Ad Age’s glowing article about HeadOn this week is a head-scratcher.
The magazine calls the brand’s ads “obnoxious” but “effective,” citing a 234% increase in sales in 2006.
Frankly, the numbers don’t add up for me.
HeadOn’s sales are still ridiculously small—$6.5 million last year. (That’s why the meteoric jump, duh.) Yet it spent $15 million in advertising alone to generate those sales.
The article goes on to suggest that HeadOn is on track to double its sales again in 2007. But its advertising budget will bulge more than four times to $70 million.
All of that expense is chalked up to “brand building.” But name recognition doesn’t equal brand loyalty.
Once HeadOn’s pop-culture novelty wears off—aren’t we already past that point?—will one-time buyers become long-term customers? And will they really care about the brand’s various product extensions?
If not, HeadOn is careening toward a head-on collision with reality. You can’t keep replacing sales by spending more than $2 for every $1 you take into the till. No matter how many people know your name.