JAMES W. OBERMAYERVice president, Inquiry Handling Services...

JAMES W. OBERMAYER

Vice president, Inquiry Handling Services Inc.

James W. Obermayer, vice president of Inquiry Handling Services, thinks advertising is one of the keys to a better Southern California economy. When business is slow, advertising is not an expendable budget item, he said in an interview last week with Times staff writer Anne Michaud. Rather, it is the engine that drives increases in revenue. Obermayer’s company, which is based in San Fernando, processes sales leads for companies such as Odetics in Anaheim and Rockwell in Newport Beach.

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Question: When Los Angeles ad agency Campbell & Wagman closed last month, one of the principals was quoted saying it’s impossible to prove the results of advertising--and that’s why agencies are having a hard time surviving. You say you were upset about that.

Answer: Yes, it irritated me.

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Q: But that view is widely held--that you can’t prove advertising works.

A: Consumer advertising is more difficult, compared with business-to-business, but it’s not impossible.

Accountability is possible, with the ability today to create databases inexpensively and pretty accurately. You need databases that include buyer preference, need, desire, buying authority, time frame for purchase and those kinds of things.

You can capture that for people who inquire about a product. Then you turn that information over to the salesperson. You can follow up later to see whether the customer bought your product, and if not, why.

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Q: Some of the people who say you can’t prove that advertising works are among the top names in the business. Why don’t they share your view?

A: Some of them do and keep their mouths shut. They’re not going to stand up and teach the other agencies how to do it.

Some of it also is that clients don’t allow the agencies that much latitude. They say, “Create the ads, create the PR, create that product interest.” They’re asked to create image rather than inquiries.

You can’t ship image. It doesn’t weigh very much; you can’t bill for it very often.

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Q: Where do you get the inquiries in the first place?

A: Companies that aggressively use “800” numbers in their ads and direct mail can push up their total inquiry response from 3% or 4% to 20%.

Trade shows create 12% to 18% of inquiries for most corporations. Smart companies are starting to give salespeople clipboards and saying, please get this information filled out. Or they put the computer on the floor and say, please find out this information.

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Q: How does that information help a company make sales?

A: Salespeople want more information than just simply a name, where the lead came from and which product is of interest.

They also want to know, how soon is the customer going to be purchasing? How many and what? What’s his current application for that? Does he want to lease or buy it?

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Q: Then what?

A: I encourage in-house marketing people, as a first step, to find out what the company’s sales have to be for that product this year. It’s amazing how many people in marketing do not even know the sales quotas that salespeople are carrying.

The in-house marketing people just simply have to go to sales and say, “Tell me what your quotas are. I will make every effort to give you enough sales leads, knowing what our market share is, for you to make your quotas.”

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Q: That’s not a new idea, is it?

A: It’s been around a long time. But in a way it’s revolutionary because you’re not going to find a lot of marketing people doing it. I’ve done it practically, both as a consultant and as a (vice president) of marketing in several companies.

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Q: How did it work out?

A: Just about every time it has worked. It isn’t that difficult. Half of all sales inquiries--actually, 45%--turn into a sale for somebody within 12 months. Create a thousand inquiries, and there have to be 450 sales in there.

Then they must do a little bit of research, call people in six months and ask, “What did you buy? Whose did you buy? Did a salesman follow up with you?” They’ll find that 26% bought in six months.

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Q: What goes wrong?

A: Unfortunately, 75% to 85% of all sales leads that are created are never followed up by a salesperson.

Other reasons people buy from a competitor are that price or the channel of distribution was better.

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Q: What can an ad agency do about that?

A: The agencies don’t control that.

But an agency just has to say, “Along with everything else you’re budgeting this year, Mr. Client, I want to make sure that we do one or two small mailings to people who have inquired.

“We should do one or two small did-you-buy studies, either through the mailings or on the telephone, to double-check to see what percentage of people are closing purchases in what period of time for you and your competitors. We’ll take a look at the profiles of those people, and we’ll make some media decisions based on that.”

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Q: You’ve got to spend some money to do that.

A: If you send out a little mailer six months after the inquiry was generated, it will cost you 10 or 15 cents to print up each letter, plus postage.

Or you can do a did-you-buy study. Go to any telemarketing firm and say, “Here’s 150 people, will you give us a study?” That’s a couple of thousand dollars.

Somebody will spend $30,000 to be in a magazine. Why not budget $2,000 to $4,000 to prove the value of your advertising?

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On generating sales through advertising. . .

“Several of our clients tell us that in the long run they have very strong advertising budgets because the budgets are tied to sales.”

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On trading ad budgets for profits. . .

“By midyear, if the sales department isn’t making its quota, the company says it needs money for profits. It raids the marketing budget at the very time the company’s not making quota. Now, the salespeople have to go it alone.”

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On selling by having a superior product. . .

“What’s superior today might not be superior tomorrow. Sooner or later, you’re going to be in the barrel along with all the me-too products trying to develop the next winner. Advertising has to come to the rescue.”

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On proving that advertising works. . .

“If clients prove the value, they won’t hesitate to advertise more.”