Are Your Clients Overdoing Promotions?

by | 2 minute read

As we enter 2019, your clients may be asking themselves whether they should spend more money on promotions or on advertising. After all, the marketplace is more competitive than ever. It’s not easy to differentiate themselves from the competition. Analytic Partners has released its ROI Genome Report to show marketers how they may be missing the mark when they rely on promotions.

When Promotions Work

Your clients definitely want to increase sales. But they also want to do so at a level that involves a profit. That’s why they need to focus on ROI. Analytic Partners analysts point out that promotions such as coupons, discounts or free shipping definitely drive short-term sales. These kinds of promotions also help attract new customers, especially during a product launch.

The Power of Media Advertising

However, building awareness and brand through advertising also drives sales. The results of the Analytic Partners study indicate that media is “35% more efficient than promotions, on average.” This finding holds true “over time and across industries and geography.” This pattern is relatively new. Prior to 2013, marketers generally experienced a big ROI from promotions.

The New Marketplace

What changed? Analysts point to two factors. First, marketers have been using promotions heavily in the past few years. This tendency is causing consumers to burn out on the idea of saving money. If the weekly email from a favorite marketer always contains a promotion, consumers will pay less attention over time. The age of online shopping from smartphones means that consumers can easily determine whether an offer is a good deal. They will bypass the deals that don’t include significant advantages for them.

Does this mean your clients stop their promotions? Not at all. However, they should invest in advertising. When they do, they can expect an ROI boost that is two to three times higher than what they’ll get from promotions. In addition, talk to your clients about timing. Research shows marketers can maximize ROI when they use the following strategy: Use advertising media to build brand and follow up with a promotion.

To understand the kinds of advertising that influences consumer purchases, check out the AudienceSCAN reports available on AdMall from SalesFuel.

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.