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Traditional Advertising to Purchase
A Direct Model of Audience
Response
There is a simple model of business which
says: if you build it they will come
Potential
Customers
Ted Mitchell
Customers
Purchasing From
Competitors
If They don’t Come! The business model
needs Promotion and Advertising
Potential
Customers
Your
Business
Machine
The business model needs Promotion and
Advertising
An
Advertising
Machine
Potential
Customers
Customers
Purchasing From
Competitors
Customers
Purchasing from
you
Customers
Purchasing From
Competitors
Customers
Purchasing from
you
Early Days of Advertising
Marketing Converting Advertising into Customer
Demand
•  1) Promote product features
•  2) Promote a special event such as a
short term price cut, end of season,
fire-sale, new inventory (aka Sales
Promotions)
•  3) Reminder Advertising
Printed Ads, Flyers
Radio
•  The three classic roles of advertising
Promotion
Specials
Marketing
Converting
Advertising
into Demand
Coupons
Quantity of Goods
Sold
Customers Purchasing from you
1
In the early days of advertising the
relationship between the advertising budget
and the volume of goods sold was
considered to be a direct relationship
Classic approach to advertising was direct:
You advertise more and you sell more stuff
Q=
Quantity
Sold
Advertising
Machine
x
x
x
x
x
x
x
x
x
x
x
x
Customers
Making Purchases
Q=
Quantity
Sold
A= Advertising Expense
Q=
Quantity
Sold
A= Advertising Expense
Early Days of Advertising
•  All about the size of the potential audience
•  Your advertising is so good it can convert
20% of any audience to purchase your
product.
•  Purchasers = 20% x audience size
•  14 purchasers = 0.2 x 70 households
•  20 purchasers = 0.2 x 100 households
Increase ad budget and you
increase quantity sold
$1,400
A= Advertising Expense
$2,800
Today Advertising is Part of a
Indirect Communication strategy
•  Change from a Direct Relationship between
advertising and demand (sales volume)
•  To an Indirect Relationship between
Advertising to Awareness to Demand
•  How to get more households to see
your ad?
2
In the early days the relationship
between the advertising budget and the
volume of goods sold can considered to be a
Change This
direct relationship
Advertising
Machine
Awareness
level among
customers
The Basic Awareness To Purchase Model Cognition to Behavior Model (CB)
Unaware Potential Customers
Advertising
Machine Produces Aware Customers
Customer Demand
Behavior, Purchases
Purchases
Awareness
Cognition
Potential Customers Need to be made Aware of Your Product
Advertising indirectly creates sales by creating awareness
The three roles of modern mass advertising
Shift to Advertising Building Awareness
•  1) Promote Awareness of new product
features and whole new products
•  2) Promote Awareness of a special event
such as a short term price cut, end of
season, fire-sale, new inventory (aka Sales
Promotions)
•  3) Promote Renewed Awareness
Reminder Advertising
A= Advertising Expense
Q=
Quantity
Sold
In a mature market where the
primary type of message is
Reminder Advertising
Awareness Building Is
Cumulative over Time
W = Total Number
Aware of Business
Potential market 100%
New Market
Mature Market
aWareness Level
Weeks since launch
3
With the Promotion of New
Products
•  The awareness level builds on its self
through buzz, word of mouth, etc.
•  Different types of people become aware at
different points of time
Amounts of advertising can speed
up the rate of awareness building
W = Total Number
Aware of Business
Potential market 100%
Lots of
promotion
Very
Expensive
Very little
promotion
Very Cheap
Weeks since launch
Move From a Single Shot
Promotion every Week
•  To a Cumulative Effect of an Introductory
Campaign
•  Track the Cumulative Promotional Effort
and the Awareness Finding the Optimal amount of promotion to spend
to reach a target awareness level with the less cost
W = Total Number Aware
of Business
Lots of
promotion
Very
Expensive
Potential market 100%
Target 80%
Awareness
Level
Zero
promotion
Very Cheap
Weeks since launch
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Dashboard Items for Tracking
Awareness building
Keep the rest of the
mix constant
Monthly
Trial #1
Monthly
Trial #2
Monthly
Trial #3
Monthly
Trial #4
Monthly
Trial #4
Use a Monthly Time Frame for
Groundhog Replays
Keep the rest of the
mix constant
Total Radio Spots
Total Radio Spots
Total Print
Insertions
Total Print
Insertions
Type of Print
Promotion
Type of Print
Promotion
Cumulative
Promotion Budget
Cumulative
Promotion Budget
Awareness level
Awareness level
Monthly Revenue
Monthly Revenue
Monthly Income
Monthly Income
Monthly Monthly
Trial #1
Trial #2
Monthly
Trial #3
Monthly
Trial #4
Monthly
Trial #4
Any Questions on
•  The shift from a direct sales relationship
with advertising to an indirect relationship •  Adverting to Sales
•  Advertising to Awareness to Sales
•  Awareness building is a cumulative process
•  Rate of Awareness Building is Impacted by
the amount of advertising
•  Three Main Roles of Modern Advertising
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