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How Did Companies Track ROI before the Internet?
The Internet changed the face of marketing for a number of reasons. The biggest one is arguably the fact that almost every part of a digital strategy is measurable.
That lets you determine exactly how much revenue you’ve earned from different marketing strategies, and it opens the doors to new possibilities in terms of tracking and implementing new marketing ideas.
But marketing wasn’t always this precise. In fact, before the Internet, you never really had a full idea of who you were reaching and whether your marketing strategies were working.
At the same time, media outlets like print and broadcast needed to attract advertisers to stay in business. So they invented metrics to determine whether an advertiser was achieving success.
Some of these metrics worked well. Others didn’t work at all.
But before the Internet came along, this is how the marketing industry tracked their ROI for some of the most common channels.
Tracking method: Census and commuter data
First, let’s talk about billboards.
Billboards are one of the least quantifiable methods of marketing in the industry. They depend on traffic patterns, mostly from cars, meaning the people who may see your ad should be focused on driving instead of your business.
Still, billboards have been around for a while, so they must work somehow, right?
In a sense, yes.
Billboards are all gauged by how many potential people might see them in a given day. That’s why they’re commonly focused around city beltways or business districts.
The total amount of exposure you could get for your business is only an estimate since it’s impossible to say how many people actually drive past a certain point on a road.
Beyond that, those numbers would have to be based on certain demographic data that may be completely unrelated to a billboard itself.
For example, if a billboard agency wants to sell ad space on the highway coming into town, they might base their estimate on census data from federal or state governments that say how many people commute into the city every day.
They may also base their estimates on the total numbers of employees that local businesses have.
Regardless, neither is an exact representation of who could see your ad. On any given day, a certain amount of people are going to be sick, working from home, or jobless, meaning your total audience fluctuates and your estimated exposure is never really accurate.
On top of that, you can only know if a billboard works for you if you stop all other marketing campaigns and focus solely on the billboard. That’s because there’s no way to track how many people look at your billboard and immediately become your customer as a result.
So, again, you have to estimate.
If you see an increase in sales since you started advertising on a billboard, you can compare that number to the cost of the billboard and see if you’re generating an ROI.
But, again, any changes in sales numbers could happen for any number of reasons, including seasonality, holidays, word-of-mouth recommendations, or your other marketing strategies.
To mitigate that possibility, you can offer a unique promotion with a billboard. Promotions could require customers to mention the ad specifically in order to get a certain deal, like 5% off of their first purchase.
Then, you can track how many people mention that promotion so you can determine the exact number of people who became customers as a result of your billboard.
Without a promotion, you’re stuck guessing at whether or not your marketing strategy is worthwhile.
The bottom line
Billboard advertising works on rough estimates, so you never really know how many customers it gets you.
Television and radio
Tracking method: Nielsen ratings
Since 1947, broadcast advertising has depended on Nielsen ratings to detect how many people tune into a television or radio station.
Today, television and radio still rely heavily on the Nielsen system. This system includes tracking the viewing behavior of a random group of volunteers, sometimes called a "Nielsen family." Their behavior is then tracked through a Nielsen box, and that data is sent back to the company’s headquarters where they use it to tell networks about their demographics.
This information is helpful for two major reasons.
First, it tells television stations who’s watching their programming so they can make more programming that a certain demographic will enjoy.
Second, television stations can attract different advertisers that want to appeal to those demographics.
However, not every television in the world has a Nielsen box, and not every household is a “Nielsen family.”
That means the sample size of Nielsen ratings isn’t necessarily accurate when it’s compared to the behavior of all television viewers.
So, much like with billboard advertising, you’re advertising based on estimates. Depending on how you look at them, these estimates could either be more or less accurate than billboard estimates.
On the one hand, they may be more accurate since Nielsen is pulling from an actual sample size and averaging the data out over time. That helps mitigate some of marketing’s more unpredictable factors, like seasonality and holidays.
On the other hand, the data you have is based on a much smaller sample of data. For example, New York City has a population of eight million people, but they only have about 1300 Nielsen families. That’s .016% of New York City’s population, which is hardly representative of the city’s viewing behavior as a whole.
Still, Nielsen ratings have been in use for about seven decades, and they guide the marketing decisions of networks and advertisers throughout the country.
However, there’s no real way to tell if television or radio advertising are actually contributing to your marketing success.
You have two ways of evaluating television and radio ROI, and neither of them are accurate.
The first is to stop all new marketing strategies and solely launch your television or radio campaign. That way, if you see an increase in your sales, you can be mostly sure that it was because of your broadcast ad (as opposed to other new campaigns).
