Thursday, March 26, 2009

Quantifying ROI on Advertising Expense

When measuring ROI on advertising, we should look at immediate sales revenue plus the longer term benefits to branding.

How do you determine ROI on advertising expense or what should you expect from a marketing campaign? These are deceptively difficult questions because a buyer makes decisions based on awareness of a company or its products that likely was built by multiple contacts over a period of time. There is some debate about the influence of TV advertising driving people to search online for a product or a company. Accepting for the moment that people will search a store circular or search online for something they remember seeing on TV, is it fair to credit the TV ad with all the ROI for a given sale?

It’s natural to focus on ROI and it’s easy enough to set a revenue target for an ad campaign, or for that matter, any category of expense such as labor or equipment. Tracking the revenue from an ad campaign can be quite easy in many cases, if your campaign uses any specific tracking parameter: a promotion code, unique product codes or catalog tracking ID, a unique landing page or a pay per click ad. Asking, “Where did you hear about us?” is pretty much automatic in ecommerce and direct marketing. But if you run a car dealership or a dry cleaner or you build houses, it’s not always automatic. Salespeople can ask the same question, “How did you hear about us?” but often the mechanisms for collecting and reporting the answers are not really in place. What’s more in almost any business, maybe the ad was the proximate cause of today’s inquiry or sale, but maybe many other factors were taken into consideration before the ad triggered an action. If your sales cycle is long, then is it realistic to expect immediate revenue from advertising?

Advertising builds awareness, loyalty and credibility, promotes trials or drives repeat purchases. But product quality or store location, customer service and recommendations play a role in purchase decisions too along with myriad other factors. Measurement of advertising effectiveness can attempt to quantify the increase in brand recognition or those types of factors too. Establish clear, realistic goals. Would it be reasonable to set the same ROI objectives for an established product in a competitive market as you would for a new product without any campaign history? Would ROI on print media be the same as an email campaign or outdoor signage? Should you use only the media with the highest ROI for your product and how will that impact market share and target demographics?

So what is a business line manager supposed to do? Set goals, measure, test and constantly improve. When any one of these four elements are weak, advertising is usually cut; and without advertising the business will likely decline. Focus on tracking when designing ads so the performance can be measured; test different ad copy and different media with different target audiences; and try to improve with every iteration.

Saturday, March 14, 2009

Original Art and Backups

A small accounting firm called one day because a hard drive crashed. The caller said that years of work had been lost and wanted to know if it could be recovered. Yes, we'd send it to a data recovery firm, they'd open the drive in a cleanroom and probably recover upwards of 95% of the data. It would be around $5,000.

And the moral of the story is that you should keep multiple backups of critical files, client work and original art. I recently had a whole directory damaged by a power outage. But I restored 7,500 files from backup, stress free!

Logos, banner ads, stationery and photos are edited and sized for specific applications. A photo that starts out at 30MB might be scaled down to 20kb for the web and then won't be suitable for printing at 300 dpi at 8.5" x 11". Logos or other files created in Illustrator may wind up in a specific size as a JPG or some other format. Not to mention that artwork can be extremely complicated with layers of text and graphics in the original Illustrator file that are easy to edit in Illustrator but later won't be easily edited as JPGs. It's best to keep the original vector art files so edits can be made later. Getting copies of the original art at the conclusion of a project is a good practice you should consider before working with designers. And then, keeping them organized and backed up is going to save time and money.

Thursday, March 12, 2009

Listen to Your Customers

My law professor taught me one of the most important lessons ever, "listen to people who disagree with you." It's as relevant to law as it is to product development.

New product ideas are constantly coming to my attention. Someone has an idea and devises a market for it. Unfortunately, a lot of times it works better if the market tells you what it wants and the product development teams go about making a product to suit the needs of the end users. In market research we fall victim to "confirmation bias". That's our tendency to hear what we want to hear, to ignore things that don't fit our way of thinking and to hear more of what confirms what we may already believe. And worse still we want to make things happen so we are predisposed to say yes. I find it very liberating to say no these days. Next time someone proposes a new product ask them, "Can you prove there's a big enough market for this product?"

Search Optimization Tips

Search optimization comes down to the content on the page. So when designing a website, it's helpful to keep in mind a few search optimization tips. Keep the most important words up front, make important keywords the subjects in the first sentence, put keywords first in the paragraphs. Don't use articles and pronouns like "them", "him", "the" and use nouns instead if you want to emphasize the relevance of a particular noun. Or do the opposite if you want to deemphasize a particular word.

Search is based in part on weight, proximity, frequency and prominence. So the first word, the first sentence and the first paragraph tell readers the most important things and to a search engine they have the most prominence.

Let's take a word like "wings". Wings has different meanings: like wings at Super Bowl; wings on things that fly; wings of buildings and so on. Search engines may gain insight into the connotation of the word based on very advanced algorithms. A reader understands wings in context based in part on the proximity of wings to other words in the sentence or paragraph and a search engine does too.

The first paragraph is about search optimization and keywords. The second paragraph is about search. The third is very heavily weighted to wings. If "wings" were replaced by "it" the weight and frequency of "wings" would go down.