It’s all about size. The size of the marketing return on investment, that is.
Last week’s McKinsey Quarterly’s premium edition featured an interview with Cammie Dunaway, Yahoo!’s senior marketing executive. She explained how she is preparing Yahoo! for the future using strategies that Dan Kennedy, others and myself have been teaching small business people for years.
So what’s she doing for Yahoo!? Measuring response. Just measure the response to each ad, by media type, by publication. Make decisions based on what you learn. Repeat.
In Yahoo!’s case, it’s simple. Dunaway is shifting the company’s marketing dollars to vehicles whose returns can be measured. Imagine that. Hopefully they’ll use those measurements to make marketing decisions as well. It doesn’t matter what media you use to market your product. It can be done. Print ads can use special phone numbers, advertising codes, deals not advertised elsewhere, and Web addresses / URLs. Television and radio ads can do the same. Online ads have had this capability more or less since day one. Landing pages, Adwords, text links in e-mails, banner clicks, etc. can all be measured.
I find it a little ironic that Yahoo! is finally going to emphasize the use of something that they have offered for some time via their Overture online advertising services, but at least they are doing so.
So what’s the big deal about measuring response?
For starters, anything else is speculation. If you aren’t measuring the response to each media and each ad, then you don’t know anything about your marketing except how much you’ve spent.
Dan Kennedy calls it being a “marketing victim.” One such example: I recently had an organization tell me that they were finally going to purchase a service because “the salesperson just keeps calling”. Kudos to the salesperson for being persistent, but is that any reason to make an ad buy? I sure don’t think so.
Do you buy ads because the ad salesperson calls or walks in the door and offers them to you, or do you buy them because you know that their media (newspaper, magazine, Web site, e-mail newsletter, TV show, radio show, etc) provided a 3.12 percent response rate to all advertisers for ads of a particular type in your market over the last year? You should know your answers for your business in that media when you ask the ad salesperson for their response rates.
Why? Because measuring response tells you things that you think you know, but are often wrong about.
Here are a few hypothetical examples of things you wouldn’t know without measuring response to each ad in each media you advertise in.
You don’t know if the money you spent on television ads last year brought in lower gourmet food sales and fewer customers than that ad in the local shopper newspaper that costs less.
You don’t know where your better customers come from. What do I mean by “better customers”? Customers who buy more often, and make bigger purchases.
You don’t know that the newspaper is a lousy place to sell mold restoration services but a great place to sell chiropractic, cars and hearing aids. Or vice versa.
Or that Tuesday is the worst day of the week for radio ad response. Or the best.
Or that billboard ads on the driver’s side of the road perform 12 percent better than billboard ads on the passenger side of the road, except on Interstate highways where the passenger side wins by 37 percent.
Or that advertorials in newspapers outperform advertorials in magazines, except in certain lines of business.
If you knew all of those things, you’d market differently. Eventually, you’d make different decisions about other aspects of your business as well. You might even start measuring other parts of the business since it had such a novel effect on your marketing.
So what else don’t you know? Measuring advertising response will tell you a lot of those things and get you moving down a path that will lead to a smarter, more profitable, more productive business.
Start measuring. It’s all about size.
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