Why doesn’t advertising work for professional services businesses? For that answer, we have to examine when advertising can actually work. Advertising is really about buying eyeballs. The objective of advertising is buying the right eyeballs at the right time. Another way of putting this is that successful advertising has two components. First, you have to reach your target market. Second, you have to reach customers in your target market who are ready to buy.
Why doesn’t that work for the average professional services business? Let’s do a little analysis. Assume that you own a high end hair salon catering to professional women with six figure incomes in Montgomery County, Maryland. According to the U.S. Census Guide, Montgomery County had approximately 972 thousand people in 2009. In addition, according to the guide, the median household income in 2008 was approximately $94K. Clearly Montgomery County is a good market for your high end hair salon. If we dig a little further in the guide, we find out that in 2008 approximately 51% of the County’s population was female. If that percentage holds for 2009, that means there were about 496 thousand females in Montgomery. Of course not all of them are the appropriate age for your services. The guide tells us that the total percentage of the County population under eighteen years of age or above sixty-five years old was 37% in 2009. So now we are down to about 312 thousand females who are reasonably in your desired demographic age range.
Let’s now consider advertising in the flagship newspaper in the District of Columbia metropolitan area. Montgomery County is clearly in this metropolitan area. You can trust me on this, since I live in Northern Virginia not very far away from Montgomery County. The Washington Post advertising media guide (http://www.washingtonpostads.com/adsite/why/media/reach/page1450.html) tells us that the newspaper reaches 119 thousand households on a normal weekday in Montgomery County. Also according to the media guide, the total weekday circulation of the Washington Post is about 624 thousand.
Let’s see if advertising in the Washington Post is likely to work for your salon. To place an ad in the Post for one week, weekdays only, you are purchasing 3.125 million eyeballs, which is five days time 624 thousand. You are buying 3.125 million eyeballs to try and reach your 312 thousand females in your target market. Does that seem a little wasteful to you? Remember the part about reaching your eyeballs when they are ready to buy? How many of the 312 thousand females will be ready for you services during that week? How long is an ad in a daily newspaper effective? It will be effective for only about a day. Then only canaries will read it while pooping on it. How many canaries are in your target market? Hopefully zero if you hope to stay in business.
Granted the example above is an oversimplification. The Washington Post ad salespeople will tell you that they can help you target your ad more narrowly in regional editions. But my basic point stands. For professional service businesses, advertising doesn’t work very well, because you buy a lot of disinterested eyeballs. Obviously based on my story about our twentieth anniversary, I have had to learn this principle multiple times.
When does advertising work? It works well for mass market product businesses. If you own a grocery store chain, advertising in newspapers is a big part of your marketing budget. Food shoppers, like my mother-in-law, scour daily newspapers for sales every day. Your ads are reaching interested eyeballs.
If you own a small retail store in a strip shopping center, I ask God to have mercy on your soul. However, I think advertising can work for you, but you have to find publications that reach your target market cost effectively. I suggest doing the demographic analysis I performed above. Then go one step further. For each potential advertising opportunity, determine your cost per eyeball in your target market. Let’s assume in our salon example, that a daily ad would cost five thousand dollars. Your cost per Montgomery County eyeball is five thousand dollars divided by 119 thousand, which is the circulation of the Washington Post in Montgomery County. Your cost per eyeball is $0.04. In reality your cost per female in your target market is considerably higher since we calculated the cost based on total county circulation. But, I think you get the idea. You have to do some real analysis on a per eyeball basis to determine what publications deliver relevant eyeballs at the lowest cost.
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