7 Keys to Marketing Genius: Return on Investment
The following is an excerpt from The 7 Keys to Marketing Genius by Michael Daehn
The criterion for success must be the ROI, return on investment (i.e., people buying the product), not people liking the advertisements. I believe advertising agencies have tended to avoid being specific about returns for two reasons. One, they don’t really know how effective they are because they do not have systems in place to truly measure effectiveness. Second, they know there is a lot of waste and they do not want to discourage their clients. That’s why advertising talks about making impressions on viewers. If this is the case, just say “I don’t do impressions,” and ask for sales to be made instead.
Typically, sales are the measure of success, but as any statistics student will tell you, correlation is not necessarily causation since there are other intervening variables. In English this means that just because sales increased does not mean that the advertising was the cause; it could have been something else. For example, if you run a radio ad for hot dog buns on the fourth of July and sales spike for that weekend, it is not necessarily because of the ad, but because more people are barbecuing for the holiday.
In fact, if you are not measuring effectiveness, you could be running counterproductive ads. What if more people would have bought your hot dug buns, but they did not like the ads so they bought another brand, or ate hamburgers? You could deduce from the spike in sales that the ad had been effective, when in fact you could have sold more with a better ad, or no ad at all. If you are not measuring properly, you will waste money and, worse yet, you could be paying to cause damage to your image.