A couple weeks ago I had a conversation with a guy who runs an auto service business. Their company has a good name in town and I believe they do a pretty good business. He hit the nail squarely on the head as we were discussing local advertising.
His observation was that he really wasn’t sure which of their ads were bringing in the most customers. And like many small business owners he felt they spent too much on advertising for what they got in return (at least for what return they could track).
But, he said they keep advertising because they understand the need to keep their name out in front of local people who would need their services. They understand the need to build their brand in their community. “It’s all about awareness” he said.
This company has done a great job building their brand equity. For years they have invested a lot of money to keep their name in front of their current and potential customers. And it shows by how well recognized they are in this area.
Do they spend too much on advertising? Do they spend too little?
My answer would be that if they are seeing the level of sales they want given the advertising budget they have committed to, then they are spending the right amount.
You never know for sure. But by committing resources to building awareness and then sticking with it over the long haul, this company has developed a huge amount of brand equity which translates to value for their business.