Hot Potato Advertising

If you want to measure ROI, make an offer; no kidding

Vol. 6, Issue No. 1 | January 5, 2010 By Denny Hatch

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After 50 years of advertising—writing, designing, placing and analyzing the stuff—the most important thing I've learned is this:

I cannot judge good advertising; it judges me.

Slate.com reader opinions, at right “IN THE NEWS,” don't matter. If the ad works—brings in orders, donations or inquiries at the budgeted return on investment—it's good. If not, it’s bad.

Never forget the legendary Anacin commercial that was offensive to millions, ran for years, sold tons of product and cured a zillion headaches.

If an ad is successful, our job is to analyze it, figure out the elements that make it work and then steal smart.

I have absolute contempt for ads whose ROI cannot be measured.

Quite simply, the perpetrators are wasting money and are traitors to their stockholders.

E-mail From a Reader
In the November issue of Target Marketing, I excoriated American Express for running a national campaign of full-page newspaper ads that broke all design rules: headline in an all-caps serif font, text in sans serif mousetype and all the text in white against a black background. Footnotes and disclaimers ran vertically along the side in 6-point sans serif type. The entire thing was unreadable. This from one of my readers:

Your article “Fire the Agency—Now!” is a great read. In fact, I have it posted on a bulletin board next to my desk.

The rules you mentioned are simple: the cleaner the ad, the easier it is for readers and (typically) the higher the ROI. It makes sense.

I’d like to send your article to a graphic designer I work with as we are often at odds about the exact ad elements you discuss in your article. If I do send it to him, however, the first thing he’ll ask about is ROI. Do you know how poorly it performed? I understand it’s confidential, but maybe you heard a water-cooler ballpark.

The designer I mentioned above wrote this to me yesterday: “You gotta let me use all caps and reverse type once in a while. They are appropriate, and they are attention getting. The entire catalog can't be upper and lower case serif type. That gets to be a too monotone and boring. We need to have a little variety in the font usage.”

Since numbers don’t lie, and I want to get my point across (it’s tiresome having the same argument month after month), I’m hoping you can help me.

A big fan in a little pond,

—M.

What ROI? What Offer?
At the very bottom of this American Express ad—in reversed-out sans serif type—was the following: "To apply, visit takecharge.com or call 1-866-212-AMEX (2639)."

This was a generic URL on all the ads. When I called the toll-free number, I reached Connie, who wanted me to sign up for a card. That was the “offer” or reply mechanism.

Alas, I had to write M. to say that no way in hell existed for me, the agency or the client to determine the ROI—to track response back to a specific ad in a specific newspaper on a precise date. I ended the story:

A single insertion in the [The New York] Times is roughly $194,000 a pop with the agency picking up a yummy commission of $34,000 each time it runs.

In the words of blogger Mary Schmidt, “The halls of AmEx's ad agency must have been ringing with cynical laughter as they wrote all this hoo-ha. I have this mental image of the gang from 'Mad Men' holed up in an office tokin' away … 'I Am SO High.'"

Hot Potato Advertising
Use an “action device” or “hot potato.” This technique was developed and refined by Frank Herbert of Reader’s Digest. Frank didn’t just offer you a half-price subscription, he mailed you a $1 discount certificate which you could use to secure a subscription for half-price. If you used it, it was worth a dollar to you. If you threw it away, in effect, you had lost a dollar. It was a “hot potato” you had to do something with, one way or the other. The difference between a physical, tangible valuable object and a vaguely worded offer was all-important.
—Walter Weintz

A survey from the Retail Advertising and Marketing Association triggered this piece. It ranked the top 10 media influencers of retail advertising to consumers:

• 45% Coupons
• 27% Word-of-Mouth
• 27% Advertising Inserts
• 23% Broadcast TV
• 22% Newspaper
• 18% In-Store Promotion
• 12% Cable TV
• 11% Magazines
• 11% Internet Advertising
• 10% Radio

Since those numbers add up to far more than 100%, this is a squirrelly survey. But it’s clear that coupons (hot potatoes) won hands down. The obvious conclusions:

1. Coupons arrive with offers—cents-off, dollars-off, buy-one-get-one-free, 50% off, etc. Offers are attention-getters. Consumers like offers and respond to offers. Those offers come in various shapes and sizes—little cutouts in Sunday newspapers, inserts in direct mailings, elegant certificates with perceived value, and order forms at the bottom of advertisements or in solo direct mail packages.

2. To take advantage of these offers, the buyer must return the coupon device with the order—bring it into the store, send it in, enter the code number with a Web order or say it to a telephone sales rep. Once the order is consummated, the merchant can track the coupon back to the source—list, advertisement or whatever. When the promotion is finished, ROI can be determined.

In short, everybody loves coupons—buyers and sellers.

The only ones who hate coupons and measuring ROI are general agencies, because they don't want proof of how much money was wasted by inept people who didn't follow the rules of sane, profitable marketing. Here are other techniques for tracking sales back to the original source of the offer:

• Catalogs/Telemarketing

Keep a record of the names and addresses mailed and/or phoned. When an order comes in via Web or phone, match it back to the list to track your ROI.

• Lead Generation/Business-to-Business

“Specifics sell,” said Andrew J. Byrne. “Generalities don’t.”
Never end an ad or mailing with, “Send for complete information.” In the reader’s mind, “complete information” conjures up no image; it’s a mushy non-idea.
Instead say something like, “Write, phone, fax or e-mail for Information Packet A-16 today!” You can imagine Packet A-16—an envelope of goodies bulging with useful information. Consider the advantages of using this small variation:
1. You can change the packet number on each ad, thus tracking ROI.
2. The prospect is led to believe you're a big company with many information packets, and this one precisely relates to this offer.
3. By offering the option of mail, phone, fax or e-mail, it implies that you must have a legion of people standing by, ready to respond to customers' needs and wants in a manner most convenient to them.
Imperative: Always include the mail address, e-mail address, phone and fax number. You'd be amazed at the number of powerful offers in ads and mailings I've seen over the years where, oops, gee, we forgot to include the information on where to reply.
If you're running a coupon ad, put this reply information on the coupon as well as in the body of the ad. Otherwise, the prospect might cut out the coupon, throw away the ad and have no idea how to take advantage of the offer.

• Test With—and Without—Your Web Site
  • Ads and mailings that include a URL risk the possibility that prospects will set aside the offer until they can get to their computers. Once set aside, there’s an 80 percent chance you've lost the order.
  • If you list a Web site, do NOT take the prospect to your homepage. Instead, create a satellite page that relates directly to the offer you're making. Remember, on the Internet, you're one click away from oblivion.