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Philadelphia retailer and US Postmaster General, John Wanamaker, once said, "Half the money I spend on advertising is wasted; the trouble is I don't know which half."

If you're spending $10,000 a month on advertising $5,000 is going straight down the tubes. That wastes $60,000 of your hard earned cash every year. Money you could spend on better, more focused marketing.

Imagine if you could work out which half works and spend only on that half. The good news is you can. All will become clear in a little while.

In the meantime let me explain how advertising works.

Broadly there are two types of advertising. One is Branding and Positioning (BAP) and the other is Direct Response (DR) advertising.

Is Branding and Positioning Important For You?

Branding and Positioning concentrates on getting the company's name, or service or product continually at the forefront of its customer's minds. As you can imagine this needs continual advertising activity and can cost megabucks. Companies doing this type of advertising include Coca-Cola, British Airways, Nike and MacDonald's.

These are all major companies and everyone already knows their name and what they stand for.

Why do they do it?

The simple answer is that they're in a highly competitive market. They want to retain their large market share by ensuring that the most recent ad a prospect remembers is for their service or product. So when they're thirsty it's a Coke. If they're hungry it's a Big Mac if they want to fly they choose the World's favourite airline.

Picture the mountains of money that go towards that aim. But picture too the accountants horror they don't know which campaign makes a profit.

Profit is the one thing that tells you if your campaign is working. If you know your ad makes more revenue than it costs to create, run and service you'd keep running it wouldn't you?

Unfortunately Branding and Positioning (BAP) advertising can't be evaluated. You just don't know whether it's worth doing or not. How do you know which advert finally persuaded your prospect to do business with you.

Interestingly Bill Bernbach one of the founders of modern advertising said that, Advertising doesn't create a product advantage. It can only convey it."

Why Bother With BAP?

So why bother doing BAP advertising?

Probably because advertising agencies are happy to use BAP advertising for almost any company. Any slowdown in sales can't be attributed to their adverts. Any increase is claimed to prove the advert is working.

In reality you don't have a clue.

Former Canadian policeman turned fabulously paid copywriter John E. Kennedy coined the phrase, advertising is salesmanship in print.

Would you tell a salesman to go see a prospect and to strip customer oriented benefits from their presentation? Also would you tell them not to ask for the order? You'd be laughed at and if you insisted you'd probably go out of business and certainly lose your salesmen.

BAP advertising does exactly that to your customer.

Is Direct Response Advertising Any Better?

In contrast Direct Response (DR) advertising is able to directly relate a specific advert to an increase in sales. Or alternatively highlight a problem ad that needs fixing.

This type of advertising seeks to inform the prospect as to how your product or service improves their life, rights a wrong or smoothes a problem. Additionally, DR advertising almost always asks for a response. Either to call in to buy immediately (unusual), to get a free sample, free report, free voucher, free experience or other intermediary step before buying the target product.

Imagine the calls, letters and emails you can get from advertising that encourage your prospects to take action to contact your company immediately. You get to see whether the campaign is working. That means you can step in and tweak it if it's not.

But it also allows you to test different aspects of your advert to try and increase response further. So for instance you could run two adverts with the headline changed on one, or a different offer on one or a free-phone number against a geographic number.

You can see how every single word and picture in your advert performs. Doesn't that just feel better? You've control over your spend and the customers who are bought for your advertising dollar.

There are many people who would agree that DR advertising is the right way to advertise. But they still don't do it.

Why?

Usually the reason is simply one of ego. Direct Response adverts don't tend to be pretty or to win the Cannes Advertising Lions awards. If you're the head of the company or you're the director of sales imagine how tempting it is top run ads that might win awards.

You already have sales coming in. Running a BAP advert will still get sales coming in. And you might win that Lion at the Cannes awards for best advertising.

You're fooling yourself if you think it's for any other reason. Because almost without exception Direct Response adverts will pull more sales than BAP adverts.

Yet many advertisers don't realise it. They're convinced that an advert has to look "professional" to sell. WRONG!

Do you want more sales?

If you do, and I'm sure you do use the following steps:

Step 1: Learn how your products relate to your users. Which emotions, feelings and beliefs does it generate or speak to?

Step 2: Assess the best way to convey that to your ultimate user.

Step 3: Do the newspapers/magazines/radio/tv channels you've chosen to advertise in get read by your preferred prospects?

Step 4: Check and test each ad with a single entry in your chosen media. (Do not run ad series until you've tested the pulling power)

Step 5: Buy the smallest display ad possible. Then each time it makes money buy the next size up until it starts to lose money. Then go back to the last one that made money - the optimum size.

Step 6: Continually run split tests to find the best pulling direct response for your product

Step 7: Use some of your advertising saved to buy other means of marketing