Doing Advertising the Right Way - Part 1

I'd never heard of Rosser Reeves until a few months ago.  Now I wish I'd heard of him 30 years ago.
Quick Bio: Rosser Reeves, former Chairman of Ted Bates & Co., is a TV advertising legend whose work would be instantly recognizable by Baby Boomers, e.g. M&M's "melts in your mouth, not in your hands".  He was enormously successful - so much so that Jon Hamm's character on Mad Men, Don Draper, is in part based on Reeves.

I came across Reeves' while researching the origin of value propositions - a term popularized by Harvard Business School pundits like Michael Porter.   Turns out that Reeves was a pioneer of this concept as well, having invented the Unique Selling Proposition in the early 1940s.  Reeves' work is so well-regarded by the likes of Al Ries, Jack Trout and Seth Godin that I had to get my hands on Reeves' classic book, Reality in Advertising, published in 1960.

It's out of print, so only available second-hand through rare book sellers.  Thanks to Abe Books I found one in good condition at Bank of Books in Ventura, CA.

Rosser Reeves is to advertising what Benjamin Graham is to value investing.  He's a writer who cuts to the chase and knows how to take a wealth of experience and insight and condense it into succinct powerful lessons.  For any of us who have spent our lives in sales and marketing, his are the kind of teachings you wish you knew when you started out.

His advice and the principles he describes are just as fresh and relevant today as they were 50 years ago.  In fact, I'd say the Reality in Advertising is a must read for every budding social marketer (and a few pros who haven't quite figured out the plot in my view).

I'd be selfish not to share (heck, who's got $95 and the patience to find an out-of-print copy).  So here you go, everyone.  I'll share a few of Reeves' lessons in my next four blogs.

Lesson 1: Advertising cannot by judged by sales alone
It wasn't Reeves' creativity that made him successful.  It was his mastery of measurement and data.  Most marketers are familiar with this lament from Reality in Advertising, "I know that at least half of my advertising money is being wasted.  My problem is - I do not know which half."
He knew that most marketers often incorrectly attributed a rise - or fall - of sales to a campaign.  And, he had the data to prove it.  He used a very simple formula to measure advertising effectiveness:

Penetration = % people who recall a campaign (brand, slogan, etc)

Usage Pull = [% customers who recall a campaign] - [% customers who don't]

Not rocket science so far, is it?  But consider that Reeves' firm amassed the data for several $B of advertising (big then - today it's $500B annually) by America's top firms.  It was the largest study of its kind ever done at the time.  And it tells an immensely powerful story  - just using two simple bar charts.
The first, a frequency distribution bar chart, shows the penetration for 78 of America's largest advertisers - coincidentally starting with the highest penetration (78%) and descending rather uniformly to the lowest penetration (1%).  Uniform, yes, but there are surprises.

• One bar represents a company that spent a hefty amount to score 5% penetration in a year.  Its biggest competitor spent less, and in less time, to garner 60% penetration - 12X more awareness.
• Two companies spending an identical amount in advertising score penetration of 44% of America vs. 1.8%
• An advertiser chose to use a gimmick which was remembered by 38% of the market ... but only 9% could recall the message.

The second bar chart shows usage pull.  It, too, shows 78 bars - but this time some rise above the horizontal line (a story that works because it pulls new customers) while other bars fall below the line (showing net customer loss).  About half the 78 companies show positive usage pull, and half show negative ... irrespective of the penetration.

• An advertiser with a pull rate of 20% changed its campaign (story) and its pull dropped by half to 10%.  But as sales were increasing, the company did not have a clue that its advertising was now only half as effective.
• One advertiser's value proposition (its story ... the crown jewels) is neatly tucked away in a corner of its advertising, largely unnoticed by most readers.  But those who do register it have a pull rate of 18%.
• A brewery spends $100m (today's dollars) running highly memorable imagery that scores high on penetration but, digging deeper, actually is recalled by those who drink less of its beer!  And the company is none the wiser.

But, Reeves offers hope.  Those companies that do the measurement and apply the principles show advertising performance 34% higher than the average performance for all advertisers.  That's like getting the punch of $4m advertising for only $3m.