How to Improve the Efficiency of Your Advertising Tools. How to Turn Your Advertising Expenses into a Source of Income
Business and online-business
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Which Half of Your Advertising is Unnecessary?

Most often, it is your advertising that is the first point of contact with your customer.

Entrepreneurs often believe that money invested in marketing and advertising is wasted. They would like to do away with the expense, yet they are afraid that they will have no clients left. Irritably signing another check, a businessman does not understand which advertising works well and which simply eats up their profits. Can anything be done about this sad state of affairs? Certainly!

It is easy to answer the “Which half of your advertising is unnecessary?” question. In order to do that you need to consider your advertising as investment that generates profit, instead of an expense. If you invest one dollar and get back two – this is good advertising. If the advertising does not even pay for itself, however, you need to get rid of it and do something else. To succeed, you need to work with numbers and keep statistics, not blindly spend your budget. If you do not evaluate your investment in advertising, you are wasting your money.

To assess advertising investments you need to evaluate three factors:

1) Cost of contact;

2) Cost of sale;

3) Conversion rate (the rate of incoming traffic to the number of clients taking the desired action).

What are these factors and how do you evaluate them?

1. Cost of Contact

You need to divide the cost of each of your advertisements by the number of clients who respond (call, come in). That way, you can see the effectiveness of your advertising campaign. It is very important to assess the response to your advertising for each advertising channel.

That said, it is useless to ask the clients how they found out about you. Experience shows that approximately half of the answers have nothing to do with reality. Why?

• The customer does not remember or is mistaken.

• The account manager suggests an answer to the client.

• The receptionist forgets to ask and puts in a random checkmark.

There are better ways to find out which advertisement led the customer to you:

1. Use different phone numbers in different ads:

  • On the website;
  • In each magazine or newspaper;
  • In various types of brochures.

You do not need to have separate phone lines for each number. To use this method, all you need to do is get cheap SIM cards, have the calls forwarded to one phone and study reports of incoming and forwarded calls.

2. Use a Promo Code or Code Words, using which the customer can get a discount or a gift.

If you are mailing hard-copy letters, type or write different numbers on the envelope. Make sure to specify, “Return this envelope to receive such and such a bonus.” This is a very popular type of advertising and works really well.

Imagine that you have three different channels to send these hard-copy mailings. First of all, you can hire an agency that will send them out to its client database. Put number 1 on the envelopes in this mailing. Then, send them to your own client database and put number 2 on these envelopes. Finally, mail out to your partners’ client database and put number 3 on those envelopes. Once you count how many of what type of envelopes (with which number) came back and how many sales were made, you can make a decision on using such mailings for your advertising.

A similar technique works in print advertising. Specify in your magazine or newspaper ad, “Say code 777 to receive a bonus.” When the client calls, you ask for the code and find out automatically which advertisement led them to you.

3. Client Gifts and Bonuses

You can promise a baseball cap in one magazine and a mug in another. People usually remember the bonuses and the person who calls or comes in will tell you what it is they are getting.

4. Pictures, codes, or flyer (coupon) colors to be presented at the store. They can be different in different distribution locations or for different promoters.

5. A separate e-mail account for those who work with e-mailings. Specify different e-mail addresses for ordering through different websites or articles:,, etc. Study the monthly statistics for which address had more messages and how much money you made on these customers.

Use the statistics to analyze the click-rate on your website. By studying statistics you can find out exactly how many clients came via each channel and will be able to increase advertising with the most effective ones and get rid of the ones that do not work.

Estimate the conversion rate (how many people who saw your advertising or received a flyer responded) for each advertising channel. In addition to various channels, the headers, text and design of your ads are crucial. Test various headers and texts. Select the ones to which more clients responded. The difference in response rate can be as large as 300% simply because of a different header or ad design.

2. Cost of Sale

You need to divide the cost of advertising on a particular channel by the number of clients who actually purchased from you. That way you can trace both the effectiveness of your advertising campaign and the effectiveness of your salespeople. Estimate the cost of getting a customer from each advertising channel. Estimate the return on investment for each advertisement. Reduce spending for ineffective channels and increase the budget for advertising where the cost of getting a customer is lower.

3. Conversion Rate

Conversion rate is calculated by dividing your total incoming traffic by the number of clients taking the desired action. In a sense, a synonym for “conversion” is “transformation.” For example you are transforming people who simply visit your store into customers who actually pay you money. Divide the number of clients who called (came in) by the number of clients who actually made a purchase and you will see the effectiveness of your salespeople and of your merchandizing.

