I've been there. :)

I never even visited the US but I will tell you that word of mouth is everything in small towns, and you being the supporter of their little league or a small newspaper that they all use or a friend or relative uses will translate in what others have mentioned here "Good will" all that will be translated in sales

I would recommend against the budget for each shop, alternatively, you should assess each opportunity separately, e.g. readership of a newspaper out of the total population, number of families who attend little league out of the total number of households etc... and this should calculate the cost of reach to one person

I have worked with a similar situation in the past with sales agents. When I worked for a branded apparel company, we gave an advertising budget to each agent to cover their territory. The budget was based on a certain percentage of sales, and sales had to be maintained to maintain the budget. It worked effectively because the sales agents would spend the money wisely to ensure the best return-otherwise their budgets were cut. You could do something similar with your store managers-set budgets based on last year's sales, which can go up or down depending on the sales results.
If you do decide to give responsibility for local advertising to the stores, you will need to set very clear criteria and guidelines in terms of the type of advertising that is acceptable to your company, and what isn't. For example, you could specify that a measurable element must be incorporated into each campaign and specify what the options are. You will also need to develop ad templates for the stores to work with to ensure consistency of your corporate message. If you are unable to do this, I recommend against giving the stores a budget for local advertising. It will be a time-consuming exercise to develop the templates, but if you don't your messaging will be all over the place.
I have actually had a demo of an amazing software that has been developed for this exact purpose. Ad templates are set up on-line and local markets can make adjustments for their purposes, and are restricted to working within head office specifications (these are built into the program). If you want any more detail on this please let me know.

I ran a local business for a friend, and there must have been a dozen opportunities like the ones you describe. We actually had a good way to track the source of business, so I usually told the media salesperson (by whatever name) that I'd try it and see what kind of response we get. If it's better than the target rate (which we shared with them), we'll repeat. Otherwise, we would drop it.

We lived up to our end of the bargain, but none of the local specialty media were nearly as efficient as our basic newspaper/direct mail vehicles. After a while, they stopped calling on me and when they did I could say, "We tried that and it didn't work."

I'd always add that if they wanted to fund the re-trial I'd agree to adopt their medium if the test worked. Nobody ever took me up on that either.

Following up on your question:
"Sounds like a great idea. However, how do I know if sales are increasing due to local markeitng or our TV, radio etc?"

You basically have 3 ways to do this:
1) control: if you keep your TV, radio etc the same in the experimental and control stores, the difference in performance should be due to the local marketing
2) econometric modeling: if the above is not feasible, estimate a model regressing performance against TV, radio and local marketing. The regression distinguishes what part of performance is due to each marketing action
3) if none of these sound appealing, ask incoming customers how they found you. The responses may be biased (as many do not remember or remember incorrectly), but it should give you some idea

cheers