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.

Does mass media still exist?

More and more companies are looking for alternative ways to advertise. Notice that I didn't say "talk to consumers" like the request usually sounds. This may be the official request, but what these companies eally mean is: get my message in front of as many people as possible but do it in a way that makes me feel good that we are using all the cool new tools that I keep hearing about.

And who can blame them?

For the last 60-70 years companies have come to rely on the ability of advertisers to get the message out to the masses. From the early days of radio where "never before in the history of the world have five or ten or fifty million people listened to the same sound at the same time" (VP of advertising at BBDO, 1935), through to television - companies could build a marketing plan around the fact that advertisers could connect them to the masses. Because of the given choices for the consumer (radio, print and television), it wasn't too hard to find out where/when most "people were looking in the same direction at the same time."* But...

...things have changed. The task to reach the place where most people place their attention is not so simple. We keep hearing about how cool the world of new media is - but we struggle with how it fits within our current ideas of marketing and advertising. The fact that we call it media - social media, new media, etc - doesn't help.

In today's households, 40% of leisure time is spent online. When there are more websites than people on this planet, it is not a simple task of finding where these people spend 40% of their time. It's not that these people can't be reached - it's just that the way we can reach them, isn't black and white like buying a couple hundred GRP's on CBS. This makes companies worried. It makes marketing teams believe that the investment carries a greater amount of risk.

There is a perception that this move online is taking away from other media, after all we only have 24 hours in a day. In reality, of the 142 hours per month that we watch television, a large portion of that is spent splitting our attention between mediums. In a study last year from MarketingVox, 31% of those watching television were also online. Now we're dealing with a time-crunched consumer, who is also dividing their attention between mediums. Something the media ratings systems have not quite accounted for and something that is not reflected (or requested) in many media plans.

So reaching the masses is no longer black and white. The masses are fragmented. Even when we know where they are, we can be almost certain that there attention is only partly there. Facing this reality, marketers and advertisers have to change their dialogue with each other. The need to identify our audience beyond general demographics is essential. The more our audience fragments it's attention and time, the more our marketing/advertising efforts require fragmentation. The solution involves more creative ideas, more time listening to consumers and abandoning the thought that any idea outside of mass media holds greater risk.


*Paraphrased from "Buying In" by Rob Walker.

Another motivation to consider new media.

How many meetings have you been to where the amount of people you reach with your ads is discussed versus the amount of revenue (not sales) the company wants to make?

That's a great example of the old model trying to harmonize with the new. Most ad agencies continue to support this way of thinking. Don't waste your time.

Remember, all companies stay in business when they make money - not push ads out to thousands of people. Making money comes from talking to people who want to buy your product. If you could change a salesperson's close ratio to 75% from 10% you'd do it. New media offers the ability to change the 'engaged audience' ratio from the old 1%-5% to 75%-100%. Let that be the motivation to explore new media and social media, rather than the urge to reach everyone. Take quantity out of the discussion.

There's a bit more to it, but I'll leave that for another post.

The Easy Way To Shoot Yourself In The Foot

I have an anniversary coming up. So finding a perfect gift has been top-of-mind. I’m on the web reading every ad, checking every review, searching sites for ideas. I’m watching the television and tuned in to each 30 second spot. Then, on my way to work I notice a great sign on the sidewalk in front of an intriguing shop. You know, one of those places you may have passed a million times before, but with your current elevated awareness, its seems to jump at you from the road. It says “Original Gift Items - Perfect for your anniversary”. This is crazy. How did they know I would be driving here? So I take the time to find a parking spot. I get out, and walk towards the store front. The sign takes up the whole store window, and its promise has me thrilled about what lies ahead. With a message like that, I know that what’s on the other side of that door has got to be exactly what I had in mind. I try the door. It’s locked. The sign looks down at me, taunting me with a promise it won’t deliver. This store probably had 200,000 people go through this same experience.

Lots of impressions. No conversions.
Big Promise. No Delivery.

This store probably had 200,000 people go through this same experience. Why would this store/brand/website waste its time and money on grabbing attention and not making sales? An easy answer, but a scenario that pollutes the traditional marketing space and has crept into the online and new media space.

Why do marketers continue to build hype and break trust? Why do marketers continue to degrade every possible way to connect their consumers? Is it any wonder that online ads have become another "branding" medium, while 'old' consumers and companies are skeptical about 'new' media?