The Education vs. Advertising Breakdown

You’ve had that great idea. You’ve uncovered the courage to put that idea into action and launch your small business. Now what? Every day you are blasted with messages from mass marketers saying, “Advertise with us and we’ll increase your bottom line by 100%.” Really? Advertising is the last thing you want to consider when trying to market your new business. It is very expensive and if pursued too quickly, without first educating your target audience, you simply churn and burn – money and people.

In my previous life as a media buyer the rationale was, “Customers got to spend money to make money, right?” I am not denying that you occasionally experience ROI, I am simply challenging you to ask this question before making hasty decisions, “Where is the best place to spend my marketing dollars?”

I plead my case…

Advertising Campaign Scenario:
We spend a $100,000 to put an advertisement in a trade publication during Q1.

Result:
Two percent of the people who viewed the advertisement purchased our product. We do direct sales of $400,000 (the product’s price point is $10,000). We experience a 4 to 1 return on investment. Or did we?

Reality Check:
The advertising campaign investment was $100,000. We grossed a net profit of $100,000. We did not set any additional marketing strategies in place to capture customer information while they purchased our product because we allocated our budget to advertising. Ultimately, we do not have a relationship with the people that purchased. The relationship we have is with the trade publication. If we want to contact the same customers, we place another advertisement. We have not eliminated any noise. We have not established any genuine relationships. We are still competing with the other advertisements within the pages of the publication.

Education Campaign Scenario:
We spend $100,000 on an education campaign. We develop a short list of thought leaders in our targeted industry. We then invite these industry leaders to partner with us in an intimate technology conference. For example, you have created an iPad application – How to Use the iPad for Business. Those who produce complimenting technologies, such as QuickBooks Connect, will partner with you to display and demonstrate their technologies during the conference. As the conference organizer and orchestrator you will have created referral partnerships, educated more on your technologies and established more brand ambassadors. Education has now turned into word of mouth marketing – it has legs. There is immense power in education.

Result:
One hundred people from our target attend the technology conference. It takes twice as much time to organize the conference as it would have to create an advertisement. All of our employees are engaged in the planning and implementing of the conference. We get 25 new clients due to our program efforts. Within the next four months our firm gets the reputation as an industry leader. Our new partner relationships return us three times the referrals we have ever seen as a result of advertising. Due to our education campaign, we have experienced $1 million in new business. Eighty percent of the relationships we built during year one roll over to year two. Our total acquisition expense decreases by 50 percent.

Reality Check:
Here is the major difference between education and advertising. One is a short-term play, and one is a long-term commitment. Businesses want to create strategic partnerships with those who appreciate that giving is getting. By educating prospects and partners you will be positioned as an industry expert, create brand loyalty among clients and establish long-lasting strategic relationships. Cool advertisements work, but not as well as evangelizing students that are grateful for the what you have taught them.

The other important factor between the two strategies is that the educational campaign rarely has the same cost structure of the advertising campaign. It is usually pulled off for 1 /10 the comparative results. Many content experts are willing to pay a good price to participate in seminars in the hopes of getting new clients out of the deal. Once established as industry expert, other complimentary businesses will recognize that you are a powerful ally. They realize that your partnership and recommendations will hold a great deal of weight and establish credibility for their brand. .

4 Tips on How a Good Expert’s Great Tribe Catapults their Business to the Next Level

1. They refer their friends to you and they relay the necessary knowledge.

2. They talk about you on blogs, posts and social media which increase your brand presence – for free.

3. They find ways to partner. (This is a very unique aspect of education. When you educate you give people context and eliminate preconceived notions. These breakthroughs create obvious points of leverage.)

4. Customers become staffers. (Educated clients become ambassadors who are conducting word or mouth marketing and ultimately sales.)

Education is always necessary. Advertising is sometimes necessary – but it must be the right time for your business and executed for the right reasons.