What return on investment should I expect from an advertising campaign?
Posted Wednesday, December 30, 2009 by admin
What is the industry rule of thumb as to amount of sles brought in per dollar spent on advertising? We use discount codes to track redemption, with print it is pretty easy and we hope to bring in more revenue than the ad cost. But with radio it is much harder to tell. We say a discount word on air that people can enter on our website to try and track, but I cant tell if the dollars were well spent. What is the typical percent of ad costs that should be recouped from a radio campaign? Thanks
It’s doesn’t matter what the “rule of thumb” is. Don’t look toward averages — you are not running an average business.
Probably 90% to 95% of radio advertising is not tracked at all. You’ve moved past those folks by providing a trackable “discount keyword,” although it’s quite a challenge for most folks to remember both a URL and a discount keyword (both must be very memorable, and of course the discount code might be “radio” or the 4-letter radio-station name). (Keep in mind that someone might enter that discount code into an online “coupon and deals” web site, which can gunk your data somewhat.)
Radio is NOT a traditional “direct marketing” advertising tool, because it’s so hard to track. Instead, radio and TV are usually used for “branding,” where results are much harder to measure (but they can be measured, though not with anything near the precision of a Google AdWords campaign).
Keep in mind that most radio advertising is “local,” promoting a local business, and there is a combined “direct response” and “branding” effect from radio advertising. A radio ad creates awareness of the business, which might not be acted upon for many weeks or months.
You should actually IGNORE what other folks are doing. Look instead at your own profit requirements. If you are spending $100 per day on the radio advertising, then the radio ads should be driving customers who buy enough that you earn back more than $100 in gross profit.
Unless you’re spending & dividing a larger budget — and want to hit targets with an overlaying marketing mix.. then, your evaluation has to be specific/personal to that company. You know your Sales, last year… and for that same period… you decide in your Creative how/if you’re compelling prospects or customers to use/visit, ask, etc. to contact you etc. etc. (whatever the subject matter)… and during & after.. you have to keep track of who/when there’s an impact… and what was the CHANGE, if any.. you can be sold on longer-term programs, buying months atop of months.. but only the Marketing exec that tracks $$$ and ROI, knows a thing (whether they’re honest about that reaction, if a quite another topic).