What is the effectiveness of advertising?
Calculation of advertising efficiency by calculating, how much money is spent for sale is how businesses find out whether they get money and new sales through their advertising. There are several equations to do so, for example, how much money is needed to achieve the entire population, and how many people are converted into a buyer. By comparing these data, businesses can measure the success or efficiency of advertising their efforts. No matter how the market is on the market, - be it radio, billboards or online - efficiency is done in the same way. If efficiency is poor, businesses must limit the total amount of advertising until they are profitable or find a way to advertise for less money. Advertising is one of the biggest costs for the company, so you can start the most efficient marketing campaign while spending as little money as possible to get a new sale. To measure marketing success, analysts use advertising efficiency formula.
The first part of the formula includes the overall population and advertising budget. For example, the company is trying to reach 100,000 people and allocate $ 10,000 (USD) to effort. By distributing these two analysts, they find that it takes $ 10 to achieve each person. This is used for initial planning to see if advertising costs can be reduced before advertising.
After the advertisement, the analysts will use another formula to determine whether the advertisement was effective. The advertising budget is divided into the amount of people who purchased the product. If the budget is $ 10,000 and 50 people have purchased a product, it means that the company has spent 200 USDr every new customer. The average sales are measured and compared with expenses for each new customer. If the average sale is over $ 200, advertising is achieved; If not, then the company spent too much money.
In order to increase the efficiency of advertising, analysts find ways of advertising on the same number of people,But at lower costs. This may include shorter ads, finding a radio station that charges less for advertising, or offers cheaper keywords for online advertising. Advertising in multiple populated areas where more potential customers hear or see a message can also reduce advertising costs.