Do Ads Work For You?

by | Oct 31, 2014 | How to, Marketing

Very few small and medium sized businesses have a system in place for tracking the success of their advertising, yet they have the least amount of money to waste on ineffective advertising. So, do ads Work?

Ask yourself the following questions:
• How much did you spend on advertising in the past quarter?
• Do you know what sales leads were brought in by each advertising campaign?
• What percentage of sales leads converted into actual sales,
and what did the sale cost in relation to the expense of the advertisement?

To really know if your advertising is working, you need to know the answers to all of these questions. To illustrate our point, look at the following figures for a new ad placed in a fictitious newspaper:

AD COSTS:
Design and Artwork            $550
Photography                         $300
Ad Placement                       $2,500
________
Cost of Advertisement        $3,320

AD RESULTS:
89 Direct Leads                    $3,320 / 89 = $37.30 cost per lead
36 Direct Sales                      averaging $45 profit per sale = 36 x $45 = $1,620

Therefore:
COST OF AD                         $3,320 –
PROFIT FROM SALES       $1,620
________
SHORTFALL                  – $1,700

So in this basic example you can deduce that by tracking the costs to produce the ad and the sales outcome, not only did the fictitious client not make a profit, the advertisement did not even pay for the cost of the advertising!

In all fairness, Marketing Managers would argue that the advertisement may have been an effective marketing tool in generating a database of potential customers from the 89 direct responses that may purchase at a later date. The advertisement may also further establish the company’s brand and corporate image. But ask yourself this, can your business afford “brand advertising”?

What small to medium sized businesses require from their advertising is to generate an income from their advertising today. To stay alive in business, small businesses need results from their financial outlay. Every expense has to be accountable, and advertising should be no different.

There are many contributing factors to the direct success of advertising, and what you wish to achieve from it, but you must know what the real costs of advertising are to know whether you wish to continue with it or direct business funds into another area of marketing.

Firstly, you should analyse your advertisement. Is it well constructed? Does it have a clear message and directly appeal to your target audience? So many ads are ineffective no matter how beautiful they look, because they failed to reach their target market.

DON’T BELIEVE THE HYPE:

One advertising myth is that if a product isn’t selling, advertise it. The most dynamic, well constructed and creative ad will not sell a product if there is no need or desire for that product.

Another untruth is that advertising will manipulate people to buy. A person’s decision to buy a product is based upon their belief that what is being offered will satisfy their need, as well as their overall readiness to buy at that time. Therefore, if the end user is not in the market, they will not buy your product or service regardless how good the ad is.

Another point to remember is that the publication’s sale staff is selling advertising space. They are not necessarily going to give you the best advice about whether you will be spending your advertising budget wisely with them. You really need to understand what you want to gain from your ad campaign and ensure that you have equipped yourself with the best possible ad to achieve that, at the right seasonal time.

To assist you, below is a simple formula for a successful ad layout:

1. ATTENTION: Use a great, concise headline to really get their attention. No tricky fonts that you can’t read, keep it clear and legible. Grabbing that initial attention of your target market can be very difficult, so why make it harder with a headline so vague that your target audience completely misses the message.

Another great mistake is putting the company name or logo in front of the headline, unless of course your brand is well known as a stand-alone. In most small business’ cases, this is often secondary information, and should never appear as the main focus of the ad.

2. INTEREST: Tell them why your product or service will solve their problems and make their life easier. But keep it clear and concise, either short sentences or point form – there is no room for an overabundance of information. The reader can obtain that from your website or other marketing material.

3. DESIRE: Deepen their desire by enhancing your message with an appropriate image, a relevant success story, facts and figures to reinforce your message, an attractive graph or an enticing competition!

4. ACTION: Tell them what to do and assume nothing! Tell them what number to call or what website to visit, just don’t make it too difficult or you will lose the potential sale right then and there.

It is also essential to track your advertising, whether it be asking all phone enquiries the simple question “How did you hear about us?” Or having a simple number code on all fax back, emailed or mailed order forms. You need this information for your market research, so don’t forget to collate it.

And when you are armed with your sales information, it should be compiled and monitored to see what advertising you are having success with, and what isn’t working so well. Over time, you will see a trend develop and be able to ascertain what publications are more successful, what headlines were more effective, did seasons or market peaks have any direct effects on the results etc.

One small business we deal with spent half of their advertising budget on newspaper ads, not realising that although it generated some sales enquiries, it did not lead directly to any sales. Therefore it wasn’t too difficult to convince them to redirect their sales into more productive marketing areas such as Direct Mail campaigns with their existing data base. It is never too late and with this simple process of tracking and measuring your advertising and direct sales leads, you too can identify any expensive mistakes and take action today.

It’s only when you stop and ask “Do ads work for me?” then do the math by tracking your results that you will know whether or not you are reaping the rewards. You can apply these principals to all your media spends to quickly identify where you should be placing your marketing budgets.

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