News Analysis: Time to think big

Advertising from global giants such as Coca-Cola and McDonald's has long dominated TV breaks. But would either have achieved such size had they chosen not to advertise in the mass media?

In today's society, where consumers are media-savvy and the traditional TV audience has fragmented beyond recognition, it is understandable when entrepreneurs shun mainstream advertising in favour of less expensive forms of marketing, such as online, PR and point-of-purchase, where they do not have to spend as much to catch consumers' attention.

But as Innocent Drinks' recent hiring of Lowe London attests, there almost always comes a time when brands acknowledge they must turn to advertising to boost awareness and bolster their market share.

Richard Reed, co-founder of Innocent, which made its TV ad debut this year with a campaign created in-house, claims his firm experienced an immediate increase in sales following the activity. 'I used to work in advertising and even I was dubious about it, but we saw phenomenal growth,' he says.

Reed adds that he always knew that once the company reached a certain size, it would naturally turn to advertising to fuel growth. 'We are the brand leader,' he says. 'We see it as an obligation as well as an opportunity to grow the category.'

Putting in groundwork

With the expense of buying media space, Reed was determined to maximise its potential. The company formed what he calls a 'TV task force' - a team that would work out how to get the best from TV advertising. 'There are masses of things to do in advance,' he says. 'You have to visit retailers and wholesalers and sort out the merchandising and back-office systems.'

Reed's experiences as a former adman gave him the foresight to create a test campaign in March. This acted as a fact-finding mission, revealing the extent of the sales increase a more widespread campaign was likely to create.

Once Innocent was confident that advertising was the right thing to do, it went national, with successful results. 'When the ad was on, we saw an increase in sales of 70% in retailers,' says Reed. 'But what is really interesting is that we have sustained a 45% increase since the ad went off-air.'

For start-ups, the main consideration is one of economics - advertising is an expensive business that should be undertaken only once the company is able to ensure promises made are met.

Eighteen months ago, James Murray Wells launched Glasses Direct, which sells cheap spectacles over the internet. Propelled by stories in the media about rows with high-street retailers over its service, its turnover is nearing £1m and it is now seeking its first ad agency (Marketing, 7 September).

'There comes a point when you have proven the business model works, and PR shows people are receptive to the idea,' says Murray Wells. 'When the business has the cash flow to actively fund marketing in a big way, you broaden your targets. For us, that came when we had excess cash at the start of the year.'

For newcomers to advertising agencies, the first visit can seem foreign, with frequent clashes between entrepreneurial and corporate cultures.

Suki Thompson, managing director of The Haystack Group, which helps companies find agencies, says that big ad agencies are interested in first-time advertisers only if they can meet several criteria: they have to have a substantial budget now or in the near future, or a fun brand, such as Innocent or Friends Reunited, which is likely to be a platform for the agency to win creative awards.

Thompson suggests advertisers with a smaller budget are better off going with smaller agencies, independents or start-ups, where they can work on small budgets profitably. In the current climate, a media spend of less than £1m will not be taken seriously by some of the bigger agencies. 'Very entrepreneurial people find the relationship doesn't fit when they go into a highly structured big advertising group,' she adds.

Interbrand founder John Murphy used the proceeds of the consultancy's sale to Omnicom to buy Plymouth Gin from Allied-Domecq, build it into the third-bestselling gin in the UK and sell it to V&S Absolut Spirits. He invested the gains from this in the creation of St Peter's Brewery, an English bitter brand (Marketing, 28 September).

He warns that before undertaking advertising, companies must have a good product, good PR and sufficient distribution. 'Big companies often advertise small brands too soon, before PR has made a brand well known,' he adds. However, he does acknowledge that PR will only carry a brand so far. 'The thing about PR is that you start to run out of things to talk about after a point.'

Biding time

When Grand Metropolitan brought luxury ice cream Haagen-Dazs to the UK in the early-90s, it relied solely on flagship stores in high-footfall areas such as Brighton to fuel word of mouth. It was not until the ice cream was listed in supermarkets that the company appointed Bartle Bogle Hegarty to create its now-infamous ads.

Even though a 30-second national TV spot can cost anything from £2000 to £90,000, small companies are likely to advertise more in the future.

For years, big advertisers have been able to test campaigns in the ITV regions, but with the arrival of digital channels such as ITV2 and ITV3, even cheaper alternatives are now available. Earlier this month, meanwhile, ITV launched a local broadband TV trial in Brighton and Hastings to tap into local advertisers.

Last month Cambridge Private Hospital broke its first ad on ITV's Anglia West to back its cosmetic surgery services. Marketing manager Carol-Anne Leyden says the ad generated a good response, with the £250,000 investment giving the brand great exposure.

To break out of their niche, small brands inevitably come to advertising.

The trick is to become big and bold enough to get there.

This article was first published on Marketing