Save Advertising Costs by Measuring Advertising Success

Measuring the success of individual advertising campaigns is the most effective way to reduce advertising costs. By determining which media and formats work best, you can focus more of your budget on advertising that increases your return on investment (ROI) and cut the ones that cost you money.Advertising ROI is the cost of the advertising campaign compared to the resulting gross profit on items sold. For example, if you spent $200 on radio advertising and you sold 20 items and each item retailed for $25 and you made a $10 profit on each item then your gross income would be $500 and your gross profit would be $200. Your ROI is 100%, which means you broke even on your advertising campaign.This is perfectly acceptable because it didn’t cost you more money to advertise than the revenue the ad generated. If your goal was to increase sales, however, the ad is not quite a success.If it turns out that your newspaper ad has an ROI of 150% it might be a good idea to allocate more of your budget to newspaper advertising.As with all things advertising, to be successful you need to know your target audience. Experts say that they feel like a stuck record saying the same thing over and over again. But the truth is that if you don’t where and when to find your customers you’re going to waste your advertising budget. If you target your audience correctly then you should already be advertising in the media that bring you maximum ROI. It then comes down to measuring the effectiveness of individual ads.An article on SkalaCreative.com says that you need to have before statistics to effectively measure the success of a particular ad. This makes sense; it’s very difficult to determine if sales or new customers have increased if you don’t have anything to which you can compare the figures. According to the article, you should determine, on average, how many clients contact your service business over a specific period (30 days is deemed long enough), or how many customers enter your store, or how many unique visitors your website gets. You should also take into account your sales or profits for that period.Then you can run your ad and review the same statistics for the duration of the ad as well as a month after. This is because advertising doesn’t necessarily have an immediate effect, especially if your goal was relatively general, such as increasing sales or brand awareness, rather than selling a particular or promoting a sale.Compare the before and after stats and you should be able to determine if a campaign worked or not.This kind of measurement is somewhat indirect. There are more direct methods. For example you could send out customer surveys (which aren’t always reliable as people don’t always respond) asking how customers heard about you, which ads they found effective and which advertising media they prefer; you could also ask them these questions in-store. A more subtle approach is to include a coupon for a particular product in your newspaper ad, or give customers a discount if they tell you where they heard or saw an ad.If you want to save advertising costs it’s extremely important that you track and measure the success of your ads. You need to cut what doesn’t work and exploit what does.To assess the effectiveness of your advertising campaign, you can monitor sales, new customers, requests for information, phone inquiries, retail store traffic, website traffic, or click-through rates. Use these tactics to gauge the power of your ads:• Use dedicated phone lines to track phone orders. For example, if you mention a toll-free number in your ad, assign different extensions to particular advertisements.
• Compare pre- and post-advertising traffic on your website. Your Web host logs the hits on your site and should be able to provide you with daily, weekly, or monthly reports. If you maintain your own Web server, invest in software that generates easy-to-read traffic reports.
• When advertising online, the old metric of click-through rates (the number of viewers who click your banner ads) is not a reliable method of knowing whether your advertisements are working. While ad networks that sell ad space on the Web track click-through rates and can provide you with performance reports, the numbers you really want to know are how long people are spending on your site and how many pages they are viewing per visit. That way, you will know whether you have truly engaged your clients. Of course, if they purchase something from your Web site, then you know you really did capture them.