How to measure offline marketing spend?
THERE'S an old saying in marketing that those in the business know only too well – half of your advertising spend is wasted, but the trick is to figure out which half.
And while television and radio stations bend over backwards to help their clients prove return on investment for the marketing dollars they spend, it's not always that easy to determine.
Collectively, Australian businesses fork out an immeasurable amount of money to market their offering in a bid to bolster sales.
But with media fragmenting at a rate of knots, it's increasingly difficult for businesses to decide where to spend their marketing dollars. In fact these days the places to advertise are only limited by your imagination, with nothing sacred anymore.
Groups of scooters buzz in perfect unison around our cities towing advertising billboards. The tabletops in the local shopping mall are sprawled with advertising messages. As are our bus stops, taxis, the side of takeaway coffee cups and even the coat hangers used by dry cleaners. There are those somewhat cringe-worthy ads behind the toilet doors in airports placed there by companies that know they have our undivided attention.
Traditional advertising mediums like radio, television, direct marketing and outdoor mediums, like the huge billboards that line our highways, also remain an important part of the marketing mix for most businesses.
Sean Adams, managing director of research and strategy firm, The Seed, says consumers are being shouted at no matter where they turn, with brands unable to resist daubing their advertising slogan on anything and everything.
"These days, wherever you look, someone sees that blank space as a new advertising medium. And lot of the time it can be seen as a bit opportunistic, so businesses need to be careful."
Is advertising striking a cord?
But how much of this advertising is actually striking a cord with consumers?
The only way for businesses to determine if their latest marketing campaign is proving effective is for them to assess some kind of return on investment, which is easier said that done.
Measuring how effective offline advertising on television, radio or even outdoor is far more difficult than calculating online marketing. After all, it's impossible to tell how many people actually sit through television or radio ads. However, the television networks and radio stations make ratings available each day and provide its advertisers with viewer figures.
Penny Parsons, joint CEO of holiday website takeabreak.com.au has experimented with offline marketing, placing ads in niche publications, outdoor and radio, but admits the lack of tools available to measure ROI turned her off and led her straight back to online advertising.
"It's very difficult to measure the effectiveness of offline marketing, particularly given the time lags involved. This makes it difficult to know whether a current campaign is effective or not. We're always asking customers how they came across us to help us decide where to spend our marketing dollars, which helps us decide where to channel our marketing budget," Parsons says.
Find a tool that suits you
Chris Dale, managing director of Sydney's Marketing HQ says ideally, a business should try to measure each marketing medium by using unique promotional codes or offers that can be tracked back to the medium.
"Businesses need to have systems in place to be able to benchmark their key performance indicators and record the impact that marketing spend is having," Dale says.
Brenton Tickner, marketing analyst for a major automotive insurance company, agrees. He says there's no excuse for businesses not to find a way to measure their return on investment.
"The processes need to be right before a business embarks on a marketing campaign, which often means doing some research up front to make sure you're setting off in the right direction in the first place," Tickner says.
Phone surveys are a popular choice for businesses, but can cost between $40,000 and $60,000 to hire a firm to call as little as 500 people, according to Tickner, which can put them out of reach for many.
"But a phone survey can be effective, because it can reveal all sorts of information about your business and what consumers think of your approach," Tickner says.
Direct response campaigns
Perhaps one of the best ways to measure your marketing dollars is to run direct response campaigns. Coupons or redemption-based media can give businesses an instant and accurate picture of whether a marketing campaign is having results. Newspapers, for example, are now able to place an individual code on each copy of the newspaper, making coupon-style advertising more appealing to businesses.
Melanie Squires of Shop-A-Docket says their statistics show that 83% of grocery buyers read Shop-a-Dockets and 73% save Shop-a-Dockets for use.
But a far cheaper option is for businesses to simply make a point of asking customers how they heard about them. Parsons from takeabreak.com.au says this kind of data (which can be gathered particularly easily on your website) can then be used to formulate marketing campaigns.
"Knowing how people came across your business can be a huge help when deciding where to spend your marketing budget – it's vital."
Hiring a public relations firm is another option for businesses. Almost all PR firms will prove their ROI to clients via regular reporting.
Some PR firms measure the size of the editorial and compare that to the rate of an advert, then multiply that by two or usually three to reach a figure they say demonstrates the worth of the editorial. However, this is not the best approach, according to the Public Relations Institute of Australia. A spokesperson said it doesn't endorse the advertising equivalency measure because it's seen as an inflated way to endorse PR and that there isn't an agreed measure for PR in Australia.
There are ways to track where your message is appearing, however many also use services like Media Monitors, which will email press, social media, television and radio clippings from more than 3,000 sources containing your chosen key words each day.
Take out the guesswork
If you've got the cash, a popular tool used by many blue chip companies to measure ROI is custom analytics, which helps businesses take the guesswork out of where and how to spend their marketing dollars.
Sydney-based The Quantium Group is among those to offer this service. Its clients include Target, BUPA and Rebel Sport.
Director Tony Davis says Quantium can isolate all factors that could influence customer buying behaviour, including environmental factors, interest rates, the price of petrol, competitor activity and seasonal retail trends.
"With this information, we're able to advise our clients on what extent they should advertise a product, which day of the work, which advertising mediums would work best and in what markets," Davis says.
"Our figures show we can save 10% from a marketing budget, which means a marketer is getting the same results for 10% less if they use our service."
Log missed calls
Other businesses choose to invest in a missed call notification service. These services can give businesses detailed information about how many calls were missed, which numbers they originated from and how many callers an advertisement generated.
Sydney's Avanser is one of the companies to offer this service in Australia. Its clients include car manufacturers, ACNielsen and Yahoo7!.
Richard Tan, director of sales and marketing says any business that promotes a phone number for lead generation would benefit from the service. An email notification is sent to the business as each call is missed.
"We estimate that businesses miss as many as 20% of their calls. Our system will pick up if you've missed a call, if the line is busy, if the call was abandoned or if the caller left a message. This gives businesses the ability to learn about their customers and help determine whether their marketing dollars are working for them."
So the advice is whatever tool you choose to use, make sure you're measuring return on investment. Tickner describes it as vital.
"Businesses need to deploy some sort of method to track whether their marketing budget is working for them; otherwise they're throwing good money away."
And while almost every service will have some sort of claim to prove how effective their service is, consumers would be wise to make sure they ask a few questions before assuming the figures being presented to them are accurate. Particularly given it is difficult for mediums such as television and radio to accurately prove ROI.
"Businesses need to take responsibility for how they're proving ROI and be clear in their own minds that whatever system they're using is an effective measurement for them," Tickner says.