Sunday, August 15, 2010

Simple Marketing, pt V:
Designing your Ad Campaign


Developing a Media Ad Budget

In our last article 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, you can calculate your budget for a given ad campaign.

Perform this calculation to calculate your cost-effectiveness for each medium.  You will initially test market the most cost-effective one, or the one with the highest client value per dollar spent.

Continuing with our previous example from the last column, your calculations reveal that your most cost-effective medium is a monthly print advertisement in a specialty publication read by many of your ideal clients.  Based on your estimate and rough surveying of a few of your ideal clients, you expect this ad will attract several prospective clients each run, two of whom will be an ideal client.  From our earlier calculations, we know that an ideal client is worth $500 to us.

The maximum 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.  In this case, 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?



Selecting your Media

It's important to realize that all media are not equal.  First estimate the pull rate on each medium you can select.  Then by dividing the ad cost by the number of new clients expected, calculate your cost per acquisition for each medium.  The lowest one will be the one you choose as your first test medium..  For now, ignore scale: an ad that costs $50 and pulls only 1 client is 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 are pulled by an advertisement; you only care about per client costs.  Later you can run as many ads as you like to vary scale.  But first you want to select 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 will exhaust a smaller pool more quickly and have to start over in your testing.  As long as you are 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're buying a lot.


Test Marketing Your Ad

I encourage 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 likely get nowhere near the response than will a true marketing pro with her remaining 20% of specialized marketing knowledge.  I once had a potential client refuse copywriting assistance because she had enjoyed her marketing class in college.  Don't be that client.

To test an ad you must track it.  There are two ways I like to track an advertisement inexpensively, one for print ads and the other for call centers.  If you're running a print ad, make it a coupon or include a special offer.  To redeem this offer the buyer must provide the code or coupon on your advertisement.  Each time the discount is redeemed, you know it's as a result of that advertisement.  At the end of the campaign you 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.  The service provider logs each call and forwards it to your normal business line.  Then at the end of the promotion they provide you a log of incoming calls.  A little research will help you find a call center marketing service provider.


Tracking Your Ad Campaign

You'll track the advertisement using a matrix chart.  You can download a call sheet template or use your Customer Relationship Management software or you can get a simple piece of graph paper and draw columns and rows.  Your objective is to keep track of the activity and its results.  Each business will use a slightly different format but basically you need to add up how much profit each ad campaign brings in.  Count your net profit before taxes, not gross sales.

Once you have a baseline then 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 determine 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 advise you.  In this case it might be best if you contracted with one for a few hours of consulting time.  You're probably in a very challenging environment and may need specialized guidance.
The rest of us hopefully have our selected medium.  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.  After practicing this Ingenious Business Technique your attrition will decrease significantly.  And if you haven't yet checked out the podcast, feel free to download it.  More exciting stuff coming up.  Stay tuned!  Until then,

profitable business All!

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