Magazine article Marketing

Punching a Hole in Promotions

Magazine article Marketing

Punching a Hole in Promotions

Article excerpt

When young I was inspired by the thought that Pompey was leading an army at the age of 16. Now that my teens are long gone and I have yet to become a general, I look for more mature role models. Take Ray Kroc, for instance, who built up McDonald's. He didn't even get started in that business until he was 58.

Fittingly, Kroc's favourite quotation dismissed things like talent and education to conclude that; "Persistence alone is omnipotent." If this is true then the Wall Street Journal deserves to conquer all. They have for many years run two campaigns, both revolving around advertising.

One campaign, currently being copied poorly by a publication in this country, features interviews with advertising notables who reveal their opinions and secrets. The other puts forward cogent, reasoned arguments in favour of advertising and, in particular, advertising in the Wall Street Journal.

The headline of one such advertisement states "While promotions may offer a quick boost to sales, they also reduce profits and can dangerously erode the perceived value of your brand." The copy goes on to cite a study from the Harvard Business School which revealed that "in almost every case promotions did not increase sales enough to raise net profits". In fact in one case a 16% sales increase translated into a net loss of 104%. Conversely advertising increased profits in most cases anywhere between 10% and 140%. Finally, it seems that the smaller the ratio of brand advertising to promotion, the smaller the return on investment. …

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