Friday, December 27, 2013

Ogilvy On Advertising

Time Magazine once called David Ogilvy "the most sought-after wizard in today's advertising industry". Ogilvy shares his wisdom in his book, Ogilvy On Advertising.

The book was published in the 1980s. While the primary media through which advertising reaches us has shifted to a large extent, what makes advertising effective has not; people still want their peers to see them to be of a high status, they still want products that they perceive will increase their standard of living, and they still want to save money on their purchases.

Ogilvy discusses what works in advertising, and perhaps more importantly, what doesn't. He even throws in a chapter on how to beat the legendary Procter & Gamble in a category. One example of a useful tidbit I enjoyed from the book is that Ogilvy argues that the return on advertising spend on a product that's already successful is much higher than on advertising spend for a product that is not doing so hot. This concept reminded me of what a retail analyst once told me: a retail chain sees better returns when it spruces up one of its more successful stores versus one that is doing poorly.

I suspect Ogilvy would have loved today's advertising environment, based on his clear preference (counter to many in the industry in his day, or at least that's the impression I got from the book) towards being able to test advertising impact. A lot of expensive research would have had to be done to determine whether a magazine ad achieved its goals, whereas the internet offers immediate feedback for many metrics.

Ogilvy's writing is concise and clear, and the book is filled with colour examples depicting advertising campaigns with descriptions of why they worked and/or why they didn't. Here is a quote from the book which I particularly enjoyed:

"Take whiskey. Why do some people choose Jack Daniel’s, while others choose Grand Dad or Taylor? Have they tried all three and compared the taste? Don’t make me laugh. The reality is that these three brands have different images which appeal to different kinds of people. It isn’t the whiskey they choose, it’s the image."

Enjoy!

3 comments:

Pradeep Raghunathan said...

Dear Saj,

This insight:

"One example of a useful tidbit I enjoyed from the book is that Ogilvy argues that the return on advertising spend on a product that's already successful is much higher than on advertising spend for a product that is not doing so hot. This concept reminded me of what a retail analyst once told me: a retail chain sees better returns when it spruces up one of its more successful stores versus one that is doing poorly."

I am not able to understand the logic behind what Ogilvy and the retail analyst say. I am wondering 'Why should that be correct and when can that be the wrong advice? '

Pradeep

Saj Karsan said...

Hi Pradeep,

It's an interesting and perhaps counter-intuitive concept isn't it? I suspect it applies when there are scale effects.

For example, if a store has double the traffic of another store, an incremental change (say, a better layout) that makes the average customer increase his spend by $1/visit would have a greater effect on sales in the higher traffic store, which may already be the more successful store. Also, you are spreading your spend here across more customers, so in addition to more revenue, your spend/customer is also lower, for a higher overall profit.

Ankit Gupta said...

FYI - Berkshire used to have a stake in them in either the 70's or 80's.

Follow by Email