How To Measure Your Return On Investment

The great promise of online advertising has always been
that advertisers will now be able to effectively track the
successes and failures of their online advertising efforts.
This promise has been met.

Yet, for those of us who still employ offline promotions
and advertising methods, we must consider the various ways
in which we can effectively track our results in the
old-world media.

Tracking Results Before The Internet Age

How long has it been? Ten Years? Believe it or not, it has
been less than ten years since the Internet went
mainstream.

Companies still utilize the same methods to track results
as they did before we laid our hopes on the Digital
Superhighway.

TV advertisers ask you to call extension X. Radio
advertisers offer you additional savings if you tell them
you heard it on XYZ radio station. In newspapers and
magazines, advertisers suggest you clip the attached
coupons.

Why do you think advertisers employ these
tactics?

Simple. They need to know what advertising is bringing
customers in the front door and to their cash register.

By understanding what advertisers are bringing them
customers and dollars, they have a better understanding of
where to spend their next wave of advertising dollars.
Additionally, they can do a side-by-side comparison of
their Advertising Return on Investment (ROI) to determine
which method brings them the most percentage of return per
dollar spent.

How Should Results Be Measured

The truth is that we really do need to know how people are
deciding to visit and buy from our business establishment.

Some consider this idea silly or even a waste of their
valuable time. Far too many people, who think of tracking
in this fashion, end up searching for a job at some point
in their future. Unless pure dumb luck is on the side of
the business owner, a business simply cannot survive if it
does not track the effectiveness of its advertising.

Somehow, some way, a business owner or his marketing staff
must look at their advertising and promotion budgets, and
look at their advertising mediums and find a way to know
which is doing the job for them and which is not.

Discover What Motivates Your Customers

Somehow, we must get our customers to tell us how they
found us and what ad motivated them to come in and purchase
our product or service.

Everyday, businesses motivate their customers to tell them
how they learned of them by having the customer call a
certain extension, offer them an additional discount to
tell them which advertisement they had heard, or to offer
them a coupon to use.

Others motivate their customers to tell them how they had
learned of their business by offering a very specific
product in their advertising. They know that if someone
shows up at their business to buy a certain product, then
they will know how the person had heard of their business.

This is why you should make your radio advertising focus on
a different promotion than your newspaper advertising.
Different mediums should focus on different leader pieces
so that you can see which medium provides the best results.

Why You Need To Measure Results

We measure advertising results so that we can learn how to
not waste our money and to learn how to get the most bang
for our advertising dollar.

Return On Investment or ROI is the key measurement utilized
to determine the value of our advertising.

It is best to show in an example how ROI is measured.

Cost of Newspaper Advertising: $150 Number of Items Sold As
a Result: 60 Retail Price of Individual Item: $ 10 Profit
on Individual Item: $ 3

Gross Income on Items Sold: $600 Gross Profit on Items
Sold: $180

In this example, you have spent $150 to make $180. Your ROI
is 120%.

Cost of Radio Advertising: $ 300 Number of Items Sold As a
Result: 50 Retail Price of Individual Item: $ 20 Profit on
Individual Item: $ 6

Gross Income on Items Sold: $1000 Gross Profit on Items
Sold: $ 300

In this example, you have spent $300 to make $300. Your ROI
is 100%.

Utilizing these two examples, you can quickly discern why
and how we are calculating ROI.

Now, some people would consider both to be good investments
of their advertising dollars. In fact, many believe that so
long as their advertising generates enough sales to break
even as the radio example did, then they consider the
investment to have been in their future rather than their
present. So long as you do not lose money on the
transaction, then you should at least be willing to
continue with the advertising medium that was used.

However, over time, you might find that the newspaper
advertising will continue to provide the 120% ROI. If that
is the case, then your newspaper advertising should take
more of a center stage in your advertising efforts so that
you can develop more profits which can be used to increase
your dollar investment into your advertising.

Tracking Your Offline Promotions

With this introduction, you should now have available to
you the knowledge necessary to introduce tracking into your
marketing efforts. Those who take the time and effort to
advertise and track their results will benefit more than
you can imagine.

Truth be known, a single person with a dream today started
every big corporation in the world many years ago. Each of
these corporations grew from a fledgling operation to a
economic powerhouse by tracking and tweaking their
Advertising ROI.

Every corporation and small business who will remain in
business through the long term will be tracking their
advertising and promotional efforts today. It is an
investment into their future success. If you make the same
kind of investment of time and cash resources, you too will
be making an investment in your future success.

David Hudson, webmaster of webcashlink,
business articles author, and a successful affiliate,
can help you with your online business.
Visit: Webcashlink