Measuring Your Return – Can We Determine ROI of an Advertising Campaign?

WebWhile recently reading On the Near Impossibility of Measuring the Returns to Advertising by Randall A. Lewis and Justin M. Rao, it was stated that the average American sees 25-45 minutes of tv commercials, multiple billboards and an array of internet ads per day.  They go on further to say that industry reports place annual advertising revenue in the US in the range of $173 billion, or about $500 per American per year.  In order for advertisers to break even they need to net about $1.50 in profits per person per day – translating into about $3,500 -$5,500 per household per year. So is this possible?  Is it possible to measure the exact return on investment metrics of an advertising campaign?

 

ROI tells us if we are making or losing money from a dollar and cents perspective.  And measuring that is more difficult than one might think.  There is no formulaic way to break it down because so many factors go into a consumer’s decision to make a purchase.  Simply seeing an ad isn’t the sole driving force.

 

Measuring the success of online ads or a paid search tends to be easier than straight print advertising because we can see who has viewed an ad, clicked through and made a purchase.  Sure, some wait until later to purchase or do not purchase at all, but at least you can see the action on your site and your ads on other sites.

 

Trying to determine the success of a print ad campaign is far more difficult. Gone are the days of bingo cards that gave you some insights into your print readership and engagement. These types of campaigns are now more heavily associated with branding and exposure than generating leads. But that doesn’t mean they aren’t increasing your sales; only that it’s much harder to track when they are.

 

What is certain, regardless of ad medium, is that it’s vital to have a plan in place and a specific audience to target as you begin your campaign. Even the most creative and engaging ad campaign will fail if it isn’t targeted to the correct audience.

 

With that said, we all know that there really is no concrete way to measure the absolute success of any ad campaign.  And there certainly is no exact formula to figure out how many sales dollars are generated in proportion to each advertising dollar spent.  However, there are some subtle ways to determine if your advertising is reaching your audience and improving your bottom line.

 

Here are some tips on determining whether your ads are successful:

 

  • Monitor sales – know what your sales were before, during and after you started the campaign
  • New customers – did you notice an increase in new customers
  • Request for more information – is your phone ringing more with information requests, are there requests being sent to you via the web, are there more document downloads on your site
  • More traffic – are you seeing more traffic to your website, in your retail store or recognition of your brand at events
  • Click-through rates – has there been an increase in your click-throughs from your specific ad medium (Google Adwords, social media, publications, other partner sites?)

 

All of these factors can help you to determine if what you are doing is working.  It is your job then to continue to follow through and keep those sales going.

 

And a newly-rising force to reckon with for helping the sales force continue to grow sales, is marketing automation… on which more information can be learned here.

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