Many times a business advertises simply in order to have a presence. A tally is not kept of responses to the advertising. The owner or manager can tell by the general volume of business whether or not their ad is working sufficiently for them.
However, in some businesses it is easy to keep a record of advertising response and when we can, it is wise to do so. Then we can tell which ads are working in which media. We can also tell if a formerly successful ad quits working and we need to change our style.
But how do we judge our response? Is it as simple as the number of phone calls we get or the number of people who walk through the door? Not always.
Years ago when I first started The New Times newspaper, I had an experience which brought this home to me. A massage therapist complained that his ad hadn't worked. In a month he had only one client come to see him as a direct result of the ad. At the time the rate for a classified ad was $3.00 for 20 words or less. He had run a $3.00 classified ad. I asked him how much he charged for a massage. "Sixty dollars," he replied. "So," I said, "in one month you invested $3 and got a return of $60? I think there are a lot of investors who would be very jealous!"
When you are evaluating your results in terms of money, it is important for you to figure out how much each client is worth to you. For instance, in this fellow's case, if he charges $60 for a massage and his average client gets one massage a month, then his average customer will spend $720 a year. If the average client stays with him for an average of two years, the client is worth $1440! This helps determine how much money can be spent on generating one client. In this situation, an advertiser might reevaluate and decide he can afford to spend more to generate clients like this.
Another advertiser I know placed a display ad and spent $115.20. She quit running the ad because she got only one client. That one client has already spent $720 with her in a year and a half and referred another client who has spent $90 in the past six months. $115.20 gave a return of $820. What if she had continued to advertise and picked up one good customer a month?
To evaluate your advertising budget, figure out how much each client or customer is worth to you over a period of time. This tells you how much you can afford to invest in attracting them to you. Think long-term rather than only immediate benefit and you'll be able to evaluate your advertising results in truly realistic terms.