Ordinary Advertising

One of the points I emphasize in the book is that extraordinary advertising is probably the most underleveraged tool in all of business. Why do I say that? Basically because the incremental cost of extraordinary advertising is essentially nothing; it costs just about the same as ordinary advertising. But the results it can achieve are quite significant relative to the investment required for many other business initiatives.

For example, I was just reading the other day about how Steven Heyer, the chief executive of Starwood Hotels & Resorts, is planning to bring the coolness and cachet of that company’s W chain to the world of limited-service hotels like Hilton Garden Inn or Courtyard by Marriott. Because, as the Wall Street Journal quotes Mr. Heyer, “We believe we’ve found a white space in the industry–a place that nobody’s gone.”

Now setting aside for a moment the possibility that this is “a place nobody’s gone” because no one in his or her right mind ever would, I’m curious about something else.

At $8-10 million a pop, building just 20 of these trendy properties (in hip locales sandwiched between a Bennigan’s and a Circuit City with The Home Depot across the street, which is generally where you find limited-service hotels) will run Starwood’s shareholders about $200 million. Whereas doing something with the advertising it currently runs for its Sheraton, Westin, Four Points by Sheraton, St. Regis and Luxury Collection properties would cost them nothing more than what they’re already investing. Which is what, maybe $50 million tops?

I can’t remember the last time I noticed an ad for any of these hotels, probably because they’re ordinary as all get out. (The ads, not the hotels.) And it would seem like doing something about that would be infinitely easier than trying to get business travelers who arrive half-asleep and depart the same way to stay and party in some chic digs in SOHDO (south of Home Depot).

Being an ad guy originally, you’d think Mr. Heyer would know that. But his career trajectory has hardly been marked by extraordinary advertising (and reminds me of people I’ve heard described as: “being able to go into a revolving door beyond you and come out in front of you.”) But clearly, that’s not the case.

If I were a Starwood shareholder, my advice to Mr. Heyer would be that before he does the W writ small exercise, he should remember:

It’s the advertising, st…Steven.