Kenny Roberts

Recently my office has been visited by more sales people selling space than usual. I’m not sure whether it’s the fact that companies relying on advertising revenue are struggling or if more companies are seeing advertising revenue as another channel for supposed easy money but I do see a worrying trend.

Now obviously I can filter who I see or deal with and getting me to part with hard cash for advertising campaigns without some proof of potential ROI is nigh on impossible, however for some sales people it has been totally impossible.

Why?

Well because a big percentage of them don’t even know how to work out the potential efficiency of their existing campaigns, this is true of even large companies. They love to marvel at their headquarters monitoring software but have no idea what they are really talking about when questioned.

So next time you are offered advertising space arm yourself with this information and see if they really cut the mustard before you part with your money based on “Mickey Mouse” figures.

ADVERT EFFECTIVENESS

Effectiveness is measured in terms of quantity, quality and costs.

For any form of advertising it is easy to find the conversion rate by dividing the number of sales by the number of enquires and then times the total by 100, this will give you the conversion rate percentage and the higher the percentage the better.

CONVERSION RATE % = NUMBER OF SALES/NUMBER OF ENQUIRES X 100

COST EFFECTIVENESS

The cost effectiveness of your campaign can be assessed by finding the advertising cost of your sales and enquires. This will give you an average or mean value. The lower this value the better. Take the mean value from your annual gross margin and that will tell you its cost efficiency.

COST PER ENQUIRY = TOTAL COST OF ANNUAL ADVERTISING/NUMBER OF ENQUIRES

COST PER SALE = TOTAL COST OF ANNUAL ADVERTISING/NUMBER OF SALES

BREAK EVEN POINT

Probably the most important thing to know when signing up for any advertising space is when will I see the advert pay for itself.

NUMBER OF ENQUIRES TO BREAK EVEN = TOTAL COST OF ADVERT/(GROSS PROFIT MARGIN X CONVERSION RATE)

NUMBER OF SALES TO BREAK EVEN = TOTAL COST OF ADVERT/GROSS PROFIT MARGIN PER SALE

The secret to social media marketing is knowing the relationships between the different factors that you are trying to achieve. Let’s start by taking a look at those factors and how they might relate to your business.

BROADCAST – whether you use Facebook, Twitter, MySpace or any other social media tool you are effectively broadcasting yourself to your listeners. If you can get into the mindset that each time you “say” something online that you are talking directly to people that are interested in what you have to say since they are tuned into your station, then you will have a better understanding of how to use any strategy.

TRAFFIC – this is your list of listeners, the number of potential customers is a percentage of the traffic that you produce. Therefore the more traffic that hears your broadcast the better chance you have of gaining new direct customers. However don’t mistake all of the people on your friends or followers lists as potential customers at any one time, you will need to broadcast different things at different times to cover them all.

CONVERSION – once you have a number of followers you need to convert them into customers for the service or product that you are offering you can do this be targeting your broadcasts to different parts of your traffic and then test the feedback.

FEEDBACK – this is the improvement factor of your strategy and relates to all other actions. By measuring the click through rate or increase in traffic or even sales during any particular broadcast period you will be able to see which broadcasts produce an increase in either traffic, conversions or both. On occasions you might even find that your listeners will actually tell you what they want to hear more of.

THE GATHERING – outside of converting your traffic directly you should be attempting to gather their “proper” contact details so that you have permission to market directly to them in a more tradional way or by email. This is the list building part of your strategy and over time is the most important and valuable factor.

Whenever you carry out the social media marketing cycle you should also be carrying out another cycle called the Deming Cycle. This is a four step improvement tool PLAN – DO – CHECK – ACT

PLAN every broadcast in advance to establish the objectives and steps necessary to deliver the desired results

DO it (broadcast it)

CHECK that the broadcast is right and monitor any feedback that you can compare with the expected results

ACT upon the feedback to determined what you can do to improve your broadcast before you start planning again.