You might be surprised, but we can say “Yes”. Just an example, businessman X is running an Adwords campaign with a monthly budget of 2,000 Euros. As a result of the campaign 10 people visited the website, and only one person made a purchase for 1,500 Euros. So, businessman X analysed the effectiveness of it and arrived at a conclusion, that future advertising with an Adwords campaign was not paying off.
However, the client who purchased their services for 1,500 Euros, became a regular client who regularly spends 2,000 Euros every two months. In all businessman X invested 2,000 Euros in advertising with an Adwords campaign and earned 11,500 Euros during one year, not too bad. The conclusion – you should always consider various criteria while analysing whether advertising is paying off for you.
Just another example from our client that offers expensive treatment for heart diseases. The clinic has been running a campaign for 2 months. Although the clinic has received enquiries during the 1st month, none of the potential patients visited the clinic. So, you might think that the campaign was absolutely ineffective. During the 2nd month of the campaign only one patient visited the clinic, who came with her husband. While she was having her tests done, it also appeared that her husband also had health issues, and he also decided to undergo treatment at the clinic.
This way when you analyse profitability, you should also consider the following:
- Probability that a client will be purchasing regularly in the future
- What is your profit from one client within the next 3, 6 and 12 months?
- How many new clients will become your regular and loyal clients?
- What additional services or products can you offer to them to be able to earn more?
- What can you offer to your clients so that they will be recommending your brand?
- How can you shorten the customer decision making process?
- What can you offer in order to turn more clients into regular ones?
Let’s sum it up – as our experience has shown statistics from a minimum of 3 months combined with the things we mentioned above can give you the full picture to be able to state whether advertising is cost effective.