The second way is to offer a certain promotion exclusively through television or radio. Then, you track how many people use or mention that promotion when they make a purchase. This requires a little extra work and strategizing, but it’s a much more reliable way of evaluating your ROI than buying airtime and checking it against your sales figures.
Still, the costs associated with broadcast advertising are exceptionally high — especially for television.
Television and radio require you to conceptualize an ad, write it out, find talent to represent it, record the ad itself, and pay any associated fees for its broadcast.
All of those expenses add up quickly. And if you consider the fact that it cost $5 million to broadcast a 30-second commercial during Super Bowl L, it can take a lot of new customers to generate a good ROI through television.
These two methods are the same ideas behind determining a billboard’s ROI. But they work, and they’re some of the only ways you can know exactly how much your broadcast ads deliver.
The bottom line
Television and radio are based on exact numbers, but those numbers are a very small sample size of the potential market.
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Newspaper, magazine, and direct mail
Tracking method: Circulation
Newspaper, magazine, and direct mail campaigns are all judged by the same metric — circulation.
Circulation refers to the number of people who are going to potentially see your marketing message.
For newspapers and magazines, that’s how many people have subscribed to the publications.
For direct mail, that’s how many addresses a direct mail provider has collected.
Regardless of what marketing strategy you use, you’ll use circulation as the primary gauge of your success.
There are a few pros and cons to using circulation, and some of them depend on the marketing strategy that you want to use.
The first big pro is that circulation shows you the base number of people who might see your ad. Usually, it’s a lot of people, typically in the thousands.
But the first big con is that circulation does not guarantee someone will see your ad. People read newspapers and magazines differently, and even if you have a full spread on the second page, someone might flip right past it.
For direct mail, the chance is even greater that someone will miss your marketing message. That’s because “direct mail” has a much less flattering name among consumers — they call it "junk mail."
Just from your own perspective, consider how many times you’ve received an unsolicited offer from a business you’d never heard of and actually opened the envelope.
If you have, you’re one of a very select few who actively engage with the direct mail they receive.
The second big pro to circulation is that it almost guarantees you’ll appeal to potential customers near your business, which increases the chance that they’ll actually become customers if you run a smaller operation.
On the other hand, newspapers and magazines thrive on advertisements, which means your business won't have the only ad in a printed issue.
On top of that, direct mail risks giving your business a negative reputation since you’re engaging in unsolicited marketing. That kind of advertising can feel invasive since it’s directed straight at specific recipients, as opposed to a group of newspaper or magazine readers.
Another con is that the cost of generating a print ad — whether in newspapers or mail — is surprisingly high. You have to think of the ad’s angle, create a few potential ideas, revise the ones you want to use, adhere to each publisher’s standards, and pay for postage (if using direct mail) or advertising space (if using a newspaper or magazine).
All in all, that’s a lot of investment from beginning-to-end to create an advertisement. That makes these ads risky since no provider can guarantee customers from a campaign.
In fact, newspapers and magazines can’t even guarantee you’ll advertise to the right demographics.
With all of those variables and uncertainties, newspapers, magazines, and direct mail advertising are high-risk marketing channels in the Internet era.
The bottom line
Newspaper, magazine, and direct mail are packed with uncertainties.
Tracking method: Call list
Telemarketing was a common form of direct marketing before the turn of the millennium. But heavy government restrictions (like the National Do Not Call Registry) and a negative reputation have substantially diminished telemarketing’s popularity among advertisers.
On the other hand, telemarketers can deliver hard numbers on the success of a campaign. That’s because they collect all of the phone numbers you want to contact into a list and go through it, one after the other.
This takes time, but it allows you to determine your exact ROI by tracking how many people actually buy from you because of telemarketing and how much they spend.
This is far more accurate than television, radio, billboards, and other forms of traditional advertising.
But that tracking potential comes at a price — and it’s not a price that every business can afford.
Even with the National Do Not Call Registry, most people don’t like receiving phone calls from telemarketers. That means telemarketing requires you to place your business’s reputation on the line with people who probably don’t want to talk about sales when they get home from work, eat dinner, or relax on a weekend.
With that in mind, you have to carefully consider whether telemarketing’s precise tracking is worth risking your reputation. All it takes is one moment for a customer to feel uncomfortable or annoyed, and you could lose their business forever.
That’s why telemarketing is so risky.
On the one hand, that tracking data is a huge relief in a traditional marketing world that usually runs on best guesses.
On the other hand, businesses can’t afford to lose their reputation with their target market.
