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Metrics for Measuring Ad Campaign Effectiveness

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Advertising is not an exact science. There's no precise way to measure the success of an ad campaign. You can't, for example, determine how many sales dollars are generated by each advertising dollar you spend. But there are methods that will give you a rough idea of whether your ads are hitting the mark.

Make sure you have clear advertising goals. You might want to boost business overall, but your objective should be more specific: to increase sales of a new product or service, to build awareness of your company, to spur volume during a certain time period, or to expand your business in a particular market. Tailor your evaluation methods to your goals.

To assess the effectiveness of your advertising campaign, you can monitor sales, new customers, requests for information, phone inquiries, retail store traffic, website traffic, or click-through rates. Use these tactics to gauge the power of your ads:

  • A simple way to tell if your advertising is working is to track retail traffic by counting the people who enter your store. Don't forget to monitor traffic before you start the ad campaign, so you'll have a basis for comparison. And ask new customers how they heard about your business.
  • Compare sales before, during, and after an ad campaign. Keep in mind that advertising often has a cumulative or delayed effect, so ad-driven sales may not materialize immediately.
  • In print ads, include a coupon that customers can redeem for a discount or gift with their purchase. Code the coupons so you can determine which ad or publication generates the best results.
  • Offer an incentive for customers to tell you they're responding to an ad: "Mention this ad and get a 10 percent discount on your first order.” Put it on your website or in the local newspaper, or use it as part of an ad on local TV or radio. It’s an easy way to know where customers are finding out about you.
  • Use dedicated phone lines to track phone orders. For example, if you mention a toll-free number in your ad, assign different extensions to particular advertisements.
  • Compare pre- and post-advertising traffic on your website. Your Web host logs the hits on your site and should be able to provide you with daily, weekly, or monthly reports. If you maintain your own Web server, invest in software that generates easy-to-read traffic reports.
  • When advertising online, the old metric of click-through rates (the number of viewers who click your banner ads) is not a reliable method of knowing whether your advertisements are working. While ad networks that sell ad space on the Web track click-through rates and can provide you with performance reports, the numbers you really want to know are how long people are spending on your site and how many pages they are viewing per visit. That way, you will know whether you have truly engaged your clients. Of course, if they purchase something from your Web site, then you know you really did capture them.

Keep in mind that you can't gauge success if you don't know what you're trying to achieve. Have you precisely identified your target audience? Read Determining the Target Audience for Your Small Business for ways to segment the audience for your marketing messages. 

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