VALUE OF ADVERTISING.

New Zealand Herald, Volume LXVI, Issue 20333, 14 August 1929, Page 14

VALUE OF ADVERTISING.

"CREATIVE SELLING FORCE." USE AS AN INVESTMENT. TWO SALES INSTEAD OF ONE. "Good advertising is essentially .1 creative forco that sells goods which would not have been sold if it was not for advertising," said Mr. Robert Laidlaw, in addressing members of the Auckland Advertising Club at the weekly luncheon yesterday. Mr. F. W. Pctterd presided. In view of tho enormous sums spoilt annually in advertising it was a reasonable question for the public to ask, and a proper 0110 for advertisers to answer—who pays, tho buyer or tho seller? In answer ing the question Mr. Laidlaw said that ho was going to deal with advertising backed by good quality goods and by satisfactory sorvico in tho store. Advertising backed by poor goods and poor service was usually paid for by the creditors of tho advertiser. The Measure of Advertising. "Greater business secured by judicious advertising means a higher turnover for tho advertiser and lower charges for the customer, and therefore we are forced to tho conclusion that advertising pays for itself," said -Mr Laidlaw Its first func lion was to balance the demand for the tremendously increased output of manufactured goods to-day Although some might be tempted to ask why stop, there was a limit, because advertising was sub ject to the law of diminishing returns and it was very important that the advertise! should realise when that point had been reached. As un analogy, tho speaker used tho principle of the forced draught tn a steam engine. The faster the steam escaped. the hotter the fire became, but if tho escape of steam was carried to the extreme tho heat was carried up the flues with such speed that it became ineffective and less steam was generated. That point could be reached in advertising. ■lt was fatal to. pass tho point of dimin islnng returns in advertising, and that was where a great many inexperienced ad vcrtisers mado the mistake. They then became like the dope fiend who had to take more and more drug to procure the same result, finally reaching an unhealthy state that was most difficult to remedy. Sooner or later, then, tho injudicious advertiser started to slash prices, lower quality and reduce salaries until eventually tho sign "in liquidation" went up 011 his door with tho announcement that tho stock was for sale. Stabilising tha Turnover.

In Mr. Laidlaw's opinion the best advertising was secured at an investment equal to about per cent, of turnover, and if its effect* was to keep the total percentage o! charges on tho same basis as they were previously then it was good business. He also advised that the most vigorous advcitising should be done in the quieter times in order to stabilise turn ovor. li trading was pushed harucr in the poorei times and allowed to swing along easily in the better, it would be found that it would contribute a great deal to the net profit the business caincd. "Like the use of feitiliseis on farmlands, advertising is not an expense —it is an investment," said Mr. Laidlaw. "It has been described as 'bread on the waters, poilen on the prairies and fertiliser on the waste places. ihe club should think of it as that which makes two blades of grass giow, or two sales arise, where theie was only one before, and should endeavour to lift it to the plane of public benefaction as a business fertiliser. Alter replying to a number of questions the speakoi' was accorded a vote of thanks.