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Advertising budget: Spending too much is as risky as spending too little

To be effective with advertising and promotion in the current situation in India requires a lot of thought. You need to put yourself in the customer's shoes and try to decide what appeals to your prospects to be most effective.

June 30, 2021 / 06:01 PM IST
A good idea might take a lot of time to come up.

A good idea might take a lot of time to come up.

There used to be a famous saying by the doyens of advertising when I was working with them in client servicing: “If you pay peanuts, you get monkeys!” This is what internally the creative head used to say when clients are reluctant to pay the premium for some of the best works.

This is true in all types of advertising but more so amongst industrial product companies that target other industries for their products and services. More so in the small and medium enterprises, where most of the owners are happy to loosen the purse strings when it comes to a family wedding card but not for a consultant’s services for their business. (It was more important for them to show to their immediate community that they have arrived, with lavish extravagant weddings).

Need to change mindset

If you want to understand what the above means, check any trade publication. Dull photos of machinery or products which would have been done by an amateur photographer or the manager on the floor, asymmetrical layout, long list of boring product details in engineering jargon, no prompts to make the prospect call the company, and no clue on brand building for the company. I guess these companies are doing such advertising to cut costs on making the ads – like most government ads where the rates are fixed by the bureaucrats. In many cases, these works are in-house attempt too.

muneer column smart growthAs any expert on advertising will tell you, no good results will come from ads by squeezing production budgets to the lowest possible level. The reason is simple: The main costs will be that of reaching out to your target customers and not of making the ad. Unfortunately, the problem with the B2B marketers is that they think more and more TQM and think that quality improvement programme requires driving costs down. And advertising costs should be driven down definitely as what does it bring to the company, right?


How can this mindset be changed? Most business promoters do not know a good advertisement expense from a bad one. They have no idea if Rs 140,000 for an illustration that shows the inner workings of their product is worth the money. They do not have a clue as to how spending Rs 15 lakh for a trade show promotion could be reasonable and proper. The only solution to this dilemma is hands-on experience. Once they have been to a trade show where their archrival was the talk of the event when their own stall was stale and old, they will appreciate the importance of spending right for effectiveness.

Leave creative part to creative folks

To be effective with advertising and promotion in the current situation in India requires a lot of thought. You need to put yourself in the customer's shoes and try to decide what appeals to your prospects to be most effective. That’s obvious, isn’t it? It is important to think about the customer's buying process, and about getting your brand to the next phase of that process. Most experts go through multiple possible concepts to get a handful that might do the job. It is amusing to see some of these clients spending hours ideating creative thoughts. While it is good to brainstorm, the creative part is best left to the creative folks rather than the business folks.

A good idea might take a lot of time to come up. One will go through many bad ideas before zeroing in on the right one. You can't cut corners on this process, and you have to use talented, experienced people who are capable of finding the right concepts from several rational thoughts.

Let me share one more suggestion for getting the best value from your advertising. Ask the creative team what you would like to spend. Don’t think this is a bad idea. It is like this: Think of your plans to buy a new house. When you go shopping for it, the first question brokers ask is, "How much do you want to spend?" They do not want to waste everybody’s time showing all possible combinations of apartments and villas across the large metropolis.  Why show you a Rs 10-crore apartment when your budget is only Rs 3 crore?

Target budget is crucial

Advertising works the same way. Advertising agencies deliver effective work when they know upfront the client budgets. Normally the clients have no idea how much is necessary and essential, and they are usually too embarrassed to admit their ignorance. They normally say something like, "We're open to your recommendation, we want to see some great work", which doesn't mean the sky is the limit. It probably means "Be gentle, we're new at this." But it's fine to say you don't know, just don't leave it there. Keep talking until you arrive at a target budget that is acceptable. And agencies should give some examples of similar work by other companies to help clients decide on the budget.

Spending effectively on advertising and trade shows is one of the most important and difficult tasks – more so in the near future when the pandemic is behind us. And the risk of spending too little is just as great as the risk of spending too much.

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M Muneer is the managing director of CustomerLab Solutions, an innovative consulting firm delivering measureable results to clients.
first published: Jun 30, 2021 06:01 pm
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