Make sure that you check at which stage you lose most of your potential clients. Find the weak link in your “sales funnel.”

1. If people come to your website but do not order or call, there is a problem with your website. Write copy that sells or change the design. You may want to speak to a competent consultant.

2. If there are calls, but no appointments, the problem is with the employee who answers the phone. Write scripts, train and monitor salespeople.

3. If there are many appointments or meetings, but no results, your salespeople are not doing well. Train them.

Estimate and improve the conversion rate at each stage of the sales funnel. Make sure to evaluate the results of each change.

Analyze your current advertising. Make a list of all your advertising (flyers, media advertising, Internet, posters, bill boards, etc.).

Evaluate the efficiency of your advertisement for each advertising channel. Let us say that you invested $1,000 into Google AdWords and $1,000 into target advertising on Facebook. Estimate how much your return was. It might be that the cost of a click on Google AdWords is $20 and 50 people came to your website. Ten of them called you and seven people bought something from you. On Facebook a click on a link to your website had cost $2 each and covered 500 people. One hundred visitors came to your website from Facebook and 20 of them made a purchase. It is obvious that the latter advertising is more effective.

Decide what objective you want to achieve with your advertising.

• Increase sales;

• Attract customers to the store;

• Increase the number of trial purchases;

• Raise the average amount of sale;

• Quickly sell a specific product/service.

Do not forget that you can only have one objective in each ad. Otherwise, it will not work nearly as well.

Check your ad against each point and re-do it, if necessary

• Is the header eye-catching?

• What should the customer do? Is there a call for a specific action?

• Does the client know where to go, when and how to purchase your product or service?

• Is all of your contact information there?

• Does the ad correspond to the values and needs of a specific client?

• What key benefit will this specific client get?

• What additional benefits will the client get?

• Have you offered special terms to your regular clients?

• Why are you better than your competitors, why should the clients buy from you?

• Have you dealt with the customer’s fears, concerns and arguments?

• Do you have the customer’s trust?

• What warranties and proofs does the client get?

• Are there restrictions that make the client buy immediately?

• Is there an attractive image?

• Does the client feel as if they have tried your product?

• Will your actual clients read, see or hear this ad?

• Compare advertising: do you have phrases used by your competitors? Change or remove these phrases. Differentiate yourself from your competitors.

• Change the words “we” and “ours” (they do not work) to “you” and “yours.”

• Remove or clarify all generalizations.

• Get rid of all words that are not easy to understand and use more of the short, succinct phrases.

• Separate text into paragraphs; add lists, subheaders and pictures; have a nice layout.

• Submit the text for proofreading!

Spelling and grammatical mistakes often turn the customers off. Especially the older ones; they will assume that if you pay no attention to your texts, you will treat their orders the same way.

Three Terrible Mistakes that Kill Your Advertising

The most common mistake in small business advertising is the mechanical copying of the competition. Competitors advertise products and services the same way in the same newspapers and magazines going by the “everyone does it” rule. If copying the competition is the main reason you are giving the same ad, you are wasting your advertising budget.

In order for your advertisement to be effective it has to be different from that of your competitors. If everyone has black-and-white ads, your colored one will be different. If everyone has running text, while you have a pretty woman – it will be different. If your ad does not stand out from the ones around it, you have already committed bad advertising. Such an ad inherently cannot be effective.

The second popular business mistake is when you try to sell products, buy materials and hire employees in the same ad. This type of advertising will not work for any of these. Each advertising message must be addressed to its own audience and have one objective. If a person feels that the ad is addressed to different people, they will not feel that it is addressed to them. This type of advertising will not lead to people getting involved with you.

When you talk about strong advertising impact, segmentation is a must. If you wish a person’s reaction to advertisement to be “Yes, this ad’s for me!” you will have to create several different messages for each niche. The response to such targeted message will be about ten times higher, while the expense only three times more than that for a regular ad.

The third mistake is abundance of generalizations in advertising. Be as specific as you can! Change “Promptness, flexibility and convenience of working with us” to “We’ll be there in an hour, we’ll deliver and we’ll pick it up.” Substitute “Flexible and reasonable prices” with “Starting at (specifying the numbers)” and “You’ll save such and such an amount if you do this and that.” Change “We are interested in long-term partnership” to “If you are our regular client we have these wonderful terms for you.”


1. Analyze your advertisement.

2. Select the right advertising channels by the expenses/results ratio.

3. Go through your advertising point by point and fix any errors.

Date of publication: 23 January 2018
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