Making advertising pay
Advertising doesn't often come cheap. Here's how to make sure it's money well spent
Ad campaigns play a key role in most marketing strategies, but to get the most for your money you must identify and target those who want what you’ve got
W hen we started advertising in 2002 our spend was just £8,000. This year we’ve allocated £750,000.” As Serious Readers’ founder Alex Pratt explains, advertising is an essential component of his company’s marketing strategy.
The business started by selling commercial lighting, but now two thirds of its income is through the sale of high-quality reading lamps direct to consumers. As the lights last for a long time, the market doesn’t lend itself to repeat business, so continual customer acquisition is the name of the game. Hence the level of advertising needed to drive sales.
Press, TV and radio, the internet – you’ve probably tried at least one or two already. And you’re probably acquainted with billboards, distributing flyers or slapping your logo and contact details on the sides of local taxis. But before you write your next cheque, ask yourself: how can I get the biggest bang for my advertising bucks?
What are your objectives? If it’s putting your product range in front of new customers, where are you likeliest to find the ones you want to reach? When Serious Readers began to advertise, the company assumed it was targeting the over 50s (the most likely customers for powerful reading lights) in the AB income group. “Initially we advertised in The Daily Telegraph, because we felt that many of our potential customers would read that newspaper,” says Pratt.
It was something of a punt, but it paid off. However, when you start advertising more widely – say, across a number of publications and media channels – it’s advisable to underpin your targeting strategy with some statistical analysis. “If you have a database of existing customers, profile the people who are buying from you,” says Sarah Sproston, media manager of integrated marketing agency More2. “And once you know what your best customers look like, target similar people.”
Sproston cites the Target Group Index, which provides a breakdown of the media spending habits of consumer segments. And if there is a major crossover between the people who buy your product and those who, say, read The Daily Telegraph or The Daily Mail and listen to Classic FM, you have a strong pointer as to where to advertise.
Once you find your audience, you then have to decide on the best advertising tools for the job. So what are the rules? In general, if a campaign is aimed at driving direct sales by mail order or the web, a leaflet or catalogue inserted in a magazine is likely to be better than a glossy full-page display ad on the publication’s own pages. This is because the insert can carry more product information and will typically also contain feedback tools, such as reply coupons and vouchers.
In contrast, display ads tend to be seen in terms of brand building rather than generating sales directly. If you’re aiming at the mass market, television (although expensive) can successfully drive sales and build brands, while commercial radio offers a cost effective means to hit a receptive, but possibly amorphous, local audience. “Radio is great if you have a call to action,” says Sproston. “For instance, if you have a special offer for a local event, it can be a great way to draw attention to it.”
Online advertising has its own strengths. Contextual ads served by search engines (or paid-for positioning on search engine results tables) enable companies to reach customers when they are looking for a particular service. Banners on websites also drive sales, but are rarely effective on their own. “Online advertising tends to be most effective when supported by offline activity,” says Julian Hough, group development director of communications agency, Engine Group.
So the media you select will depend largely on your aims. For instance, design-led leisurewear company, Joules Clothing sells through three distinct distribution channels: web and catalogue sales, own-brand retail stores and third-party retailers.
As head of marketing Georgina Johnson explains, the company uses a different strategy for each channel. “For direct sales, we use magazine inserts,” she says. “To support sales through third-party retailers, we take out display ads, mainly in equestrian titles, to raise awareness rather than drive sales. To promote our own shops, we use local advertising and email.”
It’s a strategy the company has honed over time, but in the early days at least, Johnson admits advertising was bought ad hoc with variable results. So how do you choose the right media and publications for the job in hand?
Sarah Sproston says one of the simplest, but most effective, strategies is to examine what else is going on in the market. “Look at what your competitors are doing,” she says. If you’re working with an agency, you’ll get plenty of advice, but those specialising in one or two advertising channels may steer you in the direction of their own competencies.
“Advertising strategy should be holistic,” says Hough. “It’s always best to work with multi-disciplinary agencies who can advise you on the best strategy for your needs.”
Measuring the results
Before you can find out if your ad campaign is working, you need to set measurable parameters. For instance, if you’re running a series of ads or inserts designed to generate sales or leads, decide on the response you’re aiming for. “You should always set a minimum response rate,” says Sproston. “For instance, we might target a 1% response rate on a particular campaign, based on what we know of the market.”
If you’ve advertised before, your previous response rates can provide a benchmark, but your agency should also have a good idea of what to be aiming for based on its own experience and industry figures.
The agency should also help you to produce a return-on-investment (ROI) plan based on sales as a multiple of advertising spend. “Your advertising should boost the bottom line and it should be accountable,” says Jason Burrows, managing director of communications company, Together Agency. “If you have an ROI plan in place, you focus on what advertising means in terms of your income stream.”
Next you need to put the machinery in place to measure response. For online advertising, this is relatively simple. Thanks to real-time ad-tracking tools, the clickthroughs from a banner ad to a website and everything that happens after that point can be measured with pinpoint accuracy. However, it doesn’t give you an indication of how successful your brand awareness raising has been.
It’s also important to consider how you measure success. For instance, if your primary metric is cost-per-clickthrough (how much you paid for each person who linked to your site) or the clickthrough rate (number of clickthroughs as a ratio of ads served) you’ll have a snapshot of how effective each ad was in terms of driving traffic.
However, in terms of measuring ROI, a more useful metric might be cost-per-sale used as part of a broader analysis of overall revenue figures.
Offline measurement is harder. You can, for example, instruct contact centre staff to ask where callers heard of the company or attach unique codes or contact phone numbers to ads in each of the publications you use. This allows you to assess the response from individual ads and match them to metrics such as cost-per-lead or cost-per-sale. Remember, though, that ads don’t always generate an immediate response. Putting a product into the public domain may have a beneficial effect long after the campaign has ended.
To establish whether a campaign as a whole is driving sales, Steve Chetham, creative director of communications agency babyGrand, recommends comparative testing.
“If you’re selling in 10 regions, you might advertise in nine,” he says. “By comparing results in the unsupported area with those in the regions where advertising has taken place, you can see if the campaign is having an effect.”
All this may add up to a significant amount of time and effort, but according to Pratt, without response information you’re working in the dark. “It’s hugely comforting to know that you have data that shows that your money is being spent effectively,” he says.
This information can also be used to hone future campaigning. Serious Readers experiments with elements of the creative it uses – size of ad, size of headlines, positioning – and uses feedback from each of its campaigns to identify what is and isn’t working. It’s an ongoing process, with the company’s campaign results also informing its choice of publication.
Indeed, that’s the secret of effective advertising. Match your strategy to your goals, and when the results come in, use the data to improve your next ad campaign.