Don’t waste money on advertising that isn’t working

Domino SpiralSounds obvious, doesn’t it. But if you don’t carefully monitor the effectiveness of all advertising, you could just be throwing your business’ hard-earned money away. Intuitively, you know this is true – but are you doing this? Be honest, we won’t tell anyone…

For many businesses, advertising is a must – almost every business needs to promote itself. And, if yours has large numbers of potential clients in clearly-defined market segments, chances are advertising will play a key part.

But, nothing stays still for long in business. You’ll need to keep firm tabs on any ad campaigns and be ready to adapt as soon as traditional methods stop working.

Make sure your advertising earns its living. Most likely, you’re using advertising to build brand awareness and/or drive sales.

If you are using advertising to build brand awareness, measurement of costs to return are a little ‘fluffier’ than when driving sales – how do you know for sure people are seeing your ads (on or offline) and remembering you?

One way to measure success is with market research or focus groups – simply ask people if they’ve heard of you and how. (See Minding your Qs when planning market research, and Have you really researched your market and customers? for some tips).

Advertising to drive sales
If your advertising is designed to drive sales, you’ll need to measure costs and weigh these up against responses.

To measure costs, include:

  • The cost of advertising space
  • Design costs, including print preparation
  • Also, production costs for brochures and/ or any other follow-on literature
  • Fulfilment costs – goods, postage, delivery, staff etc

To measure responses, here are some relatively easy, cheap ways:

  • Always ask new contacts how they found you
  • Use coded ads – then ask enquirers to quote the code
  • Use reply coupons in print ads
  • Use readers’ reply services in trade mags
  • Use a dedicated freephone number for each campaign – so you can keep easy tabs

Conversion rates
Some ads may generate a lot of interest but few sales. Why? You need to look at this.

If your conversion rate is low, there’s something wrong.

Check:

Good service
Finally, remember, the best advertising in the world won’t work if it isn’t backed up by good-enough service. This means trained staff, brochures, adequate stock levels, and the ability to live up to your promises.

For more on all this, see our 4 page PDF on Advertising strategy.

If you’d like a free business advice session with an ICAEW accredited accountant in your area, search our database.

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