Advertising buying for a small business can be confusing and expensive. You have to be methodical and in control of every dollar going out to make sure it’s being used wisely. Here are 3 things you can do for better ad buys.
The following tips and suggestions are things I learned and implemented throughout my small business journey. I don’t profess to be an advertising expert. I’m not. And you don’t have to be either to be advertising savvy. I have no doubt that you’ll find at least one of these tips to be helpful in your upcoming advertising campaigns.
1) THINK OF ADVERTISING AS AN INVESTMENT. NOT AN EXPENSE.
Just like any other investment, advertising has to bring returns or you’re better off just keeping the money in your pocket.
If you invest in stocks, or gold, or real estate, you likely check to see how that investment is doing regularly. If it’s bringing a good return, keep investing. But if starts to wane or isn’t producing a return on investment (ROI), then it may be time to restructure the campaign or make a shift all together. If you can get a 6 – 8% return on even the simplest investment, then shouldn’t your advertising dollars be held to a similar type of standard?
So, how do you measure the returns of advertising? Simple, create a checklist of your expectations (see below) that all your ads have to meet. Then develop a set of KPI to track the progress of the campaign during its run.
2) UNDERSTAND THE TERMS REACH AND FREQUENCY
Reach and Frequency are terms used to define the number of customers you can reach (Reach) and how many times you’ll reach them (Frequency). This information should be readily available from the advertiser you’re working with and it comes from an algorithm they use internally.
While every industry and customer segment is different, there is a number out there that works well for you. Mine was 3.5. I wanted to reach each key customers 3.5 times in one week. Now, the higher the reach, the more expensive the frequency will cost you and vice versa. So you don’t have to reach 100,000 people with every ad you run.
SOME ADDED INSIGHT…
To make things more affordable and financially efficient, I used to target a local TV morning schedule for two weeks, then shift to another station, then back and forth. But only between 6am and 8am. Evenings were expensive and people get home at different times every night of the week. Some have after school sports and other activities like church and scouts and so on. But people get up at pretty much the same time every morning and usually like the same channel every morning. SO while I didn’t reach the 100,000, I reached fewer customers multiple times per day and per week. That really worked well for me.
Make sure you ask about and discuss the Reach and Frequency numbers of your ad campaigns before you agree to them.
3) DEVELOP A CHECKLIST
Take time to develop a checklist that each and every advertising offer you are presented with has to meet prior to signing anything. A simple list of boxes to check off that can keep you from wasting ad dollars on the seemingly endless media “special offers” you are presented with every week. Here was my checklist:
HOW MUCH REVENUE SHOULD THIS CAMPAIGN GENERATE FOR ME TO PROFIT FROM IT?
Remember that generating $10,000 in new revenue means nothing if your ad campaign costs you $10,000. So, if you are going to invest $2,000, $5,000 or more, how much do you want to make in return for the effort and risk? Just remember to be realistic and patient in your expectations.
WILL IT REACH MY IDEAL CUSTOMERS?
Knowing your demographics is super important here. Information like income, family makeup and your defined service area should match the ad buy you are being offered. If it doesn’t reach customers that can use or afford your product or service, take that money to Vegas for the weekend and at least have some fun watching it be wasted.
HOW MANY CUSTOMERS DO I WANT TO REACH?
Don’t just say “all of them” here. Don’t be lured into the idea of attracting thousands of new customers if you don’t have the resources to handle dozens of new customers. Advertising to 400,000 people may make sense if you are a pizza shop or restaurant. They need several hundred customers per week. But maybe not so effective for a lawn mowing company with 2 crews that can be sold out with 8 customers.
I was once pitched an ad buy from a local tv ad rep where 400,000 people would be watching an important ball game on a Monday night and I should have an ad during the game. The pitch suggested that for $3,500, my cost per customer would be pennies. But that math only works if 400,000 people show up. And what the heck would I do with 400,000 customers? I only have 14 parking spots out front!
The truth is that if 1% of the viewers came in, I’d have to service 4,000 new customers. I might get 4 new customers, and at $3,500 my cost per customer would be $875.00 each. And that’s IF 4 came in. Does my ad focus on items where I profit more than $870?
HOW LONG WILL THE AD BUY RUN?
Always have a date in mind that your ad campaign will expire. Leaving the same ad up for too long can have an adverse effect. especially if customers grow tired of seeing it.
HOW WILL THE CAMPAIGN’S SUCCESS BE MEASURED?
You’ll need a way to “review” your new ad campaign, just like you’d review a new employee. After a few weeks, you should review to see if your campaign is yielding results or not. If not, don’t just ride it out. Make a change!
For more information on these or any other lessons learned along the way, contact Part Time Business Partnerstoday!