Steve Wilkinghoff is the author of “Found Money” (One of my MOST FAVORITE books). Steve’s gift is the rare combination of managerial accounting smarts with a marketing focus. In other words – he can tell you which products are making money and which aren’t — and what to do about it. In this debut article, you’ll get to see why his insight is so valuable!
About a week ago I had a client excitedly tell me all about an outdoor advertising spot she had committed to. She explained to me that the location had been measured and received a large number of drive-by impressions each day.
Therefore, she concluded, the advertising location ?worked?.
Now I’ve got nothing against any type of advertising (I love it all, and truly believe all advertising has the potential to help improve any business). However, based on this discussion, it was clear that my client could be headed for financial disappointment because she hadn?t properly defined what ?works? actually meant to her or what it should mean to her.
She had fallen into the trap of assuming that the number of daily drive-by impressions was the relevant measure of success. But the assumption was wrong.
How do I know?
Because she isn’t in the business of selling drive-by impressions.
What she is in the business of doing is to sell a service to people that need it, and create an adequate financial result for herself in the process.
Because of that fact, the relevant measure of how well any type of advertising (or any other elements of her business for that matter) ?works? is the degree to which it contributes toward her financial results.
In other words, the daily drive-by impressions are only the raw material. Before those impressions work for her, they need to translate into more prospects. And those prospects have to translate into more customers who can be served at a profit, in a way that fits in with the style, approach, and personality of her business. And there has to be enough new customers to create additional profit in excess of the cost of the advertising.
All of those things must happen before the advertising spot works for her business.
When she takes that view, it is relatively simply to put measures and metrics in place to tell very quickly if the new advertising spot is working. If those metrics tell her it isn’t working that doesn’t mean the advertising spot needs to be dropped. But it does mean she might need to change the message or the content of the advertising.
And she is in a great position to do it early and translate that large number of daily drive-by impressions into more money for her business.
And that is when the advertising spot will truly work for her.