Measure Advertising Results
One of dozens of strategies listed and linked to here:
How to Make More Money
From Your Business
By Steve Gillman
If you have never measured advertising results in your business,
you're either not advertising or you're risking throwing your
money away. In fact I have seen small businesses spend for ads
that produced nothing--not one single sale. In one case a tax
preparer I knew spent $500 or more for coupons that came out
on the back of cash register receipts. He never saw a single
But at least in that case he was able to measure that result.
$500 netted him zero additional revenue, and so he never tried
that again. If he had spent $1,000 for radio ads and business
increased 20%, how would he know that his ad dollars paid off.
After all, his business might have increased 20% in any case,
just because the season was nearing. In other words, because
there would be almost no way to measure advertising results in
this case, he might have thrown away $1,000 without knowing it--and
done it all over again the following year.
For this reason, some marketers will say that virtually all
television, radio and other non-measurable advertising should
be avoided. That might be extreme, but let me tell you another
true story to make the point. Years ago, just after the dot-com
boom and bust, I was at a seminar on making money with the internet,
and the speaker asked the hundreds of us there is we had seen
a particular television ad for new internet company. It ran during
the Super Bowl, so more than a hundred hands went up. He told
us the ad cost $2 million dollars--40% of the $5 million in start-up
capital the company had. Then he asked for a show of hands of
those of us who went to the website after seeing the ad. Not
a single hand went up.
Keep in mind that for a $2 million dollar advertising campaign
to pay off it has to produce sales of much more than that. In
fact, if the gross profit margin for a given product or service
is 25%, the advertising would have to generate at least $8 million
dollars in new sales just to pay for itself. It is easy to get
eaten up by ad costs when you have no way to test and measure
results. Find a way.
Coupons are a good example of advertising that has measurable
results. The crudest measurement is this: You just spent $500
for coupon inserts in the local newspaper, and you wither saw
a lot of coupons come in or you didn't. Many restaurants count
the coupons to track results, and only scale up if smaller tests
show a good return on investment. On the other hand, if you got
a coupon back, does it mean you made a new sale? Not necessarily.
You might have just given away some of your profit to a customer
who would have been there anyhow.
In any case, some measurement is better than none. If you
do not have a direct way like a coupon, you can at least ask
customers how they heard about you. You can do that in person,
or have a form for them to fill out, depending on the nature
of your business. In magazine advertising it is common to include
a code in the address ("dept 24"--which is entirely
unnecessary for delivery), in order to know which ad the order
Perhaps the most consistent and scientific way to measure
advertising came about with the beginning of pay-per-click ads
from Google and others. They will track the click right to your
"thank you for ordering" page, so you know the "conversion
rate." If you paid $1,200 last month for 3,000 clicks, and
they resulted in $4,000 in sales of a product with a 50% gross
margin, you netted $800 from that advertising. Seeing those results
you can build your advertising campaign more scientifically,
so you get a real return on every dollar invested.
One way or another, find a way to measure advertising results
for your existing expenditures, or find new advertising mediums
that are measurable.
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