Stop Wasting Half of Your Marketing Budget
By Bob Roitblat
John Wanamaker, the Philadelphia department store merchant, famously proclaimed, “I am convinced that about one-half the money I spend for advertising is wasted, but I have never been able to decide which half.” With just a little effort and analysis, Mr. Wanamaker could have eliminated much of that waste and so can you.
We spend advertising dollars to generate an action. As business owners the desired action is someone clicking on a web link, calling to place an order or coming in to buying something.
By understanding if customers respond to your advertising and how, you can increase the productivity of your marketing efforts. But to determine customer behavior you must use some kind of tracking mechanism to validate the performance of your advertising. You can then compare and contrast different Ad campaigns to determine which one generates the best response.
For example, sellers that use print media track the response to their display Ads to determine which Ads work, which headlines get a better response and which products sell. For an on-line Ad, you typically measure response rate by the number of click-throughs–how many people click on your Ad.
Tracking Ads that drive people to call or shop at a brick & mortar store can be as simple as asking, “How did you hear about us?” or putting something in your Ad like, “mention this Ad and get 10% off.” You tally people’s responses to determine which Ad or which medium produced better results.
There are two possibilities when an Ad generates little or no response: it didn’t generate enough interest or excitement; or the Ad didn’t reach your targeted audience.Money spent on messages that reach the wrong audience or that don’t produce the desired action is wasted.
Change the headline, Ad copy, graphics or layout and re-test the Ad. Maybe it’s a great Ad, but in the wrong medium or publication. Make a change and analyze the results.
Tracking Ad response is only the first step; the next step is to determine which Ads convert into the most sales-the conversion rate. Of the people who click, call or come in, how many make a purchase and for what amount?
By analyzing the response and conversion rate for each Ad and comparing that to its cost, you’ll know each Ad’s effectiveness. Fine-tune Ad elements or placement and re-test to optimize effectiveness and eliminate marketing budget waste.
Back in the pre-Internet days, I owned a company that relied heavily on Yellow Page advertising. We tracked Ad response down to the book our customer saw the Ad in. We were only able to make changes once a year and the Ads were expensive, so tracking Ads was critical. After analyzing our tracking results, we reduced our Yellow Page placements by 75-percent without any reduction in revenue.
Today, our advertising is all Internet-based and we use Google Analytics and Google Adwords to track click-throughs and response rates on a daily basis. We can quickly and easily add or eliminate Ads, compare Ads side-by-side and be much more responsive and effective with our marketing budget. I think Mr. Wanamaker would be impressed.
About the author: Bob Roitblat is a nationally recognized author, writing about business, medicine, technology and sailing. Bob is also a serial entrepreneur and a seasoned executive with more than 30 years of hands-on P&L responsibility running companies at every phase of a business’ life cycle. He has considerable experience consulting with and supporting small and medium-sized closely-held enterprises (SME) across a range of industries, including high technology, distribution, manufacturing and professional services. For more information, visit http://www.mainsailcg.com.
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