This is especially true if you’re involved with a local-only business. Frustrating or alienating your company’s local client base can spell disaster for a small business, especially during its first year.
So while telemarketing can sometimes be effective, it’s a strategy you need to be careful with. Just remember that when you hiring a telemarketing firm to make calls about your products, you’re not just spending money — you’re also staking your reputation.
The bottom line
You get a lot of accurate data, but you risk your company’s reputation.
Tracking method: Multiple
Now that marketing has become much more sophisticated with the Internet, it’s possible for any business to attract customers and track ROI without using invasive tactics.
That’s because many Internet marketing strategies don’t reach out to customers, like traditional marketing media. Instead, they bring them in.
This is the reason Internet marketing is often also called “inbound marketing.” When you market online, you can draw customers to your company by using a combination of both passive and active marketing strategies.
SEO is the process of improving your website to make it easier for search engines and users to read. That includes using common optimization elements, like title tags, meta descriptions, and well-written pages on your site.
Content marketing is the process of creating those well-written pages. “Content” is an umbrella term for anything you place on your site, including blog posts, articles, videos, and graphics. It makes up the bulk of your website so you can offer visitors something useful, informative, and helpful when they look up your business.
With SEO and content combined, you can have a website with lots of quality, optimized content that ranks well in Google and other search engines.
Then, when people use those search engines to research your industry, they’re more likely to find pages from your business. That lets them go to your website, learn new information, and trust you as a reliable resource in your industry.
In other words, your customers find you when they’re ready to buy.
You can also use active Internet marketing strategies to attract potential customers to your website.
You can use PPC by choosing a platform (like Google AdWords), creating ads, and assigning them to certain keywords that users search. Then, you place a “bid” on each ad. The PPC provider then looks at all of the companies trying to advertise for those keywords, ranks them according to their bid, and displays them to users.
PPC is affordable and cost-effective, and you can often rank for high-value keywords for under a dollar. Plus, you only ever pay for the ads that people actually click, meaning you never waste money on ads that don’t bring you traffic.
Social media marketing is much more free-form. It involves using your company’s accounts on social networks like Facebook, Twitter, and Pinterest to build a following and attract them to your site. You can do this by directly speaking to your followers, promoting content from your site, or simply sharing something interesting that you found.
The idea behind social media marketing is to make your business as relatable, identifiable, and personable as possible. Social media allows your company to give a face to your business, which helps potential customers relate to your brand and eventually buy.
But is all of this information actually trackable?
Tracking Internet marketing
Believe it or not, yes.
Online, there are thousands of tools that let you track different information about your site.
The most popular by far is Google Analytics, which can show you virtually anything you want to know about how visitors behave once they come to your website.
For PPC, you have solutions like Google AdWords or Bing Ads (depending on your PPC provider) that let you track exactly how much you spend and how many visitors you attract.
Social media is trackable, too. Any ads you use on social media are tracked by the ad provider’s own tracking software, and you can look at overall shares and interaction with tools like Buzzsumo.
And beyond that, there are tons of different platforms and tools you can use to keep up with your Internet marketing strategies whenever you want. The only choice you have to make is which tools to use.
When you track your Internet marketing success, you have access to raw numbers that indisputably show whether each of your marketing strategies works.
You also have access to historical data that can show you how much your marketing strategies have helped your company grow, including how many people have converted just from your website.
Conversions mean different things for different companies, but the general idea is that someone converts whenever they do something on your site that brings them a step closer to becoming a customer.
Sometimes, that could be placing an order on your site. Other times, it could be calling your sales staff to close a deal.
Regardless of the kind of conversion you need, you can see how many you’ve earned right in your tracking tools. With the right configuration, you can also see how the people who converted got to your site and what they did before they converted.
That immediately shows you the value of your different marketing strategies and whether they’re working for you.
If you find that one strategy is working exceptionally well, you could try doubling-down on it to increase your revenue even more.
If you find that one strategy isn’t working at all, you could cut it and move onto something else.
The only thing you have to keep in mind is that Internet marketing is not an overnight solution. It takes time to produce results, and cutting one marketing strategy before it has times to produce results could wind up hurting your business in the long run.
The bottom line
Use Internet marketing for trackable, dependable results.
WebFX knows how to track marketing ROI
At WebFX, we work exclusively with Internet marketing so we can tell our clients exactly how much money they earn from their marketing initiatives. That helps us get outstanding results for each of our clients, and now we’ll do the same for you!
Contact us today to create a trackable Internet marketing plan that’ll get your business the ROI you want!
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