KISS -- Guidelines for Developing An Advertising Measurement Program
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October 2006

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KISS -- Guidelines for Developing An Advertising Measurement Program


By Michael T. Brandt, CBC
President, Marketing Resources Ltd.

When was the last time that management asked for an ROI analysis of your marketing communications program? Or complained that advertising had little impact on sales or profitability? Or suggested that budget cuts might be in the offing? For most of us, the answer is likely to be ìpretty recentlyî and ìoften.î

Our increasingly competitive business environments mandate more efficient use of resources, including the marcom budget. And although management may not require ìabsolute proofî of advertising's value to the company, they do want some evidence of getting value for the money spent, some evidence of impact on the bottom line.

Gone are the days when counting inquiries or measuring image or awareness was all we needed to do, although that probably really never did cut it. Today, measurement is more complex than ever. We have more advertising choices (internet, blogs, e-mail, for example) at our disposal. Shorter product life cycles and faster first-to-market times force us to react more quickly and do more in less time. There's more pressure to relate advertising to sales, revenues, and profitability.

Why Measure?
In addition to complying with management's requests, there are numerous other good reasons for measuring our advertising programs.

First, measurement gives us an indication of the effectiveness of our marketing communications programs. Measurement gives us the information necessary to determine whether or not we have achieved our goals.

Second, measurement gives us the information necessary to modify, improve, and even increase our programs for greater effectiveness. We can intelligently increase buys in given media, change copy strategy, increase or decrease expenditures.

Third, when we have the appropriate data available to compare marketing communications with other activities such as increasing the sales force, we can come up with the marketing right mix.

Fourth, we can calculate ROI for our advertising expenditures and demonstrate that utilizing the company's limited resources in marcom programs will bring a better return than hiring more people in accounting or maintenance.

And, finally, we can demonstrate that advertising can have an effect on sales and the bottom line, giving us a basis for increasing our budgets and enhancing our role within the company.

KISS
Feeling overwhelmed by the task of measuring your advertising? Although demonstrating advertising's value can be more complex than ever before and implementing programs for doing so can be just as complex, there's much to be said for keeping things simple. Most of us don't have the budgets, staff, expertise, or time to conduct the type of detailed measurement and analysis that would make the lead article in the Journal of Advertising Research.

Too much detail and complexity often leads only to analysis paralysis and we spend too much time analyzing and massaging the information and too little time using it to help evaluate our programs and improve them. Our measurement tools and techniques should be practical ones that we can actually use.

Just as our marcom programs focus on key products and key markets, our measurement program should also focus on the essential products and essential information for efficiently and effectively managing and implementing our marcom plan. Why spend money and time relating ad expenditures to sales revenues in minor markets or for products in the declining stages of their life cycles? It's that new product or service that is projected to provide 25% of the company's revenues over the next five years that really needs our attention.

There are tools, techniques, and services available to help us evaluate our programs: web analysis services, CRM software, lead management services and the like. Many can be helpful, but only if they fit your needs, not those of the vendor. If the latest bells and whistles serve only to further complicate your life, go for something simpler.

Four Keys

Perhaps you're ready to modify an existing advertising measurement program or you're about to take the next step beyond the simple counting of inquiries or basic awareness studies. Maybe the task of developing the right program appears as daunting as proving value itself. Don't let the prospect of program development delay your measurement of ad effectiveness. Let's keep things simple by observing four keys, but simple, guidelines for developing and implementing a program to measure advertising's value.

1. Establish specific measurable advertising and communications objectives.

Objectives: here we go again. Is advertising only about objectives? Sometimes it certainly seems that way. Exactly what is our advertising supposed to achieve? If we define specific, measurable objectives on the front end, we can determine whether it has been successful or not. We can only measure what we can define.

The more specific the objective, the easier it is to measure and the more meaningful the measurement. Contrast the following two advertising objectives:
1. Introduce the new Model 100X6.
2. Generate 135 requests for on-site demonstration of the new Model 100X6 from targeted decision makers during the first three months of the introduction campaign.
Can we measure the first objective? Can we relate it to sales or revenues? Is there any real way in which we can determine that the advertising program was effective in achieving this objective? Can we tell management that advertising worked? Did we realize any ROI from this advertising program?

In contrast, the second objective is highly measurable. The number of requests for on-site demos is easily countable and we can track the source of those requests. Somewhere in the marketing plan, we have specifically identified and targeted the key decision makers for this new product. There is a specific time frame for achieving the objective that specifies the time period we need to measure the impact of the program. We can track how many inquiries resulted in demos and how many demos turned into actual sales. We can probably relate the demo requests to the total number of inquiries received and develop some guidelines for knowing how many inquiries we need to generate with advertising to generate a specific level of sales.

