thanks ,

james

Its not a question of whether you advertising works. It’s a question of how you canput that money towards benefiting your (fewer) customers.

It’s not an apples to apples situation. Comparing the acquisition of new customers (with advertising) to the potential of word-of-mouth generating by re-investing the same budget is virtually impossible. Regardless of analytics expertise and dedication. I agree. Measure whatever you can. Make informed desicion. But sometimes a risk is a risk.

The latter option (that amazon chose) is a risk (the benefits cannot be directly attributed to the costs & they cannot be accurtely measured or estimated). You are betting on customer loyalty an appreciation for the best deal.

I think a large part of the reason stopping it’s advertising worked for Amazon could be most of that advertising wasn’t being tracked.

You know 100% which advertising sources you should cancel if you’re tracking sales from advertising effectively.

Cancel those that don’t make a profit.

This whole “is my advertising making a profit” is a really frightening question because it points out that you’re simply not tracking.

Kindest regards,
Andrew Cavanagh

I think the point of the case study is a question ‘If you pulled the plug on your (high) advertising budget, where would you put it?’ Regardless of who/when/where you are. Maybe you cannot pull it off. Most cannot. But what if you could? Amazon was also predicted to fail- suicidal. But it worked.

The concept is not new. from Aldi Foodstores to Warren Buffet’s discount retailer from the 50s (”Charlie says your customers will find you at the bottom of a lake if your prices are the lowest”).

It’s definitely not a question of being a ‘household name.’ Its a question of thinking differently & taking a chance: If I ask my customers what they want, I know they will not say ’special promotions, $10m sale ads, & a team of $200k p/a brand managers’ they may react to these things, they may buy and talk and want because of these, but they won’t ask for them.

They will ask for lower prices or better service or better products. They may want to support a local business, or be greener or support their local community or something. They will not ask for more ads.

Listening to them (your customers) is suicidal because every marketer knows that what people say they ‘would buy because…’ is not the same as what makes them pull the old wallet out. But.. it might work. maybe.

You probably shouldn’t try it at home…with your business…or your reputation. Definitely not. Its suicidal.

…Bruce…

1) In 2003, Amazon was already well-known and had an established brand

2) Advertising has much more impact with those who aren’t already aware of your products/services. It’s much cheaper to reach existing prospects (through direct marketing) and customers (experience with your products/services) directly than through broadcast media.

3) Amazon has done well what all businesses should do. Use what they learned from existing customers to better hone their product, messages, etc. to sustain their competitive advantage. As you note, they’ve done this through a series of offers, “other products you’d enjoy based on past purchases”, “listmania” plays off on the fact that everyone goes there for research, free shipping for larger spenders, etc.

4. Advertising is very expensive unless you can find highly targeted small publications. Amazon continues to advertise online so they haven’t totally canceled their advertising…

In that case, this makes for some very intersting reading. We know that pulling advertising dollars off would be suicidal for companies that:
a) have no brand name
b) have one-time customers
c) are small and in a competitive environment

Gari

Another great post would be how to focus on the customer more [especially on a website/online presence perspective]!

-Marketing is not advertising. It may include advertising but its not advertising.
-Everything your customers see, hear or read from you, about you, and about them in relation to you is marketing. Every interaction relating to your relationship, no matter how small is marketing.

New advertising bridges advertising & entertainment. It’s not ‘we’ll be back with more soap operas after these ads’ so watch the ads and you can have some more entertainment. If you stick to the corporate line, you lose your permission to speak. If you speak back to customers you get positive exposure. It doesn’t matter if you paid for it directly or generated it some other way.

I just read a post by a happy father that got excellent service from Amazon after a $500 package got lost- all before christmas. How much would you pay for that kind of exposure? Where would you go to get it?