One of its 15 main rules according to the founder Jay Conrad Levinson sounds as follows:
You can actually double your profits by measuring the results of your marketing. Some weapons hit bullseyes. Others miss the target. Unless you measure, you won’t knowwhich are which.
Thats why we are also keen on measurement. Above all, the advertising is an area where the effectiveness (or efficiency?) of its spending is being widely discussed.
So what are the main benefits of measuring your advertising campaigns?
Apart from that you can learn the following from your campaign assessment as well:
A bit of Philosophy. How to distinguish between effectiveness and efficiency? A famous management guru Peter F. Drucker writes simply:
Efficiency is doing things right; effectiveness is doing the right things.
Can you see the difference? This renowned management consultant further defines being effective as getting results, and getting results he defines as getting the right things done. On the other hand, if you are efficient, you just do the things right and if not being effective, you could do the wrong things, what could be just a waste of time, as he once said as well:
There is nothing so useless as doing efficiently that which should not be done at all.
Getting back to our question, assessing advertising efficiency means mainly measuring its financial effects, i. e. the financial return on the advertising spend, while I would define assessing its effectiveness as measuring its communicational effects whether people saw it, whether they liked it etc., in short, how successful the advertising was in communicating the message. Sometimes we watch an amazing ad shot we like but we are not aware of the brand which is being promoted. Then the campaign results drop down and despite being efficient, the campaign was ineffective.
Its not easy to measure for a start, but that does not mean you should not try! Up to now, nobody has ever invented a 100 % secure advertising test, as usually the following problems occur:
Many people fail to do post-campaign testing because of these reasons:
The countries of Eastern Europe face significant problems with tracking their advertising. They suffer from the attitude that assessing is not so important. On the contrary, Irish business owners view this issue as crucial in planning more often and they are more aware of the benefits it can bring.
The only question is, how to do it. How to get from your assessment as much as possible? There are several ways and means we can recommend you.
A bit of Psychology. The marketing theory knows various tests of advertising assessment. The best known are these:
Maybe you personally are not familiar with these tests. However, they are very simple and their focus is on asking questions of people who are in the target market to react to the advertisng. So if you do not know these methods try to ask your customers, prospects or just people in the street, if they:
In addition, do not forget to ask open questions about their meanings. Sometimes the answers can be placed in a scale, so that you can see the results clearly. There are also more sophisticated ways of measuring the advertising effectiveness, such as in-market or frame-by-frame tests but their core is always in asking questions.
A bit of Math now. The main objective of advertising is sales generation, so that the marketing expenditure brings as much profit as possible. There are two main ways how to measure advertising efficiency:
The first one works with the following formula:
Campaign Eficiency = Outputs/Inputs
Please, focus on correct understanding of these categories it is not so simple to state all the costs connected with the campaign. You should always keep in mind the above-mentioned problems of advertising tracking.
Finally, your revenue increase does not always lead to increase in profits as well. Thats why probably the best criterion is to maximize net profit, after deducting the cost of marketing. So if you really want to know how much funds your advertising brought try to take a look at your net profits generated by the campaign.