Tracking the ROI of Promotional Campaigns
One of the main reasons that promotional products should represent a significant proportion of any company’s marketing mix is that time and time again, they have proven to outperform traditional media (TV, radio, print and outdoor billboard ads) in terms of return on investment (ROI). Companies are beginning to recognize this and direct their spending accordingly. According to TNS Media, traditional ad spending fell by 2% in the third quarter of 2008, whereas sales of promotional products have been increasing year on year by approximately 3.5% (according to PPB magazine).
There are a number of reasons that promotional products sales are growing:
- They are cost effective: In an earlier blog post, we talked about how the average cost-per-impression (CPI) of an advertising specialty item is $0.004, whereas the CPI of other media forms ranges from $0.005 for spot radio ads to $0.033 for a national magazine ad.
- They are tangible: At a time when marketing budgets are shrinking, promotional products are highly visible and let the buyer see and touch what they are getting for their money.
- They make a strong impression: In another blog post, we discussed how promotional products are the only form of advertising that can appeal to all five senses. This multi-sensory appeal has a powerful impact on the emotions of the recipient.
Perhaps most importantly, promotional products can be used in a way that enables companies to accurately track their ROI – something that can be difficult if not impossible to do with traditional media.
Before you can track your ROI, you’ve got to define what you mean by “return on investment.” To us, it is quite simply the total profit or savings less the original investment. To measure ROI, you therefore must determine what the objective(s) of the campaign are and how achievement of those objectives will be met. How you do this will depend upon the type of campaign you are undertaking. Some examples:
- If the objective is to increase traffic at a tradeshow booth by sending out a pre-show mailer containing a promotional product, ROI would be measured by the number of leads or booth visits that the mailer generates, and the resulting sales to those new contacts.
- When the direct mail campaign is aimed at reaching out to prospective clients, you can use tools such as PURL campaigns (personal URLs or microsites that are used to capture direct-mail campaign responses) to quantify the outcome.
- For a company looking to increase sales, incentive programs can be used to reward salespeople who outperform their objectives and ROI can be measured by dividing the increase in profits by the cost of the incentives.
- Promotional products can also be used for recruitment and employee retention programs. In those cases, to measure ROI a company must first understand what it costs them to recruit new employees (either through payments to staffing consultants or advertising costs) and to retrain new employees (to replace those who have left). With this information in hand, it then becomes easy to understand ROI if the cost of the promotional items is less than the alternative amount that the company would have spent.
These are just some of the ways that ROI can be tracked.
Here at Quintain Marketing, we place strong emphasis on tracking ROI and we’ve seen great results from doing so. If you check out the Success Stories on our website, you’ll see lots of case studies such as the one about our work with City Dock Coffee, where we were able to achieve an ROI of 20 to 1 through a dimensional mail campaign that incorporated a branded fishing lure!
What does all this mean for you as a consumer of promotional services and products? You need to ask your promotional consultant how they will work with you to set goals for your campaign, measure whether those goals have been acheived, and track ROI in a way that is concrete and measurable.