There’s an old adage in marketing that every dollar you spend should yield two dollars. And while the specifics of this are flexible ($1.50, $3, $5, …or more), the concept is sound. By adding an advertising budget, you are spending money to help your business earn more money.

If you’ve already got a working advertising relationship set-up, whether it’s digital, print, display, or broadcast media, you will still want to make improvements over time. How do you know if these improvements are better or worse for your business?

There are two basic elements needed to get started judging the effectiveness of your advertising campaigns:

  1. Attribution: You will want to make sure you have attribution for your sales. Whether this is digitally (like Google Analytics), or through customer surveys (“Where did you hear about us?”), you will want to know if your efforts are producing a return. The more granular you can go, the better you can make actionable decisions based on the response to your marketing experiments.
  2. Comparison: When you first get started advertising you have nothing to compare it to, right? Wrong! You can actually compare it to your baseline growth without advertising. What were your previous growth rates? This same principle applies to existing advertising campaigns, and we call it “King of the Mountain Marketing.”

King of the Mountain

Here is an example of an established advertising campaign that may want to do better:

Sally’s Bike Adventures sells guided trips through a website. They advertise through Facebook and Google AdWords. The campaign ad banner is a stock photo of a cyclist, the copy describes “Guided bike adventures in the country for as little as $199,” and the target audience is people within 100 miles interested in cycling, or searching for bike shops.

Before making changes, Sally’s Bike Adventures wants to make sure they have baseline attribution. Is the current campaign working – are they making $2 for every $1 – and how do they know?

What not to do:

  • Sally’s Bike Adventures stops their current ad campaign –and–
  • Re-designs the website –and–
  • Switches to banner advertising on a local tourism website –and–
  • Increases their new monthly ad budget –and–
  • Uses a new banner image from the new design –and–
  • Changes their copy to “Local cycling adventures, from downtown”
  • Etc.

Can you see what’s wrong with doing the above steps all at the same time? Each of those elements, on their own, are fantastic. But doing them all at once doesn’t allow for Sally’s Bike Adventures to determine what succeeded, what failed, and what didn’t cause any changes. Without maintaining a “King of the Mountain,” it becomes difficult to determine the effect the ad variable had on sales.

Secondly, what if Sally’s Bike Adventures compares November–January stats versus May–July? It would be hard to attribute a change in sales to that new ad banner if the season itself affects sales. This is another important reason to have a King of the Mountain – if both campaigns show effects from the season then you know it’s not just the variable you added, removed, or edited.

With elements where you can’t have a King of the Mountain – like a website re-design – you will need to smooth out the seasonality and consider the change over a longer period. For example: did Sally’s Bike Adventures website convert visitors better this year, with the new design, over last year, with the old design?

Other elements to consider:

  • Industry Events: Was there any recent announcements at a conference, expo, festival, etc. that told everyone in your target market to participate in X, start buying Y, or sell Z?
  • Catastrophes/Emergencies: Was there a wildfire, earthquake, or flood that recently affected many in your target market?

Attributing ad-banner changes, when there are outside factors influencing your audience, makes it difficult to decide if Image A or Image B was better in earning you $2 or $3 for every $1 spent, or if it was just an effect of the audience changing.

As long as you keep a King of the Mountain baseline to measure your changes against, and you have attribution to your changes, then you can keep improving on your existing marketing efforts. Soon, your $1 will not just yield $2, but $3, $5, and more!

Do you need further help with attribution or testing your ad campaign? Pathway One will help outline a step-by-step process to your marketing plan, specific to your small business and target market needs.

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