Did it work? How to measure advertising success (or why not to use ROI or Likes)
Innovative Advertising Solutions Blog | 28 August 2013
The hot buzz words: “Big Data.”
Why? Everyone wants to analyse their consumers, their ad spending decisions, and, frankly, everything.
For ad campaigns, the question becomes what to measure? What conclusions to draw? And, most concerning, are the wrong conclusions being drawn?
Many advertisers like digital or social media because they believe they can quantify the results.
As Darren Woolley points out in “The humorous impact of using the wrong online metrics,” a recent article he wrote on the subject: “Clicks, likes and impressions are simply audience reach. Unique and total visitors are an indication of frequency ... an extra 50,000 Likes on the client’s Facebook page. Or increased … unique (Web site) visits by 30%.
“Every time you divide the number of Likes or Visits by the budget, it becomes a fairly expensive direct response campaign.”
Another approach is demanding proof of return on investment (ROI) from an ad campaign. But considering ROI in isolation can be misleading. ROI is calculated by taking the net profit and dividing it by the ad spend.
This example is from Admap from February of this year:
| Ad Spend | Extra Sales Generated | Net Profit | ROI | |
|---|---|---|---|---|
| Big Budget Campaign | $10 million | $11 million | $1 million | 10% |
| Small Budget Campaign | $100,000 | $150,000 | $50,000 | 50% |
The ROI is usually higher when sales and ad budget are closer to zero. As demonstrated here, evaluating ROI only would have advertisers choosing the small budget campaign option over the big budget one. The big budget option was the better choice, as it generated far more net profit.
The less you spend on advertising, the greater the ROI. Net profit provides a more accurate picture upon which to evaluate success.
In some cases, profit is not the only goal – or it is not the goal at all.
The city of Victoria recently wanted to change local consumer perception. Preventable.ca wanted to raise awareness and reduce the avoidable injuries during the key summer months. Different elements needed to be part of the ad evaluation.
Both quantitative and qualitative factors need to be used in evaluating success of the advertising. But beware. As demonstrated with ROI, sometimes we can focus on measuring the wrong thing – perfectly.
“Not everything that can be counted counts, and not everything that counts can be counted.” – Albert Einstein
