In part one of this article we began examining how small to medium size businesses are constantly challenged to find cost-effective ways to advertise in order to gain market share, win new customers, and retain current customers. Business owners have an ongoing struggle to deal with changing economic conditions which have forced them to continually analyze their campaigns in order to figure out what is working and what needs to be changed.
And a key part of their analysis is to determine Return on Investment (ROI) not just the number of responses to an ad. Recently, I spent two days doing field research talking with business owners in our local area. My mission was to get firsthand information about their advertising campaigns and what has worked best for them in the past year. It was an interesting expedition.
During my field research, I visited a roofing company, a pizza restaurant, a small auto sales dealership, and a local hardware store, all family-owned. And although the results of the advertising campaigns from each business varied, the differences were remarkable in some aspects. Here’s what I found.
According to an advertising executive with a local cable company, a basic ad campaign that runs a thirty second television commercial two to three times each day, in a random rotation would cost approximately $2,000.00 every month, and that price is available only with a one-year contract. If the advertiser opts for a month-to-month arrangement, the cost is at least 50% higher.
According to an advertising executive with a local radio station, radio spots operate much the same way, providing the same type of coverage. A basic ad campaign that runs a thirty second ad three to four times each day, also in random rotation, would cost approximately $2,500.00 per month, and that price would only be guaranteed by a one-year contract, with the same cost penalty for a month-to-month arrangement.
The roofing company uses a mix of advertising channels including radio, TV, and print advertising, specifically postcards. They use TV advertising every other month which costs them $3,000 each month, or $18,000.00 per year. They use radio advertising every other month which costs them $3,750.00 per month, or $22,500.00 per year.
They also utilize postcards in their advertising campaigns. The average cost for post cards is $1,500.00 for the minimum purchase of 10,000. But that purchase price doesn’t include postage of $0.33 per postcard. They send out postcards twice each year, in the spring and the fall, advertising seasonal specials on air conditioning and furnace tune ups.
The postcards for the tune-up special cost $9,600.00 per year, so the total cost for their annual advertising campaign is $50,100.00. They get approximately 200 responses to all of their advertising each year, and the average charge for each appointment with customers is $500.00, for a 200% ROI.
The automobile dealership sells previously owned vehicles, and utilizes TV advertising exclusively for its two locations. They have a one year contract and their cost for the annual advertising campaign is $24,000.00; they get approximately 10 responses per year to their ads with an average sale of $4,300.00, for a 180% ROI.
The hardware store utilizes a combination of TV and radio ads, relying on TV advertising for about 80% of their campaign. The owner said that they use radio ads during the winter months, from November through March to advertise Holiday specials, and TV advertising during the spring and summer months to highlight outdoor projects such as lawn care, home maintenance, and landscaping.
Their annual cost for the radio ads is $18,750.00, and the TV advertising costs $14,000.00 per year, for a total outlay of $32,750. Although they utilize codes on their ads for tracking, the owner said that it’s difficult to get an exact number of customers that buy because of the advertising that they do.
The owner estimates that they get approximately 2100 responses to their ads per year, with an average of $25.00 per purchase which equates to annual revenues of $52,500.00 which equates to a 160% ROI.
As can be seen from the results obtained from each of these businesses and their advertising campaigns, a mix of advertising channels is effective, but the businesses that utilized print advertising provided the highest ROI. We at Front Door Advertising would love to show you how we can craft a campaign for your business that will provide you with a great ROI for you advertising dollars. Contact us today for a FREE quote on all your print advertising needs.