Why Direct Response is Better Than Brand Advertising

There are a million different possible ways to slice and dice what is advertising. We could look at the different channels and mediums like TV, Radio, Print, Digital, Outdoor and others. We could subdivide those as well, for example paid search vs organic search, video vs social and so on. One extremely important way that we can segement advertising, or at least the way we as marketing decision makers think about it is brand vs direct response. To get started down this path, let’s try to define the terms.

What is Brand Advertising?

Unfortunately there isn’t a clear definition that is well accepted by a majority of academics, advertisers, or the public. One pundit defined brand advertising in the following way. “Brand advertising is a form of advertising used to establish connections and build strong, long-term relationships with consumers over time.” The Cambridge Dictionary states, “(Brand Advertising is) the process of making the public aware of a particular brand and its features so that they will continue to buy it:” A national billboard advertising vendor states, “The goal of brand advertising is to make the brand name synonymous with a quality product or service so that it is immediately recognized.” A few of the common threads here are awareness, emotional connections and matching a name to a product.

What is Direct Response Advertising?

According to businessdictionary.com direct response advertising is a”Promotional method in which a prospective customer is urged to respond immediately and directly to the advertiser, through the use of a ‘device’ provided in the advertisement. These devices (called direct response mechanisms) include a (1) coupon to cut and mail, (2) business reply card, (3) toll-free telephone number, or, on the internet, (4) hotspot to click. Most retail sale advertisements are direct response ads in one way or the other.”

Why is Direct Response Better?

First we should define, for who? As much of a direct response advocate as I am, I understand that there are cases where brand advertising might be useful or beneficial. The most obvious is billion dollar enterprise brands. Since they seem to be doing generally doing well financially without my help, let’s just leave those aside for now. We are left with startups, small business and regional/challenger brands. There are three primary advantages that direct response advertising has over brand advertising for these companies.

  1. Demonstrable ROI
  2. Velocity of revenue
  3. Actionable insights

Demonstrable ROI

It’s pretty much in the name, direct response. Let’s imagine we have two creative options. Ad 1, Visit bestbluewidgets.com now to buy a blue widget. Ad 2. Bill’s widgets are the best blue widgets. If we know that 10,000 people were exposed to ad 1 and the same number to ad 2, how can we measure the business result? Presumably, it wouldn’t even be fair to measure the ad performance based on how many of the people who were exposed to the ad purchased a blue widget. Ad 1 had a clear call to action and no claim to a collateral benefit that some might call brand affinity or some similar. Ad 2 doesn’t ask the consumer to buy the widget, it just claims that Bill has the best widget, so presumably, if the consumer already wanted to buy a blue widget they’d be influenced to buy it from Bill. The question becomes, which is more valuable to the small business owner, sales revenue or brand affinity? If you said the latter, check out this list of 50 big agencies who’d be happy to help you spend (waste) your money.

Velocity of Revenue

The answer of which is better, direct response or brand advertising, becomes even more clear when you add the variable of budget. Small businesses generally start with limited advertising budgets. Let’s say a business can afford to spend $5,000/mo on a month of advertising. With this limited budget, if they focus the spend on direct response marketing and the goal is achieved the campaign could conceivably generate the necessary revenue to fund, or even expand, the next month’s budget. In any case, when running a marketing campaign with a direct response goal the advertiser will quickly have the feedback they need to understand whether or not the goal is being achieved. This is not the case with brand advertising without expensive customer surveys or other measurement methods that are far less accessible to a business than their sales figures.

Actionable Insights

With direct response advertising, whether it’s old school catalogs or digital marketing, A/B testing with the goal of generating transactions and revenue is possible. Smart businesses have been taking advantage of this to drive decisions on where to place ads, what content to put in those ads, and even to help inform product pricing. In 2018, we can use Google Ads (AdWords) and Google Analytics to extract more information than ever before about our audience when running these types of campaigns. Everything from time of day, to geography, to demographics and can be analyzed to provide additional insight into how to most profitably market our wares. In a future posts I’ll dive deeper into the strategies that have proven effective for my clients in using these data points to inform many types of decisions.

Direct Response Done Well

Just because immediate positive return on investment and valuable insights are available to sophisticated digital marketers doesn’t mean that every advertiser or campaign will be benefit from these attributes. In fact most of the them don’t. I hope this post has helped convince you that if you have to choose between allocating budget to the mushy metrics and questionable returns provided by brand advertising or the attributable ROI of direct response, you’ll be sure to fund direct response efforts with priority. If you’re currently in the unfortunate majority of advertisers who isn’t reaping the full benefit of direct response marketing, let’s change that. Schedule a call with the Samurai and we’ll put the katana to work slicing the unprofitable ad spend out of your marketing budget.

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