Something about human nature wants to always be associated with the biggest… and the best. But what defines the biggest or the best? Most affluent people want to drive a Mercedes or Lexus, the super affluent want a Bentley or a Roller. They are the finest automobiles but are not the biggest sellers. In terms of volume sold
Toyota and Ford are the biggest. Most affluent people do not buy drive the cars which sell the most, in fact many people don’t want to be associated with the masses. Instead they want what is unobtainable by the masses.
Advertisers have been trained to reach mass audiences and large audiences. This is critically important when selling mass consumer items like cell phones. But if you want to reach a select audience who can afford a specific item shooting for a mass audience is usually more costly and less effective even with a low cost per thousand.
Low Cost per Thousand Examples:
Assume you are selling cell phones and you want to reach 100,000 people. If the ads are $10,000 than you are paying a cost of $10 per person reached (100,000 people divided by $10,000 ad cost). In this case volume is critical. If 50,000 of the 100,000 reached buy a phone and you can get a customer for $20.00 ($10. cost per thousand x 2) who spends $400 a year it’s a big win. On the other hand; if you spend $10,000 to reach 100,000 of the wrong people who won’t buy your product than you have wasted all of your money.
High Cost Per Thousand Example:
Assume you are selling a $200,000 Bentley. If you reach the same 100,000 people as the cell phone provider your chance of reaching your potential buyer is slim and your $10,000 is wasted. On the other hand if you advertise in a media which reaches the “Super Rich.” The publication only has 10,000 people but every one of them is a Bentley prospect. You know that if you spend $10,000 for an ad which reaches 10,000 people and if only 20 of those people buy a $200,000 Bentley you’ve earned $2 million gross revenue on a $10,000 investment. That same $10,000 spent on the same media the cell phone company uses nets you no sales. So which is better? Large audience or very highly targeted audience? The cost per thousand to reach them is much higher but there is little waste, therefore it is actually less expensive to acquire a customer.
Refined Buyer Focus:
Refining the focus to reach people who will buy is more important than just reaching people who can afford to buy. Using the Bentley example what if you are targeting super rich people who live in a dangerous place like Rio where people who drive high end cars are frequently kidnapped. Those people drive non-descript cars in order to avoid attracting attention and would not buy a Bentley, therefore even though they can afford to buy a Bentley, they won’t. Therefore targeting people can afford a Bentley has have no value and no return and your ad dollars are wasted.
High Circulation Vs Focused Circulation:
In 22 years in the magazine business I’ve probably seen every trick. Publishers often employ wholesalers to sell large quantities of copies at low prices in order to drive circulation high, which allows increased ad prices. Often in these over 50% of the circulation are not buying customers, simply people who took advantage of a low price offering for a magazine they thought they might like. (Renewals are usually low among wholesale subscriptions and more wholesale subs need to be sold to keep up.) In the case of art publications using wholesalers these subscribers typically will never in their lifetime be able to afford and original artwork?
I’ve launched six magazines in my company and have tried many differing strategies and the one I like best is what I call FOCUSED circulation, which means reaching customers who buy products and not trying to build circulation by selling to librarians, high school art teachers, and art enthusiasts who don’t buy artworks. I certainly don’t mind if they subscribe, however all of our marketing efforts target qualified affluent people who are known buyers original artworks. Period.
I once asked a dealer which she wanted more: a bus load of people to pull up and enter her gallery and eat her time or to see a Lexus drive up with a single buyer who walks out with a purchase. "Heaven forbid, I don’t want those people in my gallery," said she. "Of course I want the affluent person who might buy something." She went on to say that non-buying foot traffic was annoying and she realized that her ads were generating traffic, internet visits and calls from people who don’t buy paintings.
Which would you rather have? Focused advertising targeting art buyers is more valuable than large reach.