What is Advertising Effectiveness and How to Measure it?

Assessing advertising effectiveness is crucial for all kinds of online as well as offline businesses.

While running ad campaigns for your business, it is fundamental that you inspect the behavioral inclinations and insights of your customers. It not only makes your advertisements more result-driven but also ensures better returns on your ad spend.

By checking the effectiveness of your advertising efforts, you also safeguard yourself from wasting your efforts and money on the strategies which are just not working. Advertising is useful in enabling brands to optimize their reaches and lead generations.

Checking the effectiveness of advertisements assists a brand in deciding whether their advertisements are moving ahead on the right path where relevant audiences are being targeted, and conversion potential is optimized.

This will empower you to gauge the qualities, shortcomings, and ROI of your advertisements so that you can tweak them in a more personalized and result-oriented manner.

At the time, when more and more purchasers prefer to take control of their ads and like to block those ads that they would prefer not to see, it has become inevitable for the brands to make their ads customized as per the preferences of target audiences.

This post will take you deep into some of the critical metrics and techniques that should be used for gauging the effectiveness of advertising campaigns. So, let us get started straight away-

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What is Advertising Effectiveness?

Advertisements are the backbone of any business, and undoubtedly, brands should focus on the relevant ad campaigns to optimize their reach, lead generations, and sales.

But the question that might arise here-

How do you know if your advertising techniques are working or not?

That’s where the measurement of advertising effectiveness comes into play. You need to measure if your advertisements are capable of meeting the expectations and offering you good returns on investments.

Now, this measurement technique may not be the same for all the brands, and there is no rulebook here. You can’t define a single method to solve your query on the advertising effectiveness.

Let’s look at a few of the professional approaches to measure the effectiveness of the advertisement –

Best Ways of Measuring Advertising Effectiveness

Measuring a few key factors of successful advertising campaigns is essential for gauging the effectiveness of any ad campaigns. Below given factors will help you in checking the advertising effectiveness of your brand ads-

1. Cost per new customer

What’s the sole purpose of your ad? To generate sales!

So why not start from measuring cost per new customer to define ad’s effectiveness.

You can measure it by dividing the total cost of the advertisement by new customers that were brought through the ad. Next, the cost per new customer and revenue per new customer is calculated.

If this revenue is more than the cost, then your ad is doing well. You can keep that ad until revenue minus cost is positive.

2. Custom conversions

To measure Return on Investment – custom conversions are indeed the best way.

Platforms like Facebook allow you to set filters of purchases through ads.

Custom conversions enable marketers in tracking and optimizing advertisements for the conversions in the most alleviated manner, as there would less manual code adding to your site for tracking the effectiveness.

3. Impact of the campaign

You want your ad to be seen by your audience, but it’s not that simple. Your ad sits at a full website or a source where there’s already tons of ads.

If your ad is not able to break through it, then it’s not performing.

Now, just by creating catchy headlines, you can get the attention, but what if the ad is not able to make a lasting brand impact?

Hence a successful ad campaign not only drives the attention of people but also creates a lasting brand impact.

4. Reality v/s expectations

You don’t always get what you expect, and that’s natural, but if you are not even close to your expectations, then there’s a need to worry.

All of us expect something from our ad campaigns.

At first, it is essential to set realistic expectations.

Then it would help if you found out what your ad is delivering you—shorter the gap between reality and expectations, better the performance of your advertisement.

5. Check Certain metrics

You need to check specific metrics to check the advertising effectiveness of your ad campaigns. Let us have a look at those Advertisement Metrics here and now-

1. Click-through rate (CTR) –If your audience is viewing your ad and not clicking on it, then the purpose of your ad is still not fulfilled. You need to compare the number of people who viewed your ad and the number of people who clicked on it. If this difference is high, then your ad is not performing well.
2. Cost per Click (CPC) –You need to compare the amount that you are spending on an ad and the number of people who clicked on your ad. Again, if the difference is too high, then your ad is not performing well.
3. Cost per Acquisition (CPA) –This is simple: You need to find out how much you are spending to get a sale. If your expenses are higher than the revenue, then your ad is underperforming.
4. Cost per lead (CPL) –Here, you need to find out how much lead you are generating through your expenses on an ad. By this, you can also figure out how much you need to spend on the lead generation.

Through these metrics, you can find out the effectiveness of your advertisement.

6. Measure different objectives to get better results on ROI

Not all the ads have the same purpose; we do agree that the end goal is to generate revenue, but objectives are often divided.

There may be several checkpoints to get a bigger goal. You may be expecting brand awareness, customer retention, engagement, and so on through your new ad campaign. Hence you need to measure all this to get a better idea of ROI.

The type of ad also defines which of the above objectives are fulfilled. Hence, just by looking at the revenue, you can’t always predict the effectiveness of your advertisement. To get a broader picture, you need to look at other factors as well.

Some of the factors that you can analyze in such cases are-

• Finding out true reach of your ad for instance effectiveness of TV ads can be checked by gauging the number of people watching it at a particular time while for Digital Display Ad Reach, you can check survey data
• You should gauge the ‘sweet-point’ of your ad exposure, as it talks about the exact number of impressions an advertisement achieved before the ad gets the desired effect, and before the ad goes through over-exposure
• Check the audience validation before finalizing your ad creatives and media such as banner, video, image, etc.
• For tracking the performance of Digital Advertising Campaigns, you can use UTM (Urchin Tracking Module) tags, as it will let you track the effectiveness of organic and paid Online Ad Campaigns in Google Analytics. UTM lets you track campaign name, source, and medium.

So, these were the methods to measure the effectiveness of your advertisement.

Here is a video on Measuring Advertising Effectiveness

Undoubtedly, the methods to measure ad effectiveness are increasing day by day, and it depends on your business and ad type that which method suits you.

Let’s look at some key points to follow while measuring the ad’s effectiveness –

• Have clear goals and realistic expectations–You can’t measure something without having an objective. More important is having valid expectations; you can’t expect something unachievable. Be practical with your objectives.
• It might be possible that your ad is not placed on the right channel. Calling your ad in-effective is not always the right idea; you might consider changing the channel as well.
• Always give your ads the right amount of time to air. Your results from the measurement are only valid if you gave enough time to your campaign. You can’t expect a month’s result in just a week.
• You need to find out if your audience is getting the message. Your ad won’t do anything if it’s not reaching the target audience. Keep track of its progress as well.

So, it’s not always the fault with your ad, but there are several other factors that you should look before changing your advertisement. Measuring an ad’s effectiveness is never easy as it requires proper expertise, and the strategies mentioned above will assist you in the process quite adeptly.

Final Thoughts!

Ads perform the best if they are tracked correctly. Nothing is perfect; hence, there are chances that your ad may have certain flaws.

You need to find and fix them at earliest.

If you are tracking your ad well, then only you can detect those flaws.

What factors do you consider the most useful in tracking the effectiveness of your ad campaigns?