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Business Development: Advertising

Published 02/01/2019

The line between Marketing and Advertising is not always apparent.

“Advertising is a sub category of Marketing,” Gunner Technology CEO, Cody Swann, said. “Most people don’t understand the difference between the two.”

Swann pointed to an analogy popular in the field, whose original source is unknown.

If the circus was coming, and you went looking for a site to pitch the ‘Big Top’, that’s market research.

If you painted a sign before the circus came to town announcing, “Circus Coming to Town on Saturday!”, that’s advertising.

If you put your sign on the back of an elephant and marched it through town, that’s promotion.

If the elephant, still with the sign on his back, tramples through the mayor’s garden, and it makes the evening news, that’s publicity.

If you get the mayor to laugh about it, that’s public relations.

If you deliberately lead the elephant past schools and through residential neighborhoods, that’s market segmentation.

When town’s residents come to your circus and you show them the array of games, treats and entertainment stalls, explain how much fun they’ll have enjoying the circus performers, answer their questions about the attractions and, ultimately, they spend their hard earned money at your circus, that’s sales.

If you created, planned and managed all these activities, that’s MARKETING!

“It’s not a perfect analogy for Gunner,” Swann said. “But I think the point is clear enough.”

Sales, for example, is a sub category of Business Development, as is Marketing – rather than sales being a sub category of Marketing.

“Advertising is the ‘what’ of Marketing,” Swann said. “And it’s also the most creative part of the process.”

And it’s a big part of the process, too.

In 2017, US companies spent $205 billion on advertising.

And 15.9 percent is the increase in digital ad spending, hitting $83 billion.

“A lot of people view advertising as a scuzzy scheme – a kind of pay to play type thing that is heavily skewed toward the big guys and only benefits them,” Swann said. “I don’t necessarily share that opinion.”

For example, while most people would prefer to skip ads, ads can provide informational as well as entertainment value, Swann said.

And smart, smaller companies can take advantage of the billions being spent above them.

“Advertising isn’t a zero sum game,” Swann said. “For example, AWS is spending tens of, if not hundreds of millions of dollars advertising AWS and how great it is. That helps us, too, because we’re AWS experts, so the benefits flow down.”

Companies need to be aware of this and adjust their advertising and marketing to accommodate the trickle down effect, Swann said.

But how much money should a small or mid-sized company spend on advertising?

“That depends,” Swann said with a grin. “I know. I know. Everyone hates that response, but it really does.”

Companies should be spending money on advertising as long as it’s profitable to do so, and sometimes even when it’s not.

But that’s not easy to figure out.

“Take Gunner for example,” Swann said. “Our goal is to get prospects to contact us. If we pay for a search ad to promote our AWS expertise, which gets someone to our AWS landing page, and then, through remarketing, we show that person an ad for our 30-day free trial program on Facebook and he clicks that ad to go to that landing page, but then sees our livestream on YouTube and comments on our show that he’s interested in working with us, what ad gets the credit for that?”

The trick is to have stages with values attached to each.

In Swann’s example, the potential prospect would move through a number of stages.

  1. Click the search ad and they go in the “Know Bucket”
  2. Click the remarketing ad and they go in the “Like Bucket”
  3. Watch the livestream and they go in the “Trust Bucket”
  4. Comment and ask for contact and they go in the “Engage Bucket”

From there, companies must work out a value for each bucket based on likelihood of conversion and average annual client value.

For example, if the average annual value of a new client is $10,000 and people in the “Know Bucket” have a 1% chance to convert, the company should spend up to $100 on ads to get a new person into that bucket.

“If you go into advertising with the mindset of ‘we’ll just know if it works,’ you’ve already failed,” Swann said. “You have to have a plan and a process otherwise, you’re going to be throwing money into a pit.”