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Home Contracting Service Television and Web Marketing help Beat Market Downturns Home service companies are spending a lot of time these days trying to come up with ways to beat the negative sales effect of the downturn in their local real estate activity. Since Americans tend to fix up their current home before selling it and moving, sales are off, these same home improvement and home contracting companies have been calling us and asking how they can redesign their marketing plan to include television and internet advertising. For example, in Florida the real estate market pacing is down anywhere from thirty to fifty percent. As such most home contractors are seeing double digit declines in traffic as well. Believe me, when a business owner is sitting in front of you and telling you that their sales are down double digit and that their ad budget has increased 50% it is truly time for drastic action. Well, if there has ever been a truism in marketing, it’s that when the available market share decreases, your ad plan needs to increase. Increasing your plan does not mean spending more, it means that your plan must get much more cost efficient thereby making the same ad budget work harder. As we have stated before: Achieving client growth in an expanding economy is easy since the marketplace takes business forward. However, achieving growth in retracting economy is the demonstration of real marketing prowess. In short, businesses caught in a down market have two choices. Either they can “wait out” the market until the market regains momentum, or they can examine their ad plan for weaknesses and replace weak media with a more efficient marketing model. To help a business owner the first thing that you need to ask is: “Are you prepared to do what it takes to get your business moving again?” We ask this because when you move into television and web marketing, everything changes including how the campaign is designed all the way to how it is measured. We then ask if the business owner is ready to flexible enough to adapt to local market conditions. This is to make sure that the business owner is realistic with market factors and is not living in denial about where the market is at this time in regards to price and value. (Real estate salespeople know this as they spend a great amount of time negotiating the listing price of their client’s home…you simply must “price to market” and not just “market a price”.) Next we look over the client’s ad plan and look for media that they have outgrown. These can include niche magazines, local newspapers, and other small audience media. These media are simply not powerful enough to pull a client forward in a down trending economy and keeping these media in the plan will keep bringing the same poor results. Our firm employs the use of disciplined broadcast television on a local level since the resulting low cost per thousand prices make a home service client ad dollar hit hard. Lately we have been seeing a lot of yellow page advertisers seeking an alternative to the books. Since yellow page usage is down dramatically over the last ten years it’s clear that consumers are beginning to use Google and Yahoo and also local television web sites as local search engines just as they used to use the phone book for the simple reason that the data found on line is “fresher”. Phone numbers still work, companies are still in business, and the consumer can also click over to the business’s web site instantly for even more information. We recently worked with a large residential electrical company that wanted to grow sales in a down housing market. This client needed a 20% increase in sales just to maintain last years’ profit margin. Clearly some bold action was needed. We first examined his media plan and found it to be very heavy in yellow page directories and in direct mail. In the past these two media had worked well together. But over the last 5 years his direct mail response rate has dipped from a 2% return to a .02% return rate. And his yellow page ads were only drawing “price” shoppers that wanted quotes on the phone and did not seem to be serious about having work performed. In short, the owner of the business felt that his yellow page ads were being used by consumers to cross shop his competition and the ads did not effectively separate his business in the mind of a consumer. Surprisingly, despite this slide in direct mail response rates our client was increasing his spending in direct mail. Some clients do this. They will throw money at their current ad plan expecting it to work harder and thereby generate more customers. This is a fallacy. If a media plan is outdated or poorly designed, it will not keep up with the market place. We then moved to examine the current media plan from a cost perspective. When we broke down the CPM analysis it turned out that he spending $600 for every 1,000 homes reached. Few regional businesses can afford to spend anything close this high of a CPM and still expect to make money. Further, when we structured a television and web plan the cost per thousand came in at $25 per thousand. By moving to television and web marketing, the owner of business was saving so much in customer reach costs that he literally was putting $575 dollars back in his pocket with every 1,000 TV viewers that he bought. We launched the plan and within six months his sales were up 40% in his TV advertising markets. He is now considering doubling his local broadcast television plan for 2008 since he expects home sales to be even or even down from 2007 levels. When I asked the President of the company what he liked about TV advertising he stated “My competition is still advertising in the yellow pages…I am on television…who do you think will get the phone calls?” Creating success for a mid sized business in a declining real estate market is not difficult. But getting a client to shift his or her mind to take action can be very challenging. As one of my mentors said “Some people won’t reach for a lifeboat until the water level reaches their chin”. Some business owners will delay taking action when their market declines. It’s our responsibility to help business owners understand the tactics to use on a non-growth economic scenario. Television campaigns that are boldly executed draw the attention of consumers no matter what the market conditions bear. So next time your client complains about a weaker economy, help him or her by finding the weaknesses in their marketing plan. It’s the fastest way to improved profits. -Adam Armbruster is a partner in the retail and broadcasting consulting firm Eckstein, Summers, Armbruster and Company located in Red Bank, New Jersey and can be reached at [email protected] or 941-928-7192. Source: Kelsey Research