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The 3 Biggest Reasons Why Most Ads Fail and What You Can Learn From Them So Your Ads Win Every Time

The 3 Biggest Reasons Why Most Ads Fail and What You Can Learn From Them So Your Ads Win Every Time

August 22, 2008

I'm going to reveal to you the biggest reasons why most marketing and advertising is a waste of money and how to prevent your ads from a similar fate.

Unfortunately, I know I'll be wasting my time with many readers. It's not a knock on anybody in particular. I've just come to know human nature. There will be those who will argue with what I have to say and mumble, 'That's never worked for me.' And that's fine. I understand that. But for those who do take my advice and act on it, you can make a fortune!

These are some of the solutions I've used with clients that include IBM, Blue Cross/Blue Shield, National Geographic as well as small coffee shops and real estate investors you've never heard of before. But they all have one thing in common: they're making at least TEN TIMES more money as a result of working with me than they were before! Why? Because they listened and they acted on the advice I'm about to give you.

The problem with most ads - whether it's direct mail, a magazine ad or an online ad - is that it suffers from any one of these three ailments:

  • Lacks power and an ability to break through the clutter.
  • Does not offer a strong enough incentive.
  • Does not have staying power.

You have a lot going against you. You're competing with more than 3,100 marketing messages every day. Consumers will take less than 3.5 seconds to decide whether to pay attention to your ad or toss it into the trash, flip the page or click on something else.

For mailers, the numbers can be even more discouraging. A large portion (48%) of business recipients toss their unsolicited mail without bothering to open it all!

Since typical response rates are so low, you need something that can help you grab the attention of your hungry fish and get them to act. And while everyone else is talking about marketing and advertising online, I'm going to limit my advice to marketing in the mail, which is still one of the cheapest and most direct forms of marketing you can do that will give you amazing returns on your investment. That said, my advice can also be applied to other forms of marketing and advertising too, as you'll see.

Here's how you can increase response:

The single best thing you can do to increase the response in your direct mail is to send what I call, Lumpy Mail. In fact, I've come to be known as the 'lumpy mail guy' based on the enormous success we've had with our clients.

Premier Bank faced the same question all mailers face: how do we break through the clutter and get noticed? They increased response 300% by offering a premium, in this case a $4 acrylic clock.

The control was a letter that they had been sending. The test piece was the same letter with a free gift offer: 'If you respond you get this FREE clock.' The letter by itself got a 1.8% response rate. But with the test package, the bank got a 7.3% response!

Now, here's the interesting thing. The cost per transaction dropped by 66%. How does that work? They mailed fewer letters and got a higher response. That's very interesting. We could justify the increased costs by making the offer more irresistible and lower the quantity we had to mail and got the same or better response as a result. Make sense?

The big secret about premiums

Here's the big secret about premium offers. They didn't give a clock to everyone. They included a picture of the clock in every mailing, but they only gave the actual clock to the customers they met with. When it comes to describing a premium offer show, don't tell.

This isn't an isolated example, either. Research has proven again and again that a direct mail letter with a premium can outpull a sales letter alone by as much as 300%.

But it only works if the premium is something your hungry fish find valuable enough to take action. The best premiums are those that you would use for personal use (as opposed to something you would use at the office) and that have a high perceived value. For example, free Sears Craftsman ratchet sets do well because they have a lifetime guarantee. Electronics, such as video games, iPods and hand-held radios, are also very popular premiums but they should be tailored for your target audience. In the layout, be sure to show the premium several times and be sure to remind your audience about your terrific offer by showing a picture of it again next to the reply.

Still not convinced premiums really work or they're worth the money? The following graph demonstrates how premiums can increase response. Out of 316 tests, when offering a premium against the control package, the premium increased response 278 times.

That means, offering a premium beat the control 88% of the time! (By the way, for the test package to 'win', it had to beat the control in terms of ROI too since the test package included additional costs for printing and fulfilling the orders.) In other words, the premiums not only increased response but improved bottom line results too.

The most popular premium in history? The big-button calculator. The number two premium has been the mini boom box. More than 10% of the U.S. population now has a mini boom box and some 23 million calculators have been given away as premium offers.

Here's a myth I need to break for you. The myth is that related premiums work better than unrelated premiums. For example, a medical equipment company may offer you a report or a book about their medical technology as a premium. But what we've found is that calculators, knife sets, cameras and the like outpull them all 74 out of 77 times or 96% of the time.

Here are some rules of thumb to determine how much to spend on premiums. First, figure out the lifetime value of your clients.

LTV = (average amount of purchases by a customer in one year) X (average number of years a customer buys from you)

For instance, let's say I know that my average purchase price from a person is $100, and he's going buy from me once a year over the next five years, then the LTV is about $500. If I get a 10% response rate, I know I can spend up to $50 per prospect to acquire a customer and still breakeven. How much can you spend to acquire a new customer?

What's your average sale? $100, $1,000 or $10,000? How much are you willing to spend to acquire a new customer? How much would you spend just to have a prospect meet with you? What's your close ratio?

CAUTION: If the initial purchase is a low-price item, scale the premium offer to fit the budget. Finally, if you don't care about maintaining a relationship with your customers, don't spend as much on premiums.

One of the most successful and unusual premiums is from legendary speaker Joel Weldon who promotes his 'Success Comes in Cans, Not Cannots'. He'd offer the 8-ounce cans as a free gift with the purchase of one his motivational courses. But the premium is so intriguing that when people called to spend several hundred dollars for his course, they really wanted the free can he was giving away. They wanted to find out what was inside!

The point is that premiums are one of the most powerful tools you can use to breakthrough clutter. They give your prospects an incentive to respond and they stick with your prospects long after they put the ad away.