Diversification: It applies to Advertising, too.


I was sitting with my financial planner one day and he was talking about market fluctuations, stability, risks, growth, equity, blah, blah, blah and then he said something about the importance of a portfolio having diversification.  It’s never safe to put all your money into any one fund, whether it’s a good fund or not.  You’ve heard the saying, ‘don’t put all your eggs in one basket’, right?  The risk is too great and the return on the investment would be slow, if any at all.  Distributing finances into multiple funds to ensure stability and balance and then tailoring the investments to my specific growth goals would pay off in the long run.   That made perfect sense to me as I’m sure it would to most people.

It dawned on me that the same principle applies to advertising strategies as it does in financial investment strategies.  Just like a financial plan that is diversified and invested wisely, an advertising plan is also more efficient, more effective and has a better chance of delivering successful results when it includes a diverse mix of media outlets targeting a specific outcome.

Often times, business owners and marketing executives try one media outlet at a time, putting all of their advertising dollars into that media with the thought that it is better to spend a lot in one place to increase their frequency.  And then they wonder why it didn’t work.  Frequency is good, but in order to be effective, you also need to reach the right amount of people.  When you put the entire advertising budget into any one media outlet, you sacrifice reaching more people.  You’re basically reaching the same people too often thus hitting a point of diminishing return. Think back to the ‘eggs in one basket’ analogy.  Too much in one basket is a recipe for disaster.

Diversification by definition means to invest in different types of something.  In the finance world, that could be stocks, bonds, growth funds or other managed funds.   For advertising, it could be print, TV, radio, billboards, digital or social advertising.   Of course, the variety of media that is brought into the advertising mix has to be well thought out and needs to be strategically aligned to reach the specific demographic audience needed to obtain a favorable return on investment.   Each media outlet has its strengths and weakness just like the many managed funds that are available to choose from when building your financial strategy.

What does your business’s advertising portfolio look like?  Is it diversified enough and in the right places to create efficiency and deliver a positive outcome to drive customer results?


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