Survey says…

When sales are slow, it may seem counterintuitive for a business to increase its spending. But that’s exactly what many experts recommend when it comes to advertising and marketing.

In a much-cited study from the 80’s, McGraw-Hill Research analyzed 600 companies across 16 industries and found sales of businesses that maintained or increased advertising expenditures during the recession in the early part of that decade rose 256 percent compared to those that decreased ad spending.

Whatever sum a business budgets, an effective approach to marketing and advertising is essential – regardless of the economic climate – if a company wants to maximize its sales potential.

With that in mind, Boating Industry asked more than 5,000 marine dealers around the country to participate in a 10-question survey created to uncover their biggest marketing and advertising problems.

Several hundred dealers completed the survey, which, although unscientific, does represent a strong cross section of marine retailers, at least in terms of revenue. Some 20 percent of the respondents had total gross revenue of under $1 million in 2006, while 18 percent had gross revenue in excess of $10 million, with a fairly even spread between those two benchmarks.

The guessing game
One of the most interesting results revealed by the survey was the level of confusion that still surrounds the “how-to” of marketing and advertising. The most frequent responses to our question, “Please briefly explain what your biggest marketing challenge is?” were different versions of the general theme “knowing what works.”

Answers like “Picking the right place to spend marketing dollars,” or “Hitting the greatest amount of potential buyers with the least amount of advertising effort,” were common. One business owner summed up the popular sentiment saying, “So many different areas you have to choose. You can’t possibly put a lot of money in every single medium.”

Those responses, coupled with the fact that the next most commonly cited challenge was difficulty tracking return on investment, reveal the frustration many businesses seem to have with spending money to promote themselves. They know, or at least hope, those dollars are doing something for them, but are either hesitant to fully fund an aggressive ad campaign or disillusioned because they believe some of what they’re spending is going to waste.

Roadblocks and returns
The survey addressed this issue by trying to determine which marketing or advertising mediums provide the best response and return on investment and which were least effective, given the sales they generated and/or the money spent.

When asked “Which marketing/advertising medium elicits the most traffic and/or sales for your business?,” respondents chose their own Web sites as the most effective tool (38 percent), followed by boat shows and third-party online classified sites.

Only 8 percent chose Yellow Pages, which was borne out by our next question, asking respondents to choose the least effective marketing/advertising medium. The Yellow Pages were selected by 34 percent of the businesses, with newspapers (25 percent) and radio (16 percent) the next most frequently chosen answers.

As for ROI, 34 percent of marine dealers chose their own Web sites as the marketing/advertising medium that provides the best return. That answer was almost twice as popular as the second and third most frequent choices, which were boat shows (18 percent) and third-party online classified sites (17 percent).
We also asked businesses to rate the severity of the marketing/advertising challenges they currently faced.

Respondents were given four choices; not a challenge, infrequent challenge, frequent challenge and constant challenge. “Rising costs” were chosen as the most severe marketing/advertising challenge dealers are facing, with 46 percent saying this was a constant challenge. Another 38 percent called it a frequent challenge. Seventy-nine percent of respondents said “Poor ROI” was either a constant challenge (30 percent) or a frequent challenge (49 percent), and 65 percent said “Difficulty Tracking ROI” was either a constant or frequent challenge.

Just over half of those answering the question (52 percent) rated “Using or getting co-op funds” as a constant or frequent challenge, although 16 percent said it was no challenge at all.

This seemed to jibe with the answers to another question in the survey that asked if marine dealers’ co-op funding in 2007 had risen, declined or stayed the same compared to 2006. Exactly 40 percent said their coop funding had decreased, while 49 percent said it had stayed the same and 11 percent said it had gone up.

But that did not stop those same businesses from either increasing or maintaining their marketing/advertising budgets in 2007, with 22 percent saying their budget had increased and 59 percent saying it had stayed the same. Only 19 percent or respondents said their marketing/advertising budget was down in 2007 from 2006.

A Web of money
Where are dealers spending that money? More and more, it seems, the answer is online. Our survey listed several categories (newspapers, magazines, radio, television, Yellow Pages, direct mail, online and boat shows) and asked businesses whether their spending – if they spent money in that category – has gone up, down or remained the same from 2006 to 2007. Forty-seven percent said they were spending more online than they had the year before.

Boat shows saw the next largest bump in 2007 spending, with 27 percent of respondents saying they had increased dollars in that category. Only seven percent of marine retailers said they were spending less money online in 2007, and seven percent said they don’t spend any money online at all.

Not surprisingly, Yellow Pages took a hit in 2007, with 40 percent of dealers saying they wouldn’t be investing as much money in that medium as the year before. And 35 percent said they would spend less on newspaper advertising as well.

Obstacles to overcome
In addition to not knowing how to most effectively market, advertise and track ROI, dealers cited a host of other problems as major challenges. Competition with other dealers, big box stores and other industries were listed by some as their biggest challenge.

A slow economy and poor boat-selling climate were also frequently mentioned as obstacles. One dealer even invoked Yogi Berra in seeking to illustrate the problem.

“One day a reporter asked Yogi Berra what the mediocre N.Y. Yankees of 1966 could do to get more people to the ballpark,” he wrote. “His classic Yogi-ism answer was ‘If they don’t want to come to the ballpark, you can’t stop them.’ That is what it feels like this year; we just can’t stop them from not wanting to come through the doors.”

While Yogi’s tortured logic may ring true to those frustrated by market conditions, not advertising and not marketing is not an option for any company that wants to stay in business. In fact, smart marketing and advertising is one of the best ways to make consumers want to come through your doors. The following articles provide tips and ideas for creating a unique and effective strategy of your own.