The top 5 ways to determine if your advertising is working
As a marketing consultant and the proprietor of an advertising agency, I am always asked how can a business tell if their advertising campaign is working . Here are five methods to find out:
1. Are you seeing an rise in prospects and sales beginning when you launched your new advertising campaign? Are your prospects and sales up 2%, 5%, 10%, or more? Make sure you track all of your leads and sales so you can clearly see the final results of your advertising.
2. Are leads contacting you because of your advertising campaign? The way to discover is to ask each and every lead how they heard about you and you need to track the answers so you know precisely where each prospect (and sale) comes from. Was it your website? Was it from an ad you placed? Was it from a direct mail campaign? Was it from a radio spot ? You need to track where every prospect and purchase comes from so you see which marketing channels are producing results and which are not working.
3. Are previous and current clients buying far more from you? A quality advertising campaign can bring past customers back again and increase the purchasing frequency of present clients.
4. Are you seeing an increase in referrals? A quality advertising campaign will get your present clients and your target market talking about you. This will lead to an increase in referrals.
5. Is your advertising campaign profitable? Advertising is an investment and the lifeblood of your business. For your enterprise to be successful, your advertising campaign must be profitable over time. However, there are a lot of different views on how to ascertain if an advertising campaign is profitable. Here is the correct way to figure out if your advertising campaign is profitable:
When determining if your advertising is profitable, you need to look at advertising as a long-term investment, simply like buying stocks, real estate, or mutual funds. When evaluating your advertising you need to take into consideration repeat sales from each and every new customer your advertising produces. Practically all companies bring in the majority of their sales and profits from repeat sales, NOT first time sales. Understanding this principle is one of the secrets to building a prosperous company.
For example, let’s say you run a small quarter page ad in your local shopper coupon magazine. This little ad costs $300. From that single ad you attract 3 new clients who each purchase $50 worth of your merchandise. From that data you would think that you had a loss of $100 on that ad because you paid $300 for it but you only generated $150 in product sales. But let’s glimpse into the long-term impact of those 3 new clients.
Let’s say that each and every one of those three new clients purchases an additional $250 of items from you over the following 11-months. When you take that into consideration, your $300 advertisement has now produced $900 in gross sales. And, what if every of those 3 clients buys an extra $300 of items from you the following year? Now, your original $300 ad has generated $1,800 in product sales over a 24-month period. To put that into perspective, if you acquired $300 of mutual funds and in 2-years your $300 investment was worth $1,800, you would be leaping for joy! That is why you need to view the profitability of your advertising on a long-term scale, not on a short-term 1-2 month scale. Advertising is an investment to generate long-term customers and repeat sales. Your focus as a enterprise proprietor must constantly be on producing faithful long-term buyers, NOT one-time sales.
Let’s broaden the picture a lot more. Let’s say one of your 3 new clients cherished your merchandise so much that she advised two of her buddies about you, and her two buddies each becomes a long-term customer of your organization. And, what if those two buddies each purchases a few hundred bucks worth of products from you over the next couple of years? Do you now see the great long-term value of that $300 ad you placed?
Now that you have a greater understanding of advertising as an investment, it is crucial that you track the source of every new customer (i.e., did they locate you in the yellow pages, direct mail, radio, World wide web, etc.). Every time you speak to a new client you need to ask the client, “How did you hear about us?” Then, you need to monitor the source of that purchaser in a spreadsheet or a CRM system and monitor how many product sales each purchaser makes over time. This is the only way you can really determine if an advertising technique is working. Sure, this will take time but it is worth it. And, a excellent CRM software can make this monitoring really easy.
In summary, before you throw in the towel on your advertising strategies simply because they are not immediately producing a profit, you must first realize the value of a new customer over time. Stop looking at advertising as a short term cost and start seeing advertising as what it really is — a long-term investment to the success of your organization.
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