10 WAYS TO BOOST YOUR COMPANY’S VALUE
Practice #5: Review your marketing and advertising ROI
According to advertising analyst firm Outsell, most companies spend 50 percent of their advertising budget on their website. Whether that is a good thing to do may depend on your industry.
The key question is; how much can you afford to spend to get a sale? Few executives actually know the answer to this question because it is a complicated mix of variables, given the recent emergence of Social Media and the growing number of online advertising channels linked to Google search. What you need to ask yourself is, what is your advertising Return on Investment (ROI) per advertising media channel, or more specifically, where can you get the biggest bang for your buck (print, tv, radio, mobile, or on-line)? And the answer is not a mystery anymore.
The first place to look is at your competition. What are they doing right? And how are they doing it? Then, focus on identifying both your anticipated advertising ROI for the year, and learn how best to measure it. Advertising Spend as it’s called in the Marketing Mix, is a percentage of total sales. If you don’t know your industry Ad-to-Sales-Ratio you can find it online, and here http://www.saibooks.com/adv-ind-sector-ratios.html
If your annualized Ad-to-Sales ratio is out of line with industry norms then you best explain why or else. Many companies spend too much on advertising without knowing how effective it is, and some say 50% of all advertising is wasted.
There are many software solutions in the Customer Relationship Management (CRM) space that can calculate ROI per channel for you. These systems can save thousands in mis-guided ad and marketing expense by tracking ROI from lead generation, campaign management, social media and response rates for tv, print & mobile ads. Even better, most CRM solutions are outsourced, and sold as (SaaS) Software-as-a-Service, meaning the software is licensed as a service online and charges a monthly fee.
Once you have a system in place you can then reduce costs and increase profits by identifying and specifically targeting the most cost effective (ROI) channels for your money. And who wants to say no to that these days?
In part 6, we look at reducing overhead expenses.