How to Measure the ROI of Offline Advertising

“I know half my advertising is a waste, I just don’t know which half.”
— Popular Saying

Many proponents of online marketing like to suggest that the problem of tracking has been largely solved in the online world. It’s true that online marketing can produce tremendous data on which ads lead to a visitor coming to a company’s website, and the type of customers that a particular media campaign generated. However, just because it’s easier to track online advertising, doesn’t mean that online advertising is more effective or has a better return on investment that offline advertising. This blog post will discuss several ways that you can approximate the effectiveness of offline advertising, such as postcards, newspaper, radio and TV advertising.

Here are three methods that you might try:

Method 1: Looking at relative changes in the number of web visits, phone calls, sales and volume of sales.

Did your advertising get more people to engage with your business? Let’s say you are a tire shop, and run a large full page advertisement in a local newspaper on a Tuesday, for a sale running from Thursday through Sunday.

If the advertising was effective, one might expect the following:

1. An increase in the number of phone calls, with a bump on Tuesday and higher than normal activity the rest of the week as people call in to find out details of the deal.
2. An increase in web traffic along the same lines.
3. More sales than normal during Thursday through Sunday, with many sales coming from new customers.

There are a few problems with this approach.

First, even if your advertising is effective, you might not be able to detect the impact.  There are normal fluctuations in the amount of phone calls, sales, etc. When I was the CMO of a fairly large company, it wasn’t at all unusual to see a 10-15% fluctuation in weekly numbers without any change in advertising.

Second, isolating the impact of one particular media expenditure can be very difficult with this particular method. In the example above, the tire company might advertise a big sale in several places at once. It’s difficult determining which place should get credit.

(Looking for a good resource on buying newspaper advertising? Check out this article.)

Method 2: Creating separate offers for different places.

If you’re only marketing the offer in one place, lets say you’re sending out a postcard for a “buy 3 tires and get the fourth free sale”, tracking sales generated through the postcard should be easy.  One should simply be able to credit the postcard with bringing in all the sales that took advantage of the offer. However, this approach might potentially underestimate or overestimate the impact of the offer.

How does this underestimate the impact? The postcard with the great sale offer might catch the attention of customers. However, not everyone might be in the market for getting an entire set of new tires and only need one. The advertising might be effective, but not generate sales for the item being promoted.

How does this overestimate the impact? A potential customer walks into the tire shop and doesn’t know about the sale. In order to be helpful or get a commission, do you think the salesperson might tell the customer about the sale?

With postcards or direct mail, it’s very easy to see the impact of advertising. Don’t send to everyone in your database! Have a control group to which doesn’t get the offer and a group which does and compare the sales. If the advertising works well, you can send it to the control group as well.

Method 3: Creating Trackable Communication Channels

I know many companies set-up vanity phone numbers (EX: 1-800-Get-Tires) or URLs (EX: www.buy3tires.com) to help with tracking campaigns. While this approach can be helpful, it also has problems. If a person is familiar with your business, there is a tendency for them to type in your URL regardless or dial the main number regardless of the contact information in the ad.

(Hint: 800 numbers don’t always increase sales over a local number. Interesting research shows consumers prefer local numbers.)

Method 4: Combining Two Of The Methods Above

All the methods individually have problems but, combining method one with either two or three can provide a good sense of the effectiveness of a particular advertising campaign. Method 1 can answer the question, “Was there a pickup in sales around the time the advertising was run?” Method 2 or 3 can provide more insight into if the pickup was due to advertising and which advertising was responsible.

How do you track and measure your offline marketing efforts? Is it using one of the methods mentioned above or something different? We’d love to hear from you! Leave a comment below, or connect with us on Facebook, Twitter or Google+.

About The Author: Marc Prosser is a marketing expert with over 15 years of experience. Currently he serves as the publisher of Fit Small Business which provides practical “how to” advice to small business owners.