DO YOU BELIEVE MARKETING AND ADVERTISING AN EXPENSE OR A PROFIT CENTER?
By Rob Nuemann
Well, if you are like most small business people, you may not be sure if you believe marketing and advertising is an expense or a proﬁt center. You may want to know, but feel intimidated in trying to ﬁgure it out. You may measure everything else in your company, but marketing seems just too hard to ﬁgure out. Therefore you may be doing things just because “that’s the way we
always do it.” Some owners are so unsure that they decide not to do anything at all. Others may jump from fad to fad looking
for the one “magic bullet” to solve their marketing problems. Mostly advertising and marketing will be an expense if you do
not know what your return on investment on advertising (ROIA) really works out to be.
You do not need to be worried or anxious. It sounds intimidating, but with a step by step process, you can get there. The key is to break down your advertising and marketing results into smaller bite size pieces. We will break this down so that marketing costs become a relevant number, which will let you decide whether you have an expense or proﬁt from your investment in marketing.
So just how do you go about it? Work backwards. Find data. Fill in the missing gaps with relevant information. A little bit of sleuthing can make your money go farther. Let’s start with the relevant types of information you need:
1. How much do you spend on marketing?
2. Can you break that number down into categories?
3. How many leads are you getting monthly?
4.Can you separate the leads you get and match them to the categories of marketing?
The fourth step is always the hardest. In some cases, you can not get more detailed, but most of the time you can and here is why. Keep breaking down each group into smaller components and use other information to help you ﬁgure it out. Here is what you need to break down the fourth question of where do your leads come from:
1. A Website or “Landing page”
2. A web analytics report
3. Phone numbers
4. A courteous phone manner
5. Good contact information for your customers
The kinds of categories you might
want to be able to measure include:
1. Direct mail results
2. Magazine advertisements
3. A sign
4.Search Engine Optimization
5. Pay per click advertising
These are common categories for small and large businesses to sell to consumers and to businesses. The concept will apply to any marketing medium.
In Part 2 Rob will address your online presence and how to measure qualitative and quantitative results.