“How much in sales lift can I expect from spending a billion dollars in advertising?” I was recently asked this question by a prospective client…okay, it wasn’t really a billion dollars but I got your attention didn’t I? Nonetheless, what’s the answer to the question, “If I spend ‘x’ amount on developing and implementing a marketing strategy, how much more in top line (revenue) growth will I see? Specifically, what will be my return on investment (ROI)?” Well, there is no way for an agency to accurately answer that question prior to engaging with you as the client. There are too many variables that are typically unknown to the agency. Product quality, size of market, customer service experience, distribution channel issues, current customer perception of the brand and market, competitor advantages or weaknesses…the list could go on and on. They all factor in to the revenue number that you will ultimately use to judge success. Sure, we can often give suggestions as to how much to spend based on the results we have experienced both quantitatively and qualitatively from other clients but each client and product is unique.
The best way to determine the amount to spend on a campaign or the expected growth from it is to do the research on the front-end to help change unknown variables into predictable ones. Once engaged, a valuable agency partner can help you find answers through detailed research. We can develop pre and post campaign methodologies to evaluate the success of any initiative to be undertaken. Then, over time, you will be able to predict, with a reasonable amount of accuracy, the ROI that your company can expect on similar marketing initiatives. Your specific experience is the best indicator of your future performance. Remember what your mother always told you, just because Susie spent a billion dollars in advertising doesn’t mean that you should too.
Here are a few resources to help you with some of the unknowns:
Jerry Dunnavant, Director of New Business Development