If on-page advertising is part of your marketing mix, you’ve probably asked yourself if magazine or newspaper ads deliver a good ROI. Unfortunately, calculating the expected response from a newspaper ad is a little more complicated than simply checking the circulation numbers.
Here are eight variables that will help you calculate an expected response from a newspaper ad:
1. Audience Demographic
Every product or service has a basic demographic that represents its prime target. Let’s say your target demographic is adults aged 25 – 54. You’ll want to make sure the publication you’re placing with has readership within this demographic; your rep should be able to provide this data via self-reported readership surveys.
2. Potential Customers
Next, calculate how many people in your target demo are inside the publication’s reach. If you’re located in a city of 1.5 million people, and the 25 – 54 demographic represents 40%, then your total target population is 600,000. Census data can get you the info you need to complete this step.
3. Purchase Frequency
The duration between purchases also factors into our calculations. Let’s say people buy your product one time per year on average. That means your available market in any given month is 1/12 of 600,000, or 50,000. You’ll also need to factor in any seasonal fluctuations that affect product purchase frequency and apply the same logic.
4. Newspaper Circulation
This is the first place people usually look when considering a newspaper ad. A big circulation means a ton of people seeing your ad, right? Not quite. A newspaper circulation of 200,000 doesn’t mean all 200,000 people will see your ad.
If your local daily newspaper has a 40% penetration in your market, calculate that against your available 50,000 potential in-market customers to reach 20,000 possible qualified exposures to your message (also called impressions). The publication should be able to provide its market penetration percentage.
5. Ad Attentiveness
Attentiveness to ads depends on several factors, but for simplification’s sake, let’s say your ad draws the attention of 10% of readers. If we apply that calculation to our example, the number of potential customers goes down to 2,000.
6. Market Share
Now it’s time to consider the competition. If you’ve got a monopoly on your category, you can probably stop reading this article. If not:
Calculate your market share by comparing your sales to those of your competitors, or to your industry as a whole. Then, apply your market share percentage to the amount of remaining targeted customers. If your overall market share is 10%, and your remaining targeted customers of 2,000, you have 200 potential customers remaining.
7. Response Rate
Seeing an ad is one thing. Actually following through with a purchase is something else entirely, especially for a product you might only purchase once or twice a year.
Industry standard tells us that a 1% to 2% response rate is a safe expectation of any given ad. For this calculation, let’s apply a response rate of 2%.
8. Total Response
Now you just need to apply our assumed 2% response rate to the 200 potential customers you effectively reached with your print ad. This gives us a total expected response of 4. That means that out of all the potential audience, four people will purchase your product.
The Fine Print
Now you have a fool-proof way to figure out how many customers will walk through your door next time you place a print ad, right? Not so fast. Just like with any medium, there are several factors between your ad and the sale. The size of the ad, the graphic design, the offer, the weather, the economy–the list goes on and on.
However, the 8-step model above is useful to illustrate the realities of advertising response, and a reminder to consider the data before adding on-page advertising–or any other medium–to your media mix.
If you need help with evaluating the effectiveness of newspaper advertising… or any other marketing for that matter, give us a call.