Your Advertising Dollars Must Be Used Wisely!

How many of you advertise?If you do advertise, why do you do it?Most of us think we must advertise to get sales, sales, sales. We think if we don’t spend the money on print, radio, or TV ads – we won’t make any money.#1 You need sales so you decide to advertise#2 Once you recover from the shock of the advertising spend, you decide on the media format to use#3 You place the ad and wait…and wait…and wait#4 You see an increase in sales and assume the advertising campaign is working. That is what they want you to think!In order to determine if your advertising is working and is effective, you must calculate your Advertising ROI. To calculate your advertising ROI you simply:#1 Take the cost of your advertising spend (let’s say $5,000 per week)#2 Know what your Sales/Service Gross Margin is (let’s say 30%)#3 Divide your Advertising spend by your gross margin ($5,000/30%)In this example, you will need to increase your sales by $16,666 dollars per week against an advertising spend of $5,000 per week! You need to ask yourself, “If by using the ad campaign I am planning, is there any way possible I can gain that amount of sales volume.” If you can – then great! Go for it! I am willing to bet that if you do this exercise with all of your ad campaigns, you will realize few of them, if any, provided you with break even results!Remember, you are in this business to make money! It does not come easy. Advertising is fun. Advertising is glamorous. Advertisers promise you outstanding returns on your spend with incredible traffic. Next time you’re in the market to advertise, resist the lure of the advertising world. Ask your advertisers to share their clients’ success stories. Ask for references. Call the references and ask them if they did an advertising ROI on their endeavor. Finally do some work yourself – put the pencil to paper and calculate your own advertising ROI. If you can’t justify the dollars, don’t do the ad.