Advertising: Brand Awareness or Lead Generation

As a new or small business you need to generate sales.  Brand awareness stands for nothing if you aren’t selling.

Advertising for a new or small business has to generate a measurable return on investment. So you need some way of measuring how many leads the advertising generated, how many sales, and the value of the sales against the cost of running the advertisement.  The coupon is the classic device to measure response rates, but simply asking customers how they heard about you or why they decided to buy from you this time will suffice.  The key is to decide how you intend to measure the response while planning your campaign.

Brand Awareness or Lead Generation?

The advertising campaign should ideally cost less than the profit generated on the first sale from new customers.  However, the lifetime value of those new customers should be taken into account when considering the success of an advertising campaign.  Repeat purchases and referrals can contribute to the lifetime value and make the ROI of an advertisement many times the cost of advertising.

Of course or many small businesses, cashflow is an issue, so lifetime value may be less relevant than achieving a return on investment from the very first purchase.

Action for today: decide how you will measure the response to your advertising.  If you get a return on investment, keep doing it.  If you don’t consider the lifetime value or don’t run the campaign again.

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