ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Measuring Advertising Effectiveness Realistically

Updated on July 10, 2019
heidithorne profile image

Heidi Thorne is an author and business speaker with over 25 years of experience in sales, marketing, advertising, and public relations.


Successful retailing pioneer, John Wanamaker, founder of the Wanamaker's department stores in the late 19th century is often attributed with saying that about half of his advertising spending was a waste, but that he didn't know which half was which (Wikipedia). And he was a strong proponent of advertising!

Today, even with all the tools we have at our disposal, measuring advertising effectiveness can still be difficult, especially for small business owners. In fact, it's even more complicated today with rise of the Internet. So some just give up on measuring results and hope whatever advertising they're doing will bring in sales. But that head-in-the-sand attitude can be costing thousands of dollars in wasted advertising.

Worse is that response rates on marketing efforts—even for more trackable efforts such as direct mail and online marketing—can be very small, often in the low single digit percentages, sometimes even a fraction of a percent.

But getting at least a rough idea of what advertising is working can be valuable in both promoting sales and reducing overall marketing costs.

Responses Do Not Equal Sales

Fact: People may respond to an ad, but may never actually buy. So should "response" be measured or "sales?" Realize that a response does not equal a sale. However, it's good to measure both response and sales to help determine how good the company is at converting responses into sales.

How is response measured? Direct response vehicles such as PPC (pay per click) advertising, email marketing, direct mail and promotional codes can assist in tracking advertising response with tactics such as:

  • Directing people to specific websites and landing pages
  • Analytical tools (such as those in Google Analytics and Google AdWords)
  • Counting responses received or sales made using promotional codes
  • Special phone numbers, such as 800 numbers
  • Direct mail reply cards returned

But if other advertising mediums such as broadcast and newspaper are also used, direct response activities such as those just discussed cannot be given all the credit for making a sale. Why? Because people often need to see an advertising message several times and in several places for them to even remember the ad, much less actually respond or buy. A direct mail piece might be the 35th time the prospect has seen any type of advertising from the company! So which impression actually caused them to think about buying from this company? The 10th or the 35th? That is why measuring advertising effectiveness is so incredibly difficult.

What Numbers are Critical for Measuring Advertising Effectiveness?

One needs to know what numbers are relevant to measure. Then how they are evaluated and compared can either provide insight or create confusion.

An easy trap to fall into is false causation. As noted in the previously referenced article, it could be very easy to attribute results to irrelevant factors. This is particularly tempting when measuring results from social media marketing. Using the business' sales funnel as a guide for relevant numbers to watch can help avoid this.

Though this list is not exhaustive and will vary from business to business, as well as vary from analysis to analysis, metrics such as the following are critical in evaluating advertising results:

  • Sales Revenues
  • Number of Sales (or Orders) Closed
  • Number of Inquiries or Responses Received
  • Website Traffic Statistics (number of visitors, number of visitors per traffic source, number of visits to specific landing pages, etc. usually obtained using programs such as Google Analytics)
  • Advertising Costs
  • Number of Advertising Impressions (this is usually done with more sophisticated surveying and analytic programs)
  • Number of Clicks from Internet Advertising
  • Number of visits redirected from links created with URL shortening and reporting services such as and tiny.url
  • Analytics from social media using services such as

All of these are for a specific time period such as annually, quarterly, monthly, weekly or even daily for some businesses. Each of these broad metrics can be further filtered by profit and cost centers, by product or service offering, and more.

Some Internet advertising programs, such as Google AdWords, can generate reports offering insight on advertising effectiveness and performance. Check the program's website for available reports and instructions.

How each of these metrics are measured, compared and analyzed will depend on what information is being sought. Example: If a company wants to know the percentage of website visits received from a particular traffic source, they would typically take the number of web visits from the traffic source and divide it by the total number of visits.

A clickthough rate of 1 percent from Internet advertising may be realistic... or optimistic.

— Heidi Thorne

What is a Realistic ROI for Advertising?

ROI (return on investment) rates for advertising are all over the percentage spectrum! As well, exact measurements from each advertising effort—as noted in the opening quote—can often be difficult to come by.

A clickthough rate of 1 percent from Internet advertising may be realistic... or optimistic. Direct mail has long had a rule-of-thumb response of around 2 percent, although that varies. And, again, response does not equal sales.

As well, even the best converting websites can have conversion rate of only up to 10 percent (Search Marketing Standard 2013).

An Advertising Effectiveness Case Study

Since I am an online marketer, I definitely want to know how successful my advertising and marketing efforts are.

I had a major difficulty with getting analytics from PPC advertising for one particular site because the ecommerce engine I was using made clickthrough performance measurements almost impossible. So I had to find another way to measure effectiveness.

I chose to measure the percentage of new customers (which would be an indicator of advertising performance) against the PPC advertising investment in dollars. It did appear to produce a decent percentage of new customers and revenues. But the cost was inflating my advertising budget dramatically.

As an experiment, I reduced my PPC investment for this site by 90 percent—yes, 90 percent—to see if it made a noticeable difference. I ran the experiment for one year and then compared results with the year prior.

Here are the pieces of data I obtained from our standard accounting software program for both the current and immediately previous fiscal years:

  • Number of new customers gained, obtained from standard accounting software program.
  • Sales revenues from new customers only.
  • Advertising expenses.

Simple calculations of the percentage of rise or fall from one year to the next were then done, with a comparison to advertising investment. Here's what happened:

  • New customers increased by 2.58%
  • New customer revenues fell by 12%
  • When factoring in cost savings from reduction in advertising costs, the net effect on new customer revenues was a loss of 6% from reducing advertising

Now I had a decision to make. Should I continue with the PPC program or leave it at the reduced level?

On the surface it appears that I should continue with the PPC program because it could have a positive impact on revenues. However, at that time, I was also working on reducing overhead expenses which was a more pressing issue. Additionally, a minor gain in the number of new customers—which can become regular buyers—showed a slight increase, in spite of reduced advertising. This can indicate that shopsite visits might be driven by non-PPC advertising and marketing efforts such as SEO keywords and networking.

So I left it at the reduced level for this profit center for the following year. But at least by doing this exercise, I knew the the impact this kind of advertising could have on my sales picture and could reconsider it in the future. If the only goal was increasing sales at all costs, then I probably would have opted to continue the PPC program.

My decision illustrates some important points:

  • Measuring and making decisions about advertising cannot be done in isolation and must be evaluated in light of other business goals and factors.
  • Measuring advertising effectiveness sometimes has to be done with limited information. Choosing the best available metrics is critical to getting the best available insight.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2014 Heidi Thorne


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)