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Understanding R.O.I. and Credibility in Advertising

JEFF C. RIVERS

One of the most important points you should know before developing an advertising campaign is to calculate your Return-On-Investment (ROI). When you figure out the breakeven number of new clients that your campaign needs to generate profits, you'll understand better where and how to spend your ad budget.



First in all, you should know how much your ad campaign will cost. You should also know the lifetime value of a client. For example, if the total cost of your ad campaign is $800.00 and a lifetime value of a client is $200.00, you only need four clients to pay for your campaign. That is the breakeven number. If you get five, you're making money. If the cost of your ad campaign is the same, $800.00, but the lifetime value of your average client is $1,600.00, you need just 0.5 client to breakeven. As you will never have half of a client, you will need just one client. After such a client, you're making money, you're getting good results.

There are many other points you should consider before developing your ad campaign. When you are going to buy ad space, you need to know the outlet you'll be using. If this is the case of any specific newspaper or magazine, you better know first the reader's profile of that publication. Such profile might not cope with the product or service you're advertising. Newspaper's readers might not be interested in what you offer, or if you're selling luxury items, your items' price might not be affordable for some low income readers like new immigrants, some retired persons and people with certain disabilities targeted by some publications.

If you're targeting specific niches, such as ethnic groups, Internet users, where-to-go calendar readers or people living in geographic regions, then you should consider many other factors such as the language in which your ad will be published, readers loyalty to newspapers or magazines you're considering, years that these publications have been in the market and obviously their credibility.

The critical importance of trust in times of adversity is a factor you should take into account. News media with strong credibility will help your advertising campaign much better. Audiences tend to believe much more in ads placed on trusted media. Sometimes, an ad on a bad place can have unexpected, unfortunate results for advertisers.

Also, if you are trying to reach an ethnic or a national group, you better make sure that such a group is a niche big enough to spend all your ad budget there.

A serious combination of a ROI calculation, a knowledge of audience profile and ad outlets' credibility is paramount for a successful advertising campaign.

Check this Advertising Breakeven Calculator

(Jeff C. Rivers is a freelance writer on marketing and advertising)

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