This single specific objective directs us to develop several pieces of information: total number of inquiries, a definition of qualified decision makers, the total number of demos, and the total number of sales that come from those demos. It all adds up to a very effective measurement of advertising effectiveness.

With properly defined objectives, we not only have the guidance to develop an advertising plan, we know what we want to accomplish and we know what we want to measure. When the marketing plan contains clear objectives we have a road map to effective measurement simply sitting there in front of us. When these objectives are properly prioritized, we can then use these same priorities for our measurement requirements and allocate our resources accordingly.

2. Specify the key elements to measure and track and identify the criteria by which to measure these elements.

With objectives established and prioritized, our next step is to decide which elements of our advertising program we want to measure: budget, creative strategy, media, the sales impact of the entire campaign, or something else

If we are in the initial stages of a multi-phase advertising campaign, we may want to emphasize measuring such elements as media selection and creative strategy in order to improve the effectiveness of succeeding phases? Or we might need to know which direct marketing offer worked better. Or which landing-page pulled more online orders.

Or, we may want to determine the effectiveness of the entire campaign. What impact did the advertising campaign have on the total sales effort? What was the ROI? Would we do better by spending more on advertising or increasing the size of the sales force?

Of course, we can measure both individual elements as well as the overall advertising effort.

Along with determining the elements we wish to measure, we need to identify the measurement criteria. This might be level of sales, number of inquiries, changes in awareness, changes in buyer attitudes, hits on the web site, orders received from the direct mail piece. These criteria need to be appropriate to our objectives, the elements we are measuring, and the uses to which we will put the information.

3. Select the measurement tools.

Once we know what we are going to measure, we can select the appropriate tools and techniques for measurement. If it's inquiries we're measuring, a good lead management system that would provide raw totals, the number of qualified leads, follow-up actions taken, and tracking of results (through sales) might be our primary tool. Or if we're evaluating the effectiveness of different landing pages, then we look at various web analysis programs. Sales levels measurements can come from our own order department, field sales reporting, CRM programs, web analysis, and lead management systems.

Benchmark studies can be used to measure our objectives related to increases in brand awareness or preference. These surveys are typically conducted at various points in time so the effects of the reader's repeated exposure to the ad campaign over time can be adequately quantified.

When selecting our measurement tools, we need to consider factors such as the time that they take to provide the information we require, the cost of purchasing, the quality of the information that we obtain, and whether the information they obtain truly relates to our advertising objectives.

4. Implement, report, use.

When everything's in place, we can start our measurement processes and programs. Much of our measuring can be applied on an ongoing basis, continually providing us with a flow, if not a flood, of information. Much of it will be one-time measurements with specific start and stop points.

As we collect the information, we need to analyze what we now have at our fingertips and we prepare and submit reports to management. Whether that report covers brand preference, inquiry response, or ROI, we should strive to keep it succinct and understandable. Put the conclusions or executive summary up front where management can quickly find them. Then back it up with detailed data and procedures for those persons who want to study the details at a later time.

Most importantly, we need to put the information to practical use as support for requesting additional budget for upcoming years, changes to the media mix, targeting different new markets, or developing new creative strategies. Data that simply sits on the shelf has little value.

A few years back, a client embarked on a program designed to evaluate the mailing lists being used for an annual technical conference. The plans included coding of pre-registration, on-site registration, and online registration forms. The client colleted the data for a couple of conferences, sometimes didn't bother to tabulate it, and eventually decided not to make the expenditure for coding at all. Ironically the client then complained about not being able to determine which mailing lists were most successful.

The information gathered not only can be used to demonstrate the impact of advertising on sales and profitability, but it can be used to modify future advertising programs. Collecting data on a regular and continuing basis can form the framework for future budgeting, copy strategy, media buys, and marcom strategies.

Summary

Can we answer the question: does advertising work? Can we answer which media is most effective or which creative works best? Of course we can.

Does advertising measurement need to be complicated and expensive? Not necessarily. If we follow the four guidelines presented here, we can simplify our measurement process, concentrating on the more meaningful measurements and providing answers to management's perpetual questions on the effectiveness of advertising.

Michael Brandt, CBC, is President of Marketing Resources Ltd., a Lakewood-based B2B marketing consulting firm. His marketing communications background includes the Wisconsin Electric Cooperative Association, Eli Lilly and Company, Vinyl Plastics, Inc. and Wausau Tile, as well as
numerous clients in the B2B marketing space. He has served as President of the Colorado Chapter of the Business Marketing Association and is the current Co-Executive Director of BMA International. He can be reached at 303-274-1222 or mtb@mrlweb.com.



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