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ENS on SalesENS on Sales is Wayne's weekly media sales tip. You can signup below to get your free copy in your email every week, and you are welcome to view our archives. To request more information please complete the following form:**All requests are submitted only to Angela and Wayne of ENS Media Inc.**
Ad AccountabilityAd Accountability Being in business for myself, I am painfully aware of the necessity of demanding a return on every expense line in my monthly statements.
Having said that, I am VERY concerned about the dangerous methodology some media and advertising people are using that underestimate the ROI (return on investment) of advertising and marketing.
At the RAB recently, I was exposed to an ‘ROI calculator’, which grossly underestimated the power of advertising and basically sets each campaign up to fail if measured by that methodology.
This calculator only credited advertising for the profit per sale of the advertised items during a campaign window. This methodology requires an ad schedule to generate a profit based upon the sales of the advertised item during the campaign.
These kinds of misguided ROI calculators create unrealistic advertiser expectations and grossly underestimate the lifetime value of each customer a campaign can attract or influence.
There is a long list of what is wrong with immediate gratification calculators. Let me expose just a few of the disastrous shortfalls:
1.) Only a small portion of any market is in the market for a given product or service on any given day.
An ad schedule costs the same whether the message influences the 5% of the market in the market for the advertised product today, or whether it also creates a preference and awareness with the 95% of the market NOT ready to buy during a campaign but who could buy in the future.
Measuring a campaign by the sales or profits on the advertised items during the campaign window, causes advertisers to resort to high-pressure special offers. These limited-time offers are not relevant to the larger percentage of the population exposed to the ad….the portion of the market not ready to buy today but can be persuaded to think of the advertiser when the need arises. Campaigns which are not meaningful or relevant to those future prospects are quickly forgotten and easily ignored.
2.) Measuring a campaign’s ROI based upon profits of a particular item during the campaign window also fails to recognize the value of additional or spontaneous purchases made by shoppers who were attracted by that campaign.
3.) Some of these ROI calculators grossly underestimate lifetime customer value, and word of mouth advertising. A customer who was introduced to a business by a particular campaign, may be so impressed by their experience during the transaction that they may buy two or three times a year for the next five years. And what about calculating the word-of- mouth generated by every customer a campaign attracts?
If I was to measure my marketing efforts by the instant gratification ROI calculators some stations use, I would conclude that my marketing does not work, even though my business has increased 300% over the last four years.
When I speak at the RAB, for example, my expenses include air travel, accommodation, promotional materials and time. If I were to measure those costs against the stations which contract our revenue-generating programs or training services the following week, I’d never speak at the RAB again.
The truth is, I have had station managers contract our services when the need arises three or four years AFTER seeing me at the RAB or receiving our free ENS on Sales. I do get a realistic return on my investment when I consider word of mouth, lifetime customer value, the credibility, and the awareness and relationships I foster over time.
P.S. The ROI calculator we use in our Guided Discovery Selling training, dramatically increases advertising sales peoples’ confidence levels and their understanding of the power of advertising. Their closing ratios and renewal rates increase by creating more realistic and manageable advertiser expectations.
Contact Wayne if you’d like to discuss exposing our powerful Guided Discovery ROI training to your team.
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