How Effective Is Your Advertising?

Have you ever heard of Guerrilla Marketing? It’s an effective way of marketing execution for mostly small businesses but its techniques can be applied in huge corporations as well.

One of its 15 main rules according to the founder Jay Conrad Levinson sounds as follows:

“You can actually double your profits by measuring the results of your marketing. Some weapons hit bullseyes. Others miss the target. Unless you measure, you won't know which are which.“

That’s why we are also keen on measurement. Above all, the advertising is an area where the effectiveness (or efficiency?) of its spending is being widely discussed.

So what are the main benefits of measuring your advertising campaigns?

Find out whether the main objective of the campaign has been reached
Find out the return on advertising investments
Get data for preparing the future campaigns
Apart from that you can learn the following from your campaign assessment as well:

Effects on customer knowledge
Effects on customer attitudes
Effects on customer intentions
Effects on customer behaviour
Effects on our brand image
Financial benefits stemming from the campaign
Information on the campaign itself (likeability, interestingness, popularity, etc.)

Effectiveness or Efficiency?

A bit of Philosophy. How to distinguish between effectiveness and efficiency? A famous management guru Peter F. Drucker writes simply:

“Efficiency is doing things right; effectiveness is doing the right things.”

Can you see the difference? This renowned management consultant further defines being effective as “getting results,” and getting results he defines as “getting the right things done.” On the other hand, if you are efficient, you just do the things right and if not being effective, you could do the wrong things, what could be just a waste of time, as he once said as well:

“There is nothing so useless as doing efficiently that which should not be done at all.”

Getting back to our question, assessing advertising efficiency means mainly measuring its financial effects, i. e. the financial return on the advertising spend, while I would define assessing its effectiveness as measuring its communicational effects – whether people saw it, whether they liked it etc., in short, how successful the advertising was in communicating the message. Sometimes we watch an amazing ad shot we like but we are not aware of the brand which is being promoted. Then the campaign results drop down and despite being efficient, the campaign was ineffective.

Why the marketeers tell you that you can not measure advertising effectiveness
It’s not easy to measure for a start, but that does not mean you should not try! Up to now, nobody has ever invented a 100 % secure advertising test, as usually the following problems occur:

Abstract character of the results
Long term effects of campaigns
Combined influence of more effects at once
Costs of testing
Lack of information
Realisation problems
Many people fail to do post-campaign testing because of these reasons:

Lack of time
Lack of money
Lack of information on advertising post-testing
Lack of human resources
How to measure advertising Effectiveness

The countries of Eastern Europe face significant problems with tracking their advertising. They suffer from the attitude that assessing is not so important. On the contrary, Irish business owners view this issue as crucial in planning more often and they are more aware of the benefits it can bring.

The only question is, how to do it. How to get from your assessment as much as possible? There are several ways and means we can recommend you.

A bit of Psychology. The marketing theory knows various tests of advertising assessment. The best known are these:

Memory Tests
Persuasion Tests
Favour Tests
Scales
Associations
Frame-by-frame Tests
In-market Tests
Direct Response Counts
Content Analysis
Image Analysis
Customer Panels
Customer Surveys

Maybe you personally are not familiar with these tests. However, they are very simple and their focus is on asking questions of people who are in the target market to react to the advertisng. So if you do not know these methods try to ask your customers, prospects or just people in the street, if they:

saw your campaign
remember your campaign
liked your campaign
have bought your product
are likely to buy your product next time etc.
In addition, do not forget to ask open questions about their meanings. Sometimes the answers can be placed in a scale, so that you can see the results clearly. There are also more sophisticated ways of measuring the advertising effectiveness, such as in-market or frame-by-frame tests but their core is always in asking questions.

How to measure advertising Efficiency

A bit of Math now. The main objective of advertising is sales generation, so that the marketing expenditure brings as much profit as possible. There are two main ways how to measure advertising efficiency:

Return on advertising investments
Increase in profits
The first one works with the following formula:

Campaign Eficiency = Outputs/Inputs

Please, focus on correct understanding of these categories – it is not so simple to state all the costs connected with the campaign. You should always keep in mind the above-mentioned problems of advertising tracking.

Finally, your revenue increase does not always lead to increase in profits as well. That’s why probably the best criterion is to maximize net profit, after deducting the cost of marketing. So if you really want to know how much funds your advertising brought try to take a look at your net profits generated by the campaign.