RSSHow much is one ad worth?
Mar 29
Business Comments Off
Promotion is a tricky business, but whether you go through an advertising agency or take a do-it-yourself approach, you need to know the value of your promotional campaign.
Determine your outcomes
Promotion can create awareness about a brand or new product, or sell a brand or new product. It can also be used to let customers know about a special, limited-time offer. You need to determine what you really expect to happen from your promotional campaign in order to measure its success. It pays to be as specific possible. If you just launched a kindle line of books, you might want to say “x sales of kindle titles” not just “x sales.” It might sound persnickety but the true measure of success is if you meet your specific goals.
Set expectations
But before you dive into the world of advertising, you need to have reasonable expectations of what success means for your advertising campaign. If your outcome is sales, then it’s likely going to be a dollar figure or quantity sold ie. 10 books at $3.50 revenue is a target of $35 of revenue.
Determine how much is advertising going to cost you
Are you hiring an advertising agency? Are you working with a promoter? What are the fees for their work?
If you’re doing it yourself, where is the campaign running? Is it in a store? Online? Do you need staff? Do you need physical props (like banners or giveaways)? What is the cost of inventory you need to purchase in advance? Are there rental charges? Are you serving food?
Obviously, an online advertising campaign can have a greatly different cost structure than running a promotion in store, or even placing an ad in a newspaper. Paying someone to do the work for you is an added layer of cost (but may be a time-savings) that needs to be factored in to truly understand the worth of the campaign.
Determine the time investment
Even free campaigns can drain your time. You need to find a way to incorporate an estimate of the time needed to complete the campaign into your value assessment in a measurable way. The amount of time you spend (or pay people to spend on the project) needs to be in proportion to the expected outcome.
So how much is your ad worth?
Total the cost of your promotional campaign and divide that number by your per unit cost of revenue. Let’s say per unit, you earn $2.50 for every sale. Then if your promotion costs $250, you need 100 sales just to break even. And of course most businesses want to come out ahead, not even. So that break even point is simply a marker of minimum success.
This is the kind of measurement you must be able to do yourself, regardless of whether you hire an agency or promoter to work with.
–
Andrew Marx is a long time writer on SmartReMarxcom and recently published a new work of fiction Accidents Happen. You can contact him on twitter or leave a comment below.
