When I was the financial analysis guy for a large department store chain, I was asked to develop a method to evaluate advertising costs related to the benefits of increased revenue. The CEO asked me to tell him if he spent an extra $1 in promotion costs what kind of return would he get. I spent considerable time analyzing various ways to track and measure the impact of advertising; but one of the issues was that there had never been a time in the company’s history when they didn’t spend a considerable sum on promotion.
One of my recommendations to the CEO was that the company should stop advertising for a period of time allowing us to establish a benchmark on what revenues would be without any promotion. The look in his eye seemed to suggest he was considering tossing me out of his office window. It was only the third story but my chances of survival were not good. Thankfully, he chose another option. He thanked me and did not speak to me for weeks. It was conveyed to me by one of his assistants that he thought I was an idiot. He also increased the adverting budget 20% without any factual justification.
While he was the one who asked the question, he knew that there was no way he was going to risk his job by suddenly decreasing or even lowering advertising expenditures. To deal with the increased promotion costs he cut the staff. He didn’t get to be CEO by being dumb.
My book sales are driven by promotion. If I stop advertising, book sales drop to almost nothing. The only exception to this, is to put out a new book; which will generate short term increases in sales for all of my books. The problem I have is very similar to the department store CEO years ago, how do I justify spending money on promotion when I cannot measure results. Sure, I can measure number of books sold during the one-day or two-day promotion; and if that is the measure I should stop all promotions, because I do not generate a profit from those days. I see this all of the time from “experts” advising how to measure your book sales based on ROI. I spent $100 and got a bump in sales that brought me $150—okay, no problem; I will do those promotions each and every day. But how about if I spent $100 and received $40? That looks like I should stop all promotions.
Of course the problem is how to measure and for how long. If I run a promotion today and sell books a week from then—did that promotion have anything to do with that? Or how about in my case I sell some books but also have an increase in pages read (which I receive some compensation from Kindle Unlimited) but can’t really put an exact number on that. In essence it’s the same problem as my old CEO; stop all promotion and see what happens.
I’ve sort of done that in the past. No promotions equal zero (or close to it) book sales. Okay that’s a known; but should you spend $100 to generate $40? If I had staff, which I don’t, I would follow the tried and true path, and would increase the promotion budget and fire the staff.
There is another approach to this problem, which I have advised many times as a wise (and expensive) consultant—when in doubt do nothing! This follows the principle of “if it ain’t broke don’t fix it.” During my days as a business consultant the most common approach taken by business leaders was always postponement. While we have the image of business owners/leaders as aggressive “let’s do something new and different” types; the reality is that most successful businesspeople are reluctant to change anything. I’ve advised people staring at bankruptcy who were reluctant to change anything, including the high-priced brother-in-law who was as dumb as a rock. Change means responsibility. The people who most often have tremendous ideas on how to change things often work in the warehouse. They have nothing to risk, so their advice is throw out the bath water and the baby. Baby is often the current leader/president/CEO of the business; warehouse people have no fear.
If you follow my blog you know I have this love hate thing with advertising/promotion. I just want to magically have massive book sales and basically be left alone. That’s not going to happen. So the question is the same; what should I do, nothing or something?
I’ve decided to stop whining (I’m sure you can appreciate that, if you’ve read this far) and re-double my efforts on advertising. Also I’m going to get back to work and finish the two books in progress. Of course taking a more aggressive approach to marketing, costs money; and since I don’t have the staff to fire, I will have to cut my own pay. Based on my analysis a twenty percent reduction of nothing is more than doable and reflects my overall commitment to myself. Recognizing all along I was going to change whatever plan I decided on for this month by next month, the long-term consequences will be minimal.
Baseball folly? Okay, enough already! Both sides should immediately compromise. It’s time for baseball—I’m tired of these scripted TV shows. We need real drama—bottom of the ninth inning drama. Go Rockies!
In case your interest The Bootlegger’s Legacy ebook is FREE today on Amazon.