There are smart reasons to advertise. In today’s competitive environment your advertising has to work even harder to break through the clutter, gain market share, create buzz and beat out the competition. However, cost-effectiveness and ROI begins with the right approach to media buying.
According to the RAB, here are 10 reasons why advertising is so critical:
- Advertising creates store traffic or web traffic.
- Advertising attracts new customers.
- Advertising encourages repeat business.
- Advertising generates continuous business.
- Advertising is an investment in success.
- Advertising keeps you competitive.
- Advertising keeps your product, service or business Top-of-Mind with customers.
- Advertising gives your business a successful image.
- Advertising maintains morale.
- Advertising brings in big dollars for your business.
While there are great reasons to advertise, the question becomes “How do we advertise wisely? What does it take to develop a successful media plan?” Or more often than not, the question we get asked is “How much should I budget? Or “How much should we spend to have our advertising be successful?”
These are absolutely the right questions to ask because you don’t want to spend too little and never know if your advertising would have worked if you would have invested just a little more. And you don’t want to spend too much and waste money.
You don’t need more advertising options. There are so many it can be distracting. You need to know which of the advertising options are going to give you the maximum Return on Investment. So here are some steps to consider when developing a media plan and how we at DX Media Direct begin to establish the right-sized media plan for clients.
Step One: Establish your target metric for results. Make it measurable. Make it specific. Make it count.
The first step to developing a successful media plan is to know exactly what you want or need from your plan for you to consider the advertising investment a success. This looks different for every company. If you are a retail location, then you would like to see more customers, foot traffic, and same store, same month, year over year sales increases. If you are a web-driven company, then it could be visitors and purchases from your site.
One way to help clarify what you need to get from your advertising is to finish this statement: If I spend $1,000 in advertising, I need this _______________ to happen. Fill in the blank. You answer could be a number of new customers, number of sales dollars, number of prospects, increase in store visitors, number of unique visitors to your website or follows on social media. Then you need to consider how many opportunities you need to convert to the specific number of sales to make that $1,000 a profitable investment.
For example, if you convert 10% or 1 in 10 prospects into a sale and you make $500 per sale on average, then your advertising needs to deliver 20 prospects for you to break even on your media. That’s because you create two customers on average based on your conversion ratio. So, you gain $1,000 in sales for every $1,000 you invest. That’s also known as 1 to 1 Media Effectiveness Ratio. Most companies are looking for a 2.5 to 1 or 3 to 1 Media Effectiveness Ratio.
What you fill in the blank with is the foundation and metric that every part of your media plan must achieve to continue being part of your media plan. That’s your benchmark. That’s your target metric. It’s also known as a KPI or Key Performance Indicator. Once you have established your Key Performance Indicator, then you need to review your sales process and develop a plan for measuring the response rate, conversion ratio and lifetime value of your customers.
Step Two: Match your media mix to the way you sell.
How you sell and who you sell to (your target customer) determines how you advertise. Delivering optimal advertising results is specific to your organization. When, where, how and who your customers are will guide you to your optimal media mix. Each company has established a sales system that works for them because of how they connect best with their target customers. It could be leads from a website to an in-house sales team. It could be you sell best 100% online. If you have retail outlets, then you want more opportunities for face to face customer interaction. Every media type has strengths and weaknesses. For example:
- Radio is great at driving response from M-F, 6am to 7pm.
- Facebook has certain times of day that are stronger for results because more people are free to look at it.
- TV is dominant in Primetime and weekends.
- Outdoor is excellent for “Exit Here” strategies.
At DX Media Direct, we work hard to make sure the media mix matches the highest conversion rates for each specific company and the way they sell. Write down your responses to the following statements. This will guide your agency or media buyer to determine the best media mix and plan for the maximum results.
- I convert more prospects to sales at this time of day and these days of the week.
- My best salespeople work during these hours and days of week.
- My sales system is this. Be specific on how you handle responses from the start of the selling process to converting a customer.
- Seasonality impacts my sales. Yes or no?
- My worst sales days are these.
- I’m closed these hours and these days.
- My best customers are age, gender, income and psychographic segmentation, which means dividing your market based upon consumer personality traits, attitudes, interests and lifestyles.
- My best customers really seem to enjoy ___________.
- Most of my customers live ______________ miles from our location.
- Location is not a factor in how we get business.
- My customers say they purchase from us because ________________.
- My customers are web savvy, shop and compare all the time. Yes or no?
Your agency should begin to see which media should be included in your media plan once some of these answers come to light.
Step Three: Create a test plan to measure how the initial media plan performs before a complete rollout.
Once you have your target metrics, how you sell and when you sell the most, then a media plan will begin to emerge. A good media plan usually has a mix of media because customers now research and respond in several ways. They search you on their smartphone, look up reviews, check you online, see if your website answers some initial questions for them, look up your Facebook page and even stop by your retail location or call. There is a best-in-class strategy for each media you use.
The key is to test the initial media plan, review the results and refine the plan before you roll out more budget. We usually recommend three- to four-week tests initially. Your media should be delivering at 65% to 75% of your stated goals within the first test phase. If certain media outlets are only performing at half of goal, or 50% of your target, then this media needs to be eliminated or re-analyzed to see why it’s underperforming.
Step Four: Make sure you get enough frequency to move prospects through the purchase funnel: “Awareness, Interest, Desire to Action.”
In broadcast, you will want to target a minimum frequency of three times. Erwin Ephron writes in his article the rule of three, “Exposure No. 1 is a ‘What is it?’ type of response. Anything new or novel—no matter how uninteresting—on second exposure has to elicit some response the first time… If only to disregard the object as of no further interest. The second exposure response is ‘What of it? Does this have relevance to me?’ By the third exposure, the viewer knows he/she has been through the ‘What is it and what of it?’ phases. The third exposure becomes the true reminder.”
For radio we suggest a minimum 25 spots per week Mon.-Fri. from 6am to 7pm. Optimum Effective Scheduling, which helps you determine the number of spots to achieve a frequency of three times on radio, is based on the formula Cume / AQH X 3.29 = OES or Optimum Effective Scheduling. This gives you the calculation for the number of times your message needs to air to reach your target audience at least three times in a week.
Optimum Effective Schedules will direct you to much higher frequency weekly, but you can save on budget by advertising fewer weeks of the month to deliver a greater yield than if you had a low number of spots spread out for 52 weeks. Again, your agency and or media buyer should help guide you to the most efficient way to execute the test.
Step Five: Let the Data drive you and take the emotion out of the media plan.
When you start advertising and planning your media, it’s easy to let emotions drive you. A customer comment, a salesperson’s input, and anecdotal observations can drive you crazy and get you off target. Once you begin to execute the media plan, then evaluate the performance based on the results each media buy accomplished. As long the media is performing you can create other campaigns that are similar in target audience, CPM, reach and frequency, and results. There will be ups and downs, but they should be manageable.
Paul J. Meyer writes: “Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort.” When you have built a smart media plan, you will harvest solid, stable results.