Monday, April 27, 2009

Is cost per sale an advertising metric?

How do you know your latest campaign worked out? After six weeks did sales jump? Or did your neighbor mention how great the new campaign was while you were working on your yard? Chances are it's a combination - most corporate marketers rely on the this combo to push for a pass or fail from their agency.

I am a believer in the web analytic's model that says if someone likes your ad, they will reward you by clicking it (or engaging in it). I'm also a believer that most people don't know what they are looking at in the run of a day to be able to give a solid reflection of a particular campaigns effectiveness. We are all often very bad judges of what we think we (and others) actually like. This bring up a tough point - How do you gage your advertising effectiveness?

I don't think that (in most cases) it is as black and white as something like the cost per sale. It works great for an online business or a business built to be flexible enough to react and proactively adjust to the consumer mindset - however most big companies are too slow for this. Using a cost per sale method for a larger organization doesn't take into consideration the high value of an existing customer base, the internal management structure (manage the management), the effectiveness of a sales team, the call-to-customer service times, public relations, the brand equity or even the competitive environment. So what works?

Look at an organization who has got it right. Chances are they look at all those things that make up the consumer experience and opinion. The departments a large company often spend resources maintaining often build barriers between employees and consumers. In those companies which are exceeding expectations, these department have been taken apart to change focus to the consumer. Actually, even successful companies that measure cost per sale do so by taking into consideration all those other factors that influence the purchase - and they make each employee of their organization consider the impact of their action on the consumer purchase.

The role of marketer changes when the result becomes the consumer experience (rather than action). I think that for certain strategic execution in advertising we should measure the action - but as a marketer we should be more concerned about consumer experience. We can change attitudes well before we influence behavior. The need for companies to change focus from what their advertising is doing, to what consumers are experiencing is the first step to supporting any marketing initiative and finding out what works.