Friday 9 November 2012

The power of word of mouth

Bobby Ghosh writing in a recent issue of Time described a country so:

“This is the last authentic place on earth. Authenticity is a rare and valuable commodity and people will travel far to find it”Mr Ghosh uses the word to mean real and genuine in a positive sense. He goes on to say “It’s the closest thing to Shangri-La I’ve ever seen”. For readers unfamiliar with James Hilton’s classic novel, Shangri-La was a beautiful land in the Himalayas where good gentle people lived long happy lives untouched by so called civilization.

He is describing Bhutan, a country sandwiched between China and India with a population of 700,000 with their own version of Buddhism and a democracy with two distinct differences in their belief in what constitutes progress in the 21st century.

Bhutan has an alternative to the western gauge of the Gross Domestic Product. Their version is the Gross National Happiness index based on what they describe as “The four pillars”. These are sustainable economic development, conservation of the environment, preservation of culture and good governance. 

The nine components of happiness are psychological well-being, health, work-life balance, education, good governance, cultural diversity and resilience, community vitality, ecological diversity and resilience, and finally living standards.  

Unlike many western democracies, Bhutan’s government will not abandon everything in pursuit of growth and know that wealth alone does not guarantee happiness.

The Government has also decided what sort of tourist they would welcome. Not the hippies on the trail of cheap marijuana that damaged Goa and Nepal. Bhutan wants the rich visitor interested in the beauty of the preserved countryside, it’s culture and religion. Birdwatchers, and adventure seekers are also welcome. These folk pay a daily tariff to limit the number of tourists and help with the maintenance of authentic Shangri-La.

Go before they change their mind.    

Tuesday 6 November 2012

Some advertisements work better than others

There are some great advertisements and though there are more poor, irrelevant and wasteful ones, the good successful ads help justify a huge industry and the many clever people it employs. Advertising expenditure accounts for about 1.4% of the gross domestic product. That’s more than 16 billion pounds sterling.

One explanation why it’s so hard to eliminate waste in advertising is the mass-market nature of the business.

Most advertisers need to influence only a small proportion of the people reached by their advertising. Household detergents hold no interest for most people who see their commercials. Yet Proctor and Gamble continue to invest heavily on Television. Tena panty liners are used by even fewer women, yet can support a £4 Million TV spend. Perhaps this is demonstrated more simply by an example from direct response advertising.

You wish to sell a lightweight vacuum cleaner for £19.95 inclusive of Vat. You can make a profit if you spend no more than £5 on advertising per sale. A colour page in a leading up market colour supplement is negotiated for £4000, so it needs to generate 800 sales. The magazine has a circulation of 800,000 and a readership of 2,000,000. Success therefore requires one out of 2,500 readers to buy.

Even targeted online advertising impressions, have a click through rate on average of 0.6 %, and a click to your website is still only an indication of interest and a long way from an actual sale.  

Another problem is the lack of interest in advertising by the general public. A leading French expert said:

“We interrupt people’s activity when they watch TV, read a newspaper or travel around by bombarding them with advertisement messages for cars, chocolate and other more mundane products. Not surprisingly, most are ignored.”

Successful campaigns emerge from a clear brief, more precise media targeting, relevant messaging and engaging advertisements.