Measuring Advertising

Many small business owners are prone to measuring advertising campaign results by how many people tell them they saw one of the ads. This is the absolute worst way to measure response! Why? Three reasons:

1. People can't remember seeing particular ads since they are overwhelmed with hundreds of advertising messages every day. Sometimes, if prompted, they can recall. But even then, they have imperfect recall or may respond in the positive to please the survey taker. (It happens!)
2. Recalling an ad doesn't mean that they will or even plan to purchase.
3. People are unlikely to voluntarily tell a business they saw an ad.

It's easy to understand why these owners would be inclined to measure response by ad recall. Advertising is expensive and they desperately want to see if their investments paid off... now! As well, results can be difficult to assess and getting a yes/no response feels like a result... even though it's not.

When I was in marketing for the trade show business, show managers and clients would always want to know how successful the advertising we suggested was in drawing in crowds. Against my better judgment, we proceeded with a survey for a consumer recreational show.

Staffers wandered through the crowds and asked attendees where they saw or heard ads for the show. Biggest response was WGN radio, a popular news station in the Chicago area. What was interesting was that we didn't run any ads on that station. While the show may have had a mention on some community calendar, fact was that zero ads for the show were run on WGN. Attendees were merely responding with their favorite or most easily recalled radio station.

Lesson: Never ask people where they saw an ad.

Even though it still may yield some imperfect measurements, any or all of the following statistics can be used for more hard data. While actual numbers are important, of more concern are trends upward or downward. Care must be taken to not overreact to minor fluctuations. That's why looking at trends over an extended period of time will help advertisers make better decisions.

• Total sales in dollars. This is where the proverbial rubber meets the road. But tying specific sales to various ads is challenging if not sometimes impossible. Look at total sales from before campaign began and at the end of the campaign period. If the campaign is running continuously, observe sales daily, weekly, monthly, quarterly and annually. Frequency of monitoring will depend on what is appropriate for the business. Monthly or quarterly is recommended as a minimum monitoring frequency for any size or type of business.
• Product sales. If the advertisements were promoting a specific product or service, those sales would be measured specifically at beginning and end of campaign or, if a continuing offer, on a frequency similar to that for total sales (discussed above).
• Number of sales or customers. Merely looking at total sales revenues may mask the fact that there are only a few customers who have high purchase volume. If the number of sales and/or customers is not increasing, it can put a business into a very precarious position if those few customers quit buying.
• Promotion redemption rate. If the advertisements contain a promo code or coupon promotion, measuring the number of promotions redeemed is easy to measure. The temptation is to think that the number of promotions redeemed are the only results of the campaign. This overlooks the possibility that people may buy things other than those promoted. Measuring redemption rate merely shows how effective the promotion was in generating action.
• Traffic. Measuring traffic to a website or physical location is another relatively easy metric to help determine advertising effectiveness, realizing that they might not all be buyers. But they may buy other things. Trends in traffic should be compared to trends in total sales and product sales.
• QR code scans. QR codes, those checkerboard looking bar codes, can also be used to measure traffic and response if integrated into advertisements, usually in printed media. Use a QR code generator that has a scan analytics function.
• Inquiries. Similar to traffic, number of total sales inquiries can be counted. Inquiries for a specific product or service can be monitored. However, realize that even if someone sees an ad for another product in the business' offerings, they may contact to inquire about the availability of a similar product to that advertised. Looking at specific and overall inquiries is recommended.

All of the above can also be broken down by geography if that is relevant to the business. This would likely be the case for businesses with physical locations. For Internet advertising, however, it may not be necessary.

Set up spreadsheets to track whatever sales advertising metrics from the list above that are going to be monitored. Some accounting software programs can do this. Check with your software provider or accounting professional for details.

The spreadsheet or report should note advertising goals established when designing the ad campaign, as well as compare the goals to the actual numbers.

Updating this report should ideally be done weekly, monthly, quarterly and annually. For some, even daily monitoring may be appropriate, although for most small businesses, that is not necessary. With careful continuous monitoring, problems and opportunities can be identified and acted upon early.