When Should a Startup Begin Advertising On Television?
Updated: Dec 26, 2022
The date was January 30th in the year 2000. Millions of viewers around the country (an estimated 88.5 million to be exact) tuned in to witness what would become one of the greatest Super Bowls of all-time.
However, during the airing of Super Bowl XXXIV—an act took place that will go down in advertising lore to be forever remembered by those in the marketing industry—similarly to how NFL fans will remember the game-ending tackle that St. Louis Rams linebacker Mike Jones made on Tennessee Titans wide receiver Kevin Dyson at the one yard line—which led to the Rams winning Super Bowl XXIV.
That’s because a startup by the name of Pets.com (an online pets food company) made such a major error in advertising—that it led to the demise of the company. Here’s how it happened; Pet.com purchased a television ad that was to be aired during Super Bowl XXXIV for an estimated $1.2 million—which at the time, was far too much money for any startup to pay for an ad during the dot com bubble.
Needless to say—the ad didn’t have a positive impact on sales for the brand. In fact, the cost of the ad actually played a significant role in the company going out of business less than a year after it aired.
Pets.com is a brand that will forever be synonymous with a startup that advertised its way out of business by spending too much on television advertising, too soon.
Let’s avoid the same fate for your startup by making sure that it meets the following criteria before you begin investing in television advertising.
Your concept has been proven
Proof-of-concept has become one of those phrases that’s been thrown around so much as of late—that many people have forgotten the definition of what it truly means. Which in business, essentially means that an idea is feasible and could be monetized.
The mistake made by far too many startup founders—is that they often get so excited about their new business—they purchase television ads for their products or services prior to actually having shown a proof-of-concept for them.
The reason why that’s a mistake is because the market has not yet validated their business idea. So by the time the founder finally realizes that her idea won’t be a cash cow—she's already invested thousands (or millions) into advertising.
To avoid making such a mishap—those in charge of your startup’s marketing decisions (which is yourself) should only spend money on television advertising when your company has consistently shown notable month-over-month growth in revenue for at least one year. By then, you’ll have a much clearer grasp of whether or not your business is ready to scale.
If your business isn’t showing signs of consistent growth in monthly revenue, instead of utilizing television ads—take a more cost-efficient approach (depending on capital) to selling your products or services by leaning more towards creative digital and guerrilla marketing. As author and advertising tycoon David Ogilvy famously stated, “If it doesn’t sell, it isn’t creative.”
Your business is beginning to plateau
Regardless of how great a business is at generating sales, at some point—the business will inevitably reach a plateau. Which isn’t necessarily a bad thing. When your startup reaches that point—it’s time to consider creating a television ad for your startup.
Despite what many naysayers in the marketing industry believe—television advertising is still a great way to garner attention for a brand, product, or service. And with streaming viewership at an all-time high—television ads are a great way to garner the attention needed to spawn sales for your startup.
Your startup is prepared to meet demand
Media buying often has a peculiar effect on the brands that utilize it. For a brand like Pets.com, which made significant strides initially—time has shown that its proof-of-concept would have eventually worked and television ads would've done wonders for the brand—in time.
Unfortunately, the brand's proof-of-concept in the year 2000 did not coincide with its efforts to scale through immoderate advertising, and media buying only expedited the downfall of the brand.
However, for brands that offer products or services that strongly resonate with their target audience as soon as they are presented to them—media buying could create a demand that the company isn’t prepared to meet. Which could significantly damage the reputation of the brand if it cannot fulfill the orders.
Before purchasing a television ad for your startup—make sure that the third 'P' (place/distribution) in your brand’s marketing mix is secure—by having a strong distribution channel already in order prior to spending any amount of money on a television ad.
Television ads could introduce your brand to millions of people that may want to buy whatever it is that you’re selling. So, make sure that prior to purchasing a television ad—your brand’s manufacturing and distribution channels are both congruent, so that your startup is prepared to meet the high demand that may result from a larger audience being introduced to your brand.