The late 19th century Philadelphia department store owner
John Wannamaker once said, I know half of my advertising
budget is wasted. I just dont know which half.
Maybe you feel this way about your advertising budget. Maybe
you feel this way about all the money you spend trying to
get customers to knock on your door and buy your products.
Certainly, if you look around during a recession like the
one the pundits tell us were pulling out of now, youll
see proof that a lot of your peers feel this way. Search through
past issues of your industrys trade journals: Many have
shrunk or disappeared because of evaporating ad revenues.
Read the local papers: Dozens of Portland advertising and
public relations agencies have slashed their staffs or closed
their doors because their clients have cut spending as sales
have slowed down.
What does that tell you? It tells me that many companies
treat advertising as if it were a gamble. When times
are good Ill put a few bucks on the table and spin the
wheel, but when times are tight, Ill hang on to my cash,
Measurement: The key to scientific advertising
Dont approach advertising as a gamble. If you do, youll
likely end up with self-doubt, second-guessing and sleepless
nights. Approach it as a scientist might approach some problem
in the natural world. Approach it as a scientific advertiser.
A scientific advertiser knows that every ad, every direct
mailer, every promotion is a hypothesis: The appeal
I make through this program will persuade qualified customers
to contact our company, eventually resulting in sales that
justify the programs cost.
To test the hypothesis, a scientific advertiser runs the
program and measures the results.
Like their white-coated counterparts, scientific advertisers
test out their hypotheses on small samples of the population.
That is, they dont spend all their advertising budgets
on one ad or one magazine. They run two different ads in the
same publication and then measure the response to see which
pulls in more returns. Or they run the same ad in two publications
and measure the response to see which offers a better audience
for their message.
When the scientific advertiser hits on a winning formula,
he or she increases the sample size by adding new magazines
to the list, always measuring results to ensure that the principle
learned in earlier tests continues to hold true.
Resistance is futile
Many advertisers resist measurement because they think its
too hard. They give excuses like, We give people too
many ways to contact us, or Our sales people wont
participate or We dont have the right software.
Think of it this way: Resistance to measuring response to
your promotional programs is just as absurd as resistance
to measuring revenue and expenses to figure out whether your
business is profitable.
Measurement gives you the confidence that your marketing
efforts really do pay off, and it gives you the confidence
to continue investing in marketing even when nervous competitors
stop. (This can help you build market share in a down economy,
and that is very satisfying.)
And measurement is easy.
Measuring tools: The balances and beakers of the scientific
O.K., I lied. Measurement isnt easy. But it isnt
rocket science, either. It just takes dedication. To be successful,
youve got to stay on top of it month after month. Here
are three simple tools you can use to measure the response
to your ads and other promotional programs:
- Coupons: By including a special code on the coupon, you
can tell which ad, brochure, flier or mailer the response
came from. Coupons may be old fashioned, but they work.
In one recent campaign, I watched 127 responses come in
through faxed or mailed coupons. Only 39 came in through
- Special Web addresses: You can use your Web site to help
track response. Print a special Web address like www.mycompany.com/specialoffer01
on your promotional material and then track how many people
visit that page. Better yet: Send respondents to that page
and ask them to fill out a form to request a bid or a special
- Asking: Whenever your company receives a phone inquiry,
ask where the inquirer heard about you. This is tough because
it involves personal initiative, but it helps provide a
complete picture of response to your programs.
When you add the responses from coupons, Web sites and phone
inquiries, you get a good picture of the response-generating
power of your program. Youre almost there.
Measure what really counts: sales
Measuring response tells you how many people your program
persuaded to contact your company. Thats a good start,
but its not the whole story. Do responses pay your office
managers salary? No. Do responses help you pay for new
Response can be deceiving. That direct mailer you sent out
might generate more inquiries, but the ad pulls in more sales.
Remember, sales pay the bills. Sales generate profit. If youre
going to measure ROI, youve got to measure sales.
However, if the sales numbers are low, dont be too
quick to toss a program. Maybe its attracting the wrong
people: Maybe all the respondents are after a chance to win
the digital camera youre giving away and dont
give a damn about your automated test equipment. If thats
true, try a new approach. Then again, maybe it is attracting
the right people. Maybe your sales people wouldnt know
a good lead if it burst out of the stomach of one of their
colleagues and started dancing on his chest. If thats
true, look into sales training.
If you're a scientific advertiser, you'll encounter many small
failures along the way to success. Thats because every
time you test a new program, its like youre trying
to feel the public pulse using acid-proof laboratory gloves.
But remember, the size of those failures is limitedbecause
theyre restricted to experiment-sized samples. In the
long run, the scientific advertisers small losses from
failed experiments are overwhelmed by the gains from the successful
programs that are run for larger and larger audiences until
they wear themselves out generating profits for the company.
So whatll it be? The roulette wheel or scientific advertising?