The problem with the way that most businesses advertise is that they don't have a direct way to measure results. If they did, it would be simple to know how to make more money and be more profitable; spend more on effective advertising and get more revenue. It's as simple as that.
If you know you spent $500 on advertising and the resulting end profit from that advertising is greater than $0, you know you are doing something right. The bigger your profit number is, the better...but you need to have a closed loop in the costs of doing the advertising, costs of delivering your goods or services, and then have the bottom line of money left over.
Here are factors to consider:
- Cost to produce the advertising campaign: graphic design, copywriting, videography
- Cost of communication time with all parties involved (your time is worth money)
- Cost of advertising to run the campaign
- Cost of time to analyse the campaign and make adjustments as needed
- Costs to deliver your product or service for the ad campaign that you are running
- Profit from the sale of your product or service after all expenses
If you have a winning ad campaign, the costs of #1 to #4 above start to be less and less of a factor, so the efficiency of your campaign gets better and better. As an example, I created a recruitment video for a company that they used for their first online recruitment campaign. It worked very well and produced many applications for their open positions....but the overall cost for that campaign was high because the cost for me to make the video was expensive in order to do it right. BUT, they have ran 5 more recruitment campaigns since I created that video and we are re-using the video each time we run the campaign, so the cost of the video production is much less of a problem now that we've used it 6 times.
Running an ad campaign where you know all the numbers is the hardest part to dial in, but once you've got it...it's simple math. Put $5 in, get $10 out...that means you are getting a $5 profit each time. Scale that up as high as you can go and you are making a great profit! But you can't do that if you don't know your numbers.
The problem with tracking results from advertising
Some methods of advertising are really hard to track results from. For instance, have you ever been driving along and you see a kid standing on the side of the road holding a sign that says "Pizza $5" with the Little Caesars branding? Why do they do that? Because it WORKS. How do they know it works? They had to do many studies and numerical stats in order to measure the increase in sales from having that kid stand on the street with a sign....and now that they have the numbers, they know that they can pay a kid minimum wage to stand there and they know it will result in profit of them. Measuring that kind of ad campaign is hard and requires some work. Other campaigns are much easier.
If you are looking to have people call you in order to claim a deal, make an order, or get a quote...just create a proxy phone number that can track how many calls you get through that number.
If you are putting an offer into an email, give them a coupon code or special web page to go to in order to know how effective that campaign was compared to the Facebook ad that you are also running.
If you are doing online advertising and the purchase is happening through an online store, you can setup the analytics and/or conversion information so you can see the cost of ads per conversion. This is extremely powerful if you have it dialled in correctly.
Selling tickets online to an event (like a hockey game)? Track every click. Setup conversion information that passes through the checkout total from the purchase. Create several ads with different wording or imagery and see which ones work best. Turn off the ads that don't work as well.
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