4. When advertising begins to bear in teresting example of the way advertising affects the sales curve is shown in the accompanying illustra tion, taken from the records of the business of the Way Sagless Spring Company. From the begin ning of 1910 to the middle of 1912 the advertising appropriation in dollars greatly exceeded the sales of springs. After the middle of 1912, while the ad vertising appropriation constantly increased, the sales curve increased at a much faster rate. Experi ences such as this lead advertising men to believe that in the beginning the amount of the appropriation cannot be expected to have a direct ratio to the re sulting sales.
5. Basing the appropriation on a specified amount per unit of expected sales.—In attempting to insure permanent sales success some advertisers base their appropriations on a certain number of cents per unit of expected sales. They reason rightly that it is not enough to sell to jobbers and retailers alone. They must help the dealers to make sales to consum ers. It is worth a certain amount per unit to assure the dealers that consumers will know of the product and will demand it.
The Dayton Engineering Laboratories Company sold 12,000 "Delco" starters to manufacturers in 1912. At the beginning of 1913, this company had already contracted with manufacturers for 25,000 systems. It decided that it could afford from sales expense a dollar for each system sold to educate the public to the merits of the product. There fore the first advertising appropriation was $25,000. The advertising was so successful, however, that the company actually sold 37,000 systems during 1913. The advertising appropriation has been increased each year on the basis of the number of systems con tracted for, but the price of the system and the ap propriation per unit have decreased, so that today the advertising appropriation is probably less than fifty cents a machine. In February, 1916, the coin pang had already taken orders for more than 250,000 systems for 1917 delivery.
The Creamette Company estimates that it can af ford to spend ten cents a case in advertising Cream ettes. Each year the advertising appropriation is based on an amount equal to ten cents a case of ex pected sales. By following the sales curve the com pany is able to estimate approximately the number of cases it should sell during the year.
6. Basing the appropriation on a certain amount per possible purchaser.—Other advertisers look at the
problem from the angle of possible purchasers rather than sales. They consider advertising purely as memory insurance. Except in cases of very season able articles, one can never tell just when his pros pects are thinking of buying. If an advertiser feels certain that his possible customers will remember his brand favorably whenever they are ready to buy, he may feel that his sales are more than half made. These advertisers consider it worth so much per buyer per year to be sure that their products will remain in the memories of their possible customers.
Coca-Cola, with its annual advertising appropria tion, which is said to be $1,200,000, spends in this country of 120,000,000 people, approximately a penny a year a prospect for memory insurance. A manufacturer of ornamental iron and bronze, which is used only in large buildings, spends two dollars a year a prospect for such insurance. There are in this country only 1,000 architects with whom he can do business profitably. His advertising costs $2,000 a year. Most of it is spent in reaching architects direct by mail. Coca-Cola, on the other hand, may be purchased by anyone, and everyone is a possible customer. When Coca-Cola makes a sale, the ex change is for a nickel. When the other man makes a sale, the sum involved runs into the hundreds of thousands of dollars. One can afford to pay more per unit. The other can afford to pay more in the total.
Ivory Soap is another example of a product with a practically universal appeal on which is spent ap proximately a penny a possible purchaser a year. Wm. Wrigley, Jr., is said to spend two cents a per son a year to advertise his gums. His advertising ap propriation is reported to be $2,500,000 annually.
. Basing the appropriation on the amount of capi tal average advertiser is not, how ever, in the financial position of the Coca-Cola Com pany, the Procter & Gamble Company, or William Wrigley, Jr. The question with him usually is, "How much can I afford?" In such cases the adver tising campaign must be planned to fit the conditions. Even the largest national advertisers commenced in a small way. They planned their advertising cam paigns to cover one city or one district; then, as their business grew, they extended the advertising until they finally secured national distribution and were able to make their appropriations on the basis of na tional demand.