Measuring the Results of Advertising Expenses
Tracking advertising expenses for local business growth can be a major challenge. Many local business owners invest anywhere from 5-15% of their revenue in advertising hoping and praying that it produces their desired business results only to look at their financials at the end of the year and measure by whether or not they made or lost money.
The primary reason we see tracking advertising expenses being the most challenging is that there are so many sources and no real way to tie every specific advertising and marketing dollar to what it returned to the local business. Therefore, we decided to share a few of the ways our local business customers have been able to help measure success and make the necessary adjustments.
First, it is important to understand the difference in branding and direct response advertising when measuring success. One of our clients engaged Social180 for an audit of their advertising expenses only to find that they could track very few results to the expenses paid. In fact, most of their business was proven to be through word of mouth referrals than advertising at all and they were spending roughly 20% of their revenue on advertising with multiple sources.
When it comes to marketing, branding is totally different than direct response in many cases. For instance, in this particular client’s case, they were using the local newspaper as a branding source to build their name in the local market. The challenge there is that we all know newspaper distribution is declining while online blogging and social media are skyrocketing in activity and following. So… even with branding, social media and blogging becomes more impactful.
Second, many local business owners are convinced by advertising salespeople that repetition is the key to effective advertising and marketing plans. How many times have we heard that our name must be seen 7-10 times before someone wants to buy. This is not the case! In fact, if you want a good explanation of why this is constantly being said, read Monopolize Your Marketplace by Rich Harshaw as he does an excellent job of explaining why this thought process exists. With effective advertising, there is no need to wait for the seventh view… be smart and share value the first time.
And finally, the main reason for this Tracking Advertising Expenses blog is that if you are effectively advertising and tracking the results of every campaign, make sure you are tracking all forms advertising – print ads, direct mail marketing, online marketing, social media marketing and any other forms.
Social180 is a sales and marketing services company for local businesses with expertise around search engine marketing, business optimization and helping local businesses grow.