The cost of selling services and software
BtoB magazine recently posted their Top 100 business-to-business advertiser list. On this list were a couple of firms with distinctly different approaches to advertising.
Oracle Corporation came in at #95 on the list, down from #74 the prior year. In 2007, they spent $18,687,700 on advertising. Their spending was down 32.2% from the prior year. Their top spend categories were:
- business publications - $7,109,000 (38%) - internet - $3,717,800 (20%) - outdoor - $3,295,900 (18%) - national newspapers - $3,171,400 (17%)
Accenture went the other direction in a couple of ways. They ranked #29, up from #59 last year. They spent $58,403,300 in advertising for 2007. How they spent it differed, too. Their top spend categories were: - consumer magazines - $25,776,800 (44%) - outdoor - $9,762,700 (17%) - national newspapers – $7,981,000 (14%) - business publications - $5,813,800 (10%)
Clearly Accenture likes consumer magazines and Tiger Woods figures prominently in those ads. But they also do a lot to promote the "high performance" message in their ads, white papers, collateral, website, etc. While I like the high performance angle, the Tiger Woods angle may be getting a bit long in the tooth. Tiger and Accenture are starting to feel like a Coca-Cola jingle/slogan that's been used for too many years. When I was a partner at Accenture (and as part of full disclosure, I own a few shares in the firm) around 1999, the firm signed up Tiger. At about nine years now, this relationship may need to be retired, re-worked or refreshed.
I was surprised at the different directions each firm has gone re: advertising spend although both have experienced growing revenues. I'm not sure either approach is right or wrong. In a down market, one could argue that spending should be maintained just to keep the brand fresh in the minds of ever more cautious buyers. Others would suggest that these costs should be pared along with everything else. What each firm spends in 2009 will be even more telling.
The more interesting issue is what are these two firms trying to achieve in their spending. Both firms spend mostly on the overall brand and to reinforce it. Oracle has so many organic and inorganically acquired products that it would be difficult, if not very expensive to market them all. But Oracle does spread its advertising around several product families, though.
Accenture, like many service firms, has lots of offerings that go the gamut from strategy consulting, custom development, outsourcing and much more. Advertising for all of these would be expensive, too. Accenture seems to keep its discussion of offerings limited to broad themes like Technology and Outsourcing.
The high performance angle is laudable as it describes what ACN is doing for clients. There's a big difference is telling prospects 'what you do' versus 'what you do for them'. With that in mind, saying you're #1 in database sales doesn't mean as much as saying you can save firms a pile of money.
If your firm is re-visiting its ad spend for 2009, think about that last point. Are you bragging about your products/services or are you getting prospects excited about what your firm can do for them? If you can't do the latter, don't waste your ad budget. These are leaner economic times and businesses need to believe you'll add value (not costs) for them. Today, businesses want to see the value - not buy nice to have solutions.