Measure Response to Your Advertisements

If you have invested in a direct response ad, measuring the response is not difficult. The coupon on each ad should be coded, so that you can identify both the ad and the publication in which it appeared. A three-part code might be useful - the first part to identify the publication, the second to identify the ad, and the third to indicate when it appeared. The coupon for version 1 of an ad appearing in Micro User in January, for example, might be coded MUIJ. When the coupons come in, you simply sort them according to their codes; you can then work out the cost per enquiry and, later, if the enquiry is translated into a sale, the cost per sale.

Cost per enquiry and cost per sale

The cost per enquiry is worked out by taking the total cost of the ad (in other words any design, photography, printing and postage costs, as well as the space cost) and dividing it by the number of enquiries received.

The cost per sale is worked out by dividing the total cost of the ad by the number of actual sales made.

Suppose you spent a total of $500 on a direct response ad, and got 1000 enquiries; your cost per enquiry would be 50p. If only 500 of those enquiries actually bought your product, the cost per sale would be S1. Any items which were ordered and subsequently returned should be excluded from the calculation, as they are not really sales.

In most cases it is the cost per enquiry which is the best measure of the ad, while the cost per sale may give you an indication of how good the follow-up is, and how popular the product. If you use the cost per sale to measure your ad's success, you could get a distorted view. It could be that the ad worked very well, but that something went wrong in converting the enquiries into sales. In that case, you shouldn't be tampering with your ads, but looking into what is wrong with the subsequent follow-up. So always use both calculations to get the full picture.

If you measure the response of each ad in a whole campaign, or a series of campaigns, you can make a number of comparisons:

• between media

• between ads

• between different times of the year.

In order to be able to make such an assessment, you need to tabulate your results along the lines shown opposite. It is vitally important to keep track of what you actually spend on your advertising, as well as what you have budgeted.