4 Things You Need To Know Before Starting An Advertising Campaign

While referrals, organic traffic and natural popularity are all great, sometimes it's worth starting an ad campaign.
Co-founder, KISSmetrics
September 28, 2011

For new business owners, it can be a badge of honor to succeed without paying for advertising and marketing.

We get our business through word of mouth.”

We got (insert ungodly amount of revenue) without spending a cent on advertising.”

It can feel as if there’s some unwritten law that if you have a quality, valuable business, that your dedicated customers will shout praises from the rooftops while the masses beat a path to your door. I had a friend whose parents ran a Chinese restaurant and constantly bereted him, saying that he shouldn’t have to advertise his tutoring service if he’s doing a good job with his students. Luckily, he was smart enough to not count on referrals before they were even coming in.

While referrals, organic traffic and natural popularity are all great when they happen, this kind of customer base is not something you can depend upon. Advertising will likely be necessary for your business, even if you are providing superb service from day one and everyone loves you.

When your business is already thriving with a solid customer list, you may still find that you make enough revenue gains from advertising that it’s worth your while anyway. After all, chances are you see ads for some of your favorite products all the time.

Here are some guidelines you must follow before starting an advertising campaign:

1. Decide your goal for the ads

For a good 95 percent of you reading this, your goals should be either to increase sales or gather leads. This means measurable results for each campaign, or hopefully, each individual advertisement.

The “other” type of advertising that gets the majority of the attention—but creates the least revenue—is branding or “brand awareness.” If you are a small business, branding should be the last thing on your mind.  Sometimes I wonder if advertising agencies came up with the term “branding” just so they could put up any ad they wanted without being responsible to their clients for monetary results.

Branding usually only makes a difference if you’re a company like Coca-Cola and you want to stay in someone’s mind long enough that he somehow feels compelled to order a Diet Coke from the vending machine instead of a Diet 7-Up.

Once you’ve decided on your goal, your advertising platform should be based on your objectives. Your ads must include a call to action to either buy your product, visit your website, place an order or any other business producing activity. The message should never end with you just letting the prospects know that you exist.

The benefit of online advertising, of course, is that you can immediately start gathering e-mail addresses, phone numbers and physical addresses to start sending direct marketing communications to.

2. Target your ads to the right people

If I were writing this article 10 years ago, I would say that if you’re advertising to 22 year olds, stay out of the Wall Street Journal.  Nowadays, that advice is obvious and almost irrelevant given the resources available.

Using the Internet, you can get a much more targeted audience for your ads. Google AdWords, for example, lets you target by keyword search and location, while Facebook lets you target by age, gender, interest and just about anything else you can think of.

However, you’ll still need to use basic judgment when using less robust advertising platforms without this type of laser-targeting. If you’re going to buy space in a magazine or a banner on a website, make sure you research the demographic of the audience before paying for anything. Any major advertising source should have a pamphlet or PDF to send you about who their readers are. If they don’t have something like this, that is a red flag.

3. Track as much as you possibly can

I really wanted to title this section “Track everything,” but that’s just not possible for many entrepreneurs. If you have 100 percent of your business online, then you can figure out just about all your traffic sources and results using a good analytics program. However, if you have a brick-and-mortar business where prospects wander in because they saw a flyer you posted, you’re going to have to get more creative and use estimates.

For non-online ads, your best bet is to use coupon codes whenever appropriate. This means you will have to give some incentive, such as a discount or a freebie. For example, if you run an ice cream stand in Philadelphia and put an ad in the local paper, you can put on the page “Ask for the ‘Phillies Discount’ to get a dollar off any order.” From there, you can have your staff keep track of every time someone mentions the listed discount. If you’re taking phone orders, you can ask someone to mention a code listed at the bottom of the ad. The possibilities are wide open with this.

4. Factor in all your numbers when you make a decision

Do these numbers sound familiar to you?

  • Total Sales
  • Conversion Rate
  • Click-Through Rate
  • Profit
  • ROI (Return on Investment)
  • Long-Term Customer Value

All of these can be near useless on they’re own and extremely valuable when combined toward a greater whole. Your ROI isn’t worth much if you have low customer volume and your Click-Through Rate is only helpful if the people who visit your page frequently end up buying your products. If there’s one number you could survive by focusing on, it would be profit, but even that is limited, because it doesn’t take into account the long-term value of your customer if he continues to buy from you.

As you can probably imagine from this article, advertising is a complicated subject. Make sure you get educated on your options and whatever you do, don’t leave all of the responsibility to an advertising agency or a freelancer. Even if someone is a master of the advertising world, you will need the knowledge and experience to keep him accountable and know how much value you’re getting.

Co-founder, KISSmetrics