How do you know if your advertising is successful?
Most business owners I know would prefer not to advertise if there was another way to get customers that was free.
But free isn’t really free. It’s just that we value some things more than others or perhaps we are used to measuring certain things with different expectations.
I titled this piece, Measure What Matters and it’s a peek into a Return On Investment or R.O.I.
Usually the R.O.I. discussions I have involve the Return On Investment of money spent on advertising.
If I was in the financial industries business, the Return On Investment would look pretty basic. A ten percent R.O.I. on a 100 dollars is 10 bucks. In other words that $100 becomes $110.
That is an easy money measurement.
So is this next one.
Hourly wage. If you work 40 hours and get paid $800 for those 40 hours, then your Return On Investment of your time is $20 per hour.
Running a business is a different animal to pin down the R.O.I. You don’t have a strict correlation between the hours you put in and the dollars you receive. It takes capital to get started. Real dollars that are not quickly translated into earnings.
There’s also time spent planning and organizing that business owners put in that go beyond typical business hours. 90% of entrepreneurs don’t have an accurate figure of how much time that have invested in their business or what the dollars are that are associated with that time.
Does that prevent them from doing the work? Usually not.
Let’s talk about Return On Investment relating to advertising and marketing. This is a very difficult calculation to figure out accurately, with the types of details that you see in your 401K portfolio.
I’m used to asking questions that create an R.O.I. formula, it was easier 30 years ago when I worked for a Christian radio station in Detroit and we had a very loyal audience that would often tell our advertising partners that Robin Sullivan of WMUZ told them to shop there. This was before the internet and social media.
See, Robin really did tell her listeners to mention her when they shopped for a mortgage or got their car repaired or any number of other things that were advertised on her radio program.
And we often get similar situations with WOWO radio, where our listeners will tell our advertising partners that Charly Butcher or Pat Miller or Rob Winters or Rick Wolf recommended them which is fantastic.
But it’s not accurate. That’s anecdotal information.
Some people who sell digital advertising products will tell you that it’s easy to track the results.
It’s not and those that pitch things like, “We can track every visitor to your website and prove the Return On Investment,” either don’t know what they are talking about or are simply lying to you.
I offer digital advertising solutions along with the radio advertising solutions we have at WOWO radio. The one thing that some digital advertising can do is track SOME of the traffic to your website and tell you SOME of the ways that traffic got there, but this does not make it better than the anecdotal info you hear about your radio ads.
If I do a digital advertising campaign for your business, no one is going to tell you that they are buying from you because they saw your ad on their laptop. And they are not going to tell you that they clicked on your ad either. However the tracking I can see will show me that yes, people are clicking on that silly display ad and while that is nice, we still haven’t determined if you are getting a positive Return On Your Advertising Investment just from those numbers.
I’m going to point you to an article I read recently about this, click here or if you are listening to the podcast go to ScottHoward.me and this article Measure What Matters to find the link. The article is about Janet & the Cows.
So how do you Measure What Matters?
Depends. There is no one size fits all. One of my clients came up with a formula that we use to measure the success of or our digital advertising campaign that he came up with based on his success with other online marketing and it pertains to a cost per lead formula. He wanted to see anything at or below 50 bucks and we are beating that. Most weeks his cost per lead is in the 30’s.
Another client of mine simply has annual sales goals. They continue to increase each year and we help her hit those numbers. We don’t have a true R.O.I. formula but we do have anecdotal information from her radio and digital campaigns that are reassuring.
The most important take away today is: You need to determine what success looks like and pick some ways to measure the results from your advertising and marketing efforts that fits you and your business. Period.
Want help? Ask me.