As we’re getting into December and the Holidays, now is a good opportunity to take some time and evaluate your advertising performance for 2013 and pencil in your adjustments for 2014. Although best practices suggest constant lead tracking and individual ad performance evaluation (check out some of our past blog posts for more on that), many busy business owners understandably overlook the big picture and get caught up in the day-to-day rigors of running a business. This leaves them with no time to properly evaluate past performance, let alone plan for the future, and can lead to overused ads, stale campaigns, or reactionary and ill-advised marketing decisions.
You’re probably like thousands of other business owners whose hands are full running their business, hiring new employees, scheduling staff, ordering inventory, paying invoices, and worrying about the in-laws coming to stay for the holidays. In addition, you’re in charge of the advertising and you don’t have time to produce and execute that Christmas sale campaign, which could generate 40% of year-end sales if done well. Maybe you’ve tried some new advertising vehicles this year, but didn’t pay attention to the fact that although you only spent 5% of your budget on direct mail pieces, that small expenditure actually generated 15% of your revenue, but instead of increasing it you let it lapse. You know your website is outdated but you brush that off because it’s still a good source of monthly leads, and you don’t realize that your website traffic is slowly trending downward to the tune of an 8% decline over the course of the year. These and similar oversights will limit your revenue and can cripple a business in the long run.
From an advertising perspective, the best way to measure ad performance is to break down the data to a cost per unique lead (CPL) and analyze that data at least once a year. CPL is a simple function of the total cost of each advertising vehicle expenditure divided by the number of unique leads generated by that vehicle. For example, if you spent $6,000 in October with publication A and received 100 unique leads, that equals a $60 CPL. Compare that to publication B where you spent $4000 to generate 80 leads, equaling a $50 CPL. Even though publication A produced more leads, publication B was a more effective spend. This type of analysis will allow you to make future adjustments to ad frequency, message, size and placement with each advertising medium, ensuring that you are maximizing your marketing budget.
Every business is different of course, so an annual strategy for any business will depend on a variety of factors. When doing your yearly evaluation and planning ahead for the next year, here are some things to consider:
- What are your revenue goals for the year?
- What is your minimum advertising budget?
- Considering your past advertising performance, how much will you need to budget to reach your revenue goals?
- What seasonal and monthly trends affect your business?
- Do the advertising vendors offer package or long-term rate discounts?
- What special offers or sales throughout the year require your advance planning?
- What internal marketing projects do you want to plan and budget for next year, like a new website, brochures, or posters?
We all know what happens to New Year’s resolutions, so don’t wait till the year is over to plan for the next. Be proactive and take some time now to review the past year’s performance and plan ahead for future success!