While it’s true that online options have diversified avenues for reaching new audiences, TV advertising is still important.
The question for companies seeking to get the most bang for their TV advertising buck is how to measure TV advertising ROI or return on investment. Not only will this help you evaluate the effectiveness of your TV campaign, but it will also help you plan it.
Measuring ROI on TV Advertising
The first thing you need to decide when seeking to measure something is to define exactly what that something is. The fact is that TV advertising ROI is a somewhat nebulous term until you determine exactly how you define your return. For example, did sales increase during and immediately after the ads ran? How do you know?
When measuring a statistical change, you need historical or baseline data first. Your sales history will be your guide in the case of sales. You can look at the months preceding a TV advertising campaign, and you can look at the same time period in years past since many sales are seasonal.
How to Measure TV Advertising ROI Using Baseline Data
Once you have identified the metric you want to track and have historical data to serve as your comparison or baseline, you are ready to set goals for your campaign. This enables you to measure your ROI in terms of increased sales in general, as well as compare any change to your stated goal.
With that data in hand, you need the cost of your campaign. This would include all production and planning costs along with the cost of purchased TV ad time. To calculate the gross sales margin generated by your TV campaign, you take the difference in sales from the campaign and your baseline data and then subtract the cost of the campaign.
For example, if your sales increased by $10,000 during the TV advertising period over your baseline sales figure, and your campaign cost you a total of $4,000, the margin of your gross sales was $6,000.
To calculate your TV advertising ROI, divide the cost of the TV advertising into the margin of your gross sales. In this case, divide $4,000 in TV advertising costs into $6,000 in gross sales margin to get an ROI of 150%.
Other Metrics for Measuring ROI on TV Advertising
While the bottom line is the ultimate driving factor behind advertising, there are other goals and metrics to consider when devising how to measure TV advertising ROI. You might want to focus on brand recognition so that you can survey customers or measure changes in website traffic related to that brand.
The goal of your TV advertising campaign might be to get more people in the store or visiting your website. Whatever your goal, you need baseline data and a way to track changes in that metric to measure your TV advertising ROI.
To learn more about how effective TV advertising can be for you, book a demo today!