Simple Marketing, pt V of VI
Developing a Media Ad Budget
In our last article in this series we calculated how much profit your ideal client brought into the business. Multiplying this figure by the number of clients you expect each advertising medium to pull is your budget for a given ad campaign.
Once you’ve done this for each medium, you can calculate your cost-effectiveness for each medium. This gives the client value per dollar spent. You’ll first test market the most cost-effective one, or the one with the highest figure.
Continuing with our previous example from the last column, let’s presume your calculations show that your most cost-effective ad medium is a monthly print advertisement in a specialty publication read by many of your ideal clients. Based on your estimate and a rough survey of a few of your ideal clients, you expect your ad to attract several prospective clients each run, two of whom will be an ideal client. From our earlier calculations, we know an ideal client brings in $500.
The most you can afford to spend on any medium is the profit (not income) you expect to earn from new acquisitions of your ideal client type. This way you might break even but you won’t lose money. In our example, the value of each client ($500) multiplied by the number of clients expected per ad run (2) is $1000. Thus your ad budget for this campaign that you expect to bring in one new ideal client is $1000. How does this information help us?
Select your Media
All media are not equal. Estimate the pull rate on each medium you select. Then calculate your cost per acquisition for each medium by dividing the total ad cost by the number of new clients you expect to get.
You’ll choose the lowest figure as your first test medium. If one ad costs $50 and pulls only 1 client it’s twice as cost-effective as one that costs $500 and pulls 5 clients. Why choose the smaller? Because running the first ad brings you new clients at $50 each; the second costs $100. Don’t concern yourself with how many people your advertisement pulls; initially you only focus on per client costs. Later you can run as many ads as you like to increase the number of clients you get. But first deploy ads in the most cost-effective medium.
If several media tie for acquisition cost or if you’re completely unsure about your estimates, choose the one with the greatest audience that make up your ideal clients. You’ll exhaust a smaller pool more quickly and have to start over in your testing. As long as you’re acquiring ideal clients, pick the medium with the largest readership you can find. You can sometimes get better pricing on media if you go through an agency, especially if you buy a lot.
Test Market Your Ad
I urge you to engage a professional copywriter. Designing a winning ad is a specialized skill, and writing marketing copy belies the 80/20 rule. You with your 80% of general marketing knowledge will get nowhere near the response than a true marketing pro with the extra 20% specialized marketing knowledge. I once had a potential client refuse copy writing help because she had enjoyed her undergraduate marketing class. Don’t be that client.
Testing an ad is tracking its results. There are two inexpensive ways I like to track an advertisement: one for print ads and the other for call centers. If you’re running a print ad, distribute a coupon or include a special offer. To redeem the offer, the buyer must give a code or bring in the coupon on your advertisement. Each time a client redeems the discount, it’s as a result of that advertisement. At the end of the campaign, add up the coupons or count the codes to track effectiveness.
If your ad urges people to call, use a separate telephone number issued by a telephone marketing service agency. Or you can buy a forwarding number and have it route to your main number. At the end of the promotion, go through the log of incoming calls. A little research will help you find a call center marketing service provider, and you can buy toll or toll-free numbers on the internet. Note: these can bill by fractional seconds so do your research.
Track Your Campaign
You’ll track the advertisement using a matrix chart. Download a call sheet template or use your Customer Relationship Management software or draw columns and rows on a simple piece of graph paper.
You’re tracking activity and results. Each business will use a slightly different format. You want to add up how much profit each ad campaign brings in. Count your net profit before taxes, not gross income.
Once you run your ad a few times, you’ll see an average. This is is when you’ll fine-tune your ad campaign budget. If an ad pulls only half as well as you had expected and your max buy is now lower than what you’re paying, revise your cost per acquisition for that medium. If an ad turns out to cost more than it’s bringing in, abandon it and try a different medium.
Only retry an abandoned medium after having exhausted every other avenue. Your goal is to find the best raw statistics for an unrefined advertisement. If you try every medium you can think of and none of them pull very well, then choose the one with the lowest ad cost per client acquired and start refining it.
An advertising agency can help. You might wish to contract with one for a few hours of consulting time. You may be in a very challenging environment; if so, you may find value in specialized guidance.
Next week we’ll explore how to fine-tune your campaign and gradually improve results to ultimately develop a top drawer ad. And in a later column we’ll talk about how to formalize training within your organization so your key employees become strong empowered leaders who will stay with your company as long as you want. Practicing this technique will decrease attrition significantly. There’s more exciting material coming up. Stay tuned! Until then,
profitable business All!