Advertising

9. Measuring an Ad's Success

Every time you make a sale, or take an enquiry, find out how the customer heard of you.

9.1 Work out which advertisements, in which publications, are getting you results.

• Ads that generate sales are successful.
• Ads that generate no enquiries are failures and should not be repeated.
• Ads that generate dead-end enquiries, that do not turn into sales, cost you even more, because of the resource they tie up.

9.2 Monitor how your campaign is working.

• Measure the number of enquiries resulting from the ad - giving the cost per enquiry.
• Measure the number of sales resulting from the ad - giving the cost per sale. In advertising jargon, this is called the 'effective ratio' or 'yield'. Put your budget in the publications that give the best yield.

9.3 Consider what kind of sales are produced.

• Are they large repeat sales with good margins, or small one-off sales that generate little profit?

9.4 Calculate the indirect costs of advertising.

• For example, you may find a £100 ad nets a one-off sale with a profit of £100. But that sale, plus enquiries that did not convert into sales, may have taken up 20 hours of staff time - a huge hidden cost.
• If your profit per new customer is less than the cost, you are throwing money away.

9.5 Bear in mind that advertisements produce delayed results.

• One customer may order today. Others may wait until they have seen half a dozen ads and feel comfortable about you.
• Other customers may order in two years' time, when they finally need your product.