Three Steps to Measuring, Managing and Maximizing Your Advertising Performance
There is a saying in advertising that “You cannot manage what you cannot measure.”
Which is absolutely true. The power of refining your advertising campaign’s performance relies on your ability to find underperforming media outlets and renegotiate, refine or remove them. They key is making sure that you are measuring what matters, managing what you can change and maximizing the performance of each campaign, so you can fix broken elements sooner than later.
Step 1: Measure What’s Important to Your Sales Cycle
The first step to maximizing campaign performance is to decide what you will be measuring, how you will measure it and what data you need to make change. There are several key items to consider. If you start with what you know then you can build a baseline for a solid measurement strategy.
“Where do I start?” In today’s digital world it’s easy to get so granular in your data that you end up being impressed with the wrong data or giving parts of your information more weight than you should. So, start with the end in mind. Start with what makes the cash register ring.
It’s also known as your conversion ratio. Begin by answering these key questions:
- How many opportunities do you need to create a sale? This can look different depending on how your business operates.
- If you sell your products or service online, then install Google Analytics and look at how many unique visitors per day, week or month it takes to generate a sale.
- If you are in retail, how many customers must visit your location for you to create a sale?
- If you sell direct, then how many prospects must you talk to on average to create a sale?
This number is your current conversion ratio. Finding your conversion ratio is the first building block to understanding what it takes for your campaign to be successful. Once you have your conversion ratio, then you can place benchmarks on the cost or investment you can afford to make in your marketing to create opportunities.
Now that you have your conversion ratio in place, ask yourself this question: “Is there any way to improve conversions or conversion ratio before I invest more money in advertising or marketing?”
If you need some resources to look at industry standards or competitor information, you can easily find benchmark information online. For Facebook statistics, for example, check out these benchmarks. Online advertising pro Larry Kim wrote in his eye-opening article “Everything You Know About Conversion Rate Optimization is Wrong” that you may be surprised at how low your conversion ratio is compared to the top performers in your industry.
Larry Kim writes:
“If you’re already achieving 3%, 5% or even 10% conversion rates, is that as high as you’re going to go? But what is a good conversion rate? Across industries, the average landing page conversion rate was 2.35%, yet the top 25% are converting at 5.31% or higher. Ideally, you want to break into the top 10% — these are the landing pages with conversion rates of 11.45% or higher.
We recently analyzed thousands of AdWords accounts with a combined $3 billion in annual spend and discovered that some advertisers are converting at rates two or three times the average. Do you want to be average, or do you want your account to perform exponentially better than others in your industry? So what is a good conversion rate? About 1/4 of all accounts have less than 1% conversion rates. The median was 2.35%, but the top 25% of accounts have twice that – 5.31% – or greater. Remember, this isn’t for individual landing pages – these advertisers are accomplishing 11.45% conversion and higher across their entire account.
Clearly, this isn’t some anomaly; this is perfectly attainable. If you’re currently getting 5% conversion rates, you’re outperforming 75% of advertisers … but you still have a ton of room to grow!”
This gives you some insight into online conversion ratios.
What about offline? If you have a retail location, keep track of weekday foot traffic and weekend foot traffic. Measure the number of sales by location by day, accounting for seasonality, bad weather days or any redirection of traffic. For direct sales or if you have an in-house sales team, you can track the number of inquiries each salesperson receives and how many they convert on average into a sale.
Campaigns that we have seen achieve the most success over the years have maintained anywhere between a 6% and 16% conversion ratio. It is rare for an offline campaign to succeed long term if you are able to speak to prospective customers (either face to face or by phone) but experience a 3% or less conversion ratio. The cost per response is simply too high. If your current team can convert at 6% to 20% you have a solid foundation for moving forward with your campaign.
Ok. You’ve established your conversion ratio. You have measurement in place to know daily or weekly how many responses or opportunities it takes to create a sale. You feel good about where you are in your current sale system to maximize every opportunity.
Step 2: Refine What You Can Control
Your second step is to refine the elements of your campaign that you can control. Here is what you can control in your campaign:
- The media mix
- The creative
- The frequency
- The audience you need to reach
- The rate you pay to reach that audience
In regard to the media mix, determine whether the media mix you are using fits the way your company sells. Your company is unique. You have a culture, a system and process for how you sell best. You want to make sure the media you use plays to these strengths. For example:
- If you have a great system for selling online, following your customer from interest to search to checkout but don’t do a great job with inbound calls, then make sure your media mix directs your customers to your online experience. (It’s been said “People want to buy–they just don’t want to be sold.”) If you are strong online, then make sure your site is fast, easy to use, mobile friendly and your advertising cost effectively drives them to that online experience. Your media mix can support your ability to sell and improve your cost per sale. Look at the time of day and days of week you generate the most sales. Advertise then. If you are a digital powerhouse, then of course digital is going to be a great vehicle. However, you may also find that offline media like radio, TV, or outdoor also does a good job for creating that interest to interact with you online.
- Traditional sales processes: Drive interested prospects to your best sales people. Use the power of the media to create inbound leads so your seasoned professionals can spend time doing what they do best. Are you open Monday through Friday 9am to 5pm? Then consider radio as an option if your product or service does not require a visual demonstration. Radio is effective for reaching prospects close to the time of purchase. If your product is visual, then use video or television to show how effective it is.
- Creating quality creative: In regard to your creative, make sure you are visually and audibly speaking in terms your customer understands and in simple ways the customer can easily see what’s in it for them. Have you ever watched a television spot and asked yourself “what that was about?” or seen the ad and questioned “who is this for?” Or worse, have you ever just tuned it out, clicked away or turned it off because you were immediately NOT INTERESTED. These are all signs of bad creative. Don’t fall prey to lazy writing, poor design and feature-focused ads. If you want to see how other companies execute creative, go to www.moat.com for web advertising ideas or www.ispot.tv Make note of ads that motivate you, interest you or capture your attention. Ask yourself why. What about this ad made you want to act or do what the ad was instructing you? What enticed you?
Step 3: Maximizing Campaign Performance
The third step is to make sure you are getting a good value for your advertising. This relates to how much you are paying to reach your target audience with enough frequency to take your prospect from interest to awareness to action. If the advertising campaign you are running is not producing a measurable ROI, then look hard at letting a professional media buyer help you navigate the options you have to make it more effective. There may be several other media options you have simply not discovered yet that could take a losing campaign and turn it into a winner.
Reach out to DX Media Direct if you’d like to learn more about creating more effective advertising campaigns.