Advertising is often times opted as a means to achieve an end goal. However, evaluating its results is no simple task. Many factors need to be accounted for in order to reach a conclusive assessment.

In business, advertising is commonly associated with the effort of increasing sales. Hence, many businesses advertise in the hopes of increased sales. In effect, the success of an ad is often measured by resulting sales increase only. That may be the correct measurement if the ad placement’s goal is only to boost sales. But it is important to recognize that there are many other aspects in advertising to be analysed. This is something many businesses still lack the understanding of.

As such, a complete comprehension of how to evaluate advertising effectiveness is necessary for businesses. To determine the most correct measurement, businesses and advertisers need to know the objective of their ads and how to execute them.

Setting a Clear Objective: What does the advertising hope to achieve?

This is the very first question that advertisers need to answer. They have to know the precise goal or objective of the advertising run. Is it to increase sales, to build awareness, or to promote new products or services?

With a clear objective from the outset, the research type and the tools to measure the ad will follow and vary. For example is an ad with the objective of increasing sales. Then utilizing Customer Relationship Management (CRM) tools will be necessary. CRM will measure how much sales is brought about by the ad. Additionally, this tool also provides impressions and conversion data from the ad.

Advertisers need to inspect those data as evaluation material. Deep-dive analysis on market conditions before the ad is placed, during its placement, and after its run is over will be valuable insight for the business and its ad. As such, advertisers need to understand the different measures of ad evaluation. To take an example from online advertising, below are some aspects to consider.

• Click Through Rate (CTR) 

A measure of the number of clicks an ad receives compared to the number of times it is seen or shown. The bigger the deviation, the weaker the ad has performed.

• Cost Per Click (CPC)

The actual cost paid for each click; the cost to get one person to click the ad. This is calculated by dividing the total advertising cost with the number of clicks garnered. Businesses should aim to minimize the number as best as possible.

• Cost Per Lead (CPL)

A measure for ads that have the objective of getting leads. This is the cost needed to get each lead. The method of calculation is similar to CPC.

• Cost Per Acquisition (CPA)

A measure of the cost needed to acquire each sale. Not unlike other cost measures above, lower cost indicates more effective advertising.

Monitoring Different Time Periods and Execution Details: When and how is advertising effectiveness measured?

Once armed with a clear goal for an advertising run, the evaluation process will cover the period during the ad is placed and the way it is executed. It is necessary for advertisers to evaluate these to learn about the advertising effectiveness.

Testing should be done before actual advertising runs are made. This can be achieved by designing a pre-testing period. The purpose is to learn customer responses in advance; such as number of likes, comments, or shares.

Then once the ad is placed, conditions during the campaign run must be monitored. Some indicators that can be taken into account in measuring ad results are consumer habit, company image, usage level, and sales data statistical analysis.

After the campaign run is over, monitoring should still continue. Post-run results can be compared to conditions before and during the run of the ad placement. Advertisers can use these data as a source of insightful analysis.

Lastly, how the advertising is executed must also be considered; time band of airing, media placements, those targeted by the ad. Results will give a picture of advertising effectiveness.

Comparing Predicted Outcomes to Actual Results

Before executing the advertising, businesses will have had predictions and result forecasts. By the end of the campaign run, compare the actual results with the previously made prediction. An effective advertising run should yield results not too far off from predicted outcomes. The smaller the difference between the two, the more effective the ad is; while the opposite is also true.

Therefore, monitoring during advertising runs is very crucial. When interim advertising results fall short of the set goal, advertisers can evaluate and improve their strategy to achieve their determined target. This will minimize potential OF failure in advertising.

Evaluating advertising serves as a very important insight. When an ad performs strongly, the points of strength should be sustained. On the other hand, when finding weak points, improvements from previous ads and advertising runs must be made.