Throughout the years, one of the most reputable and effective forms of advertising has been TV advertising. Commercials generate a great return on investment (ROI) based on the gross sales margin and the cost of making the campaign.
Keep reading to learn more about return on investments, how to calculate them, and what to expect from television advertising.
Before launching an ad campaign, you must decide on your goal. For most businesses, increased sales or service bookings are the goal, but sometimes ad campaigns are used to launch a new product or service or grow brand recognition.
If increased sales or service bookings are the goal, then getting an accurate snapshot of your sales history is important. Knowing your current or past stance will serve as an important metric in understanding your ad’s ROI.
If brand recognition is your goal, then the ROI may be measured differently using values other than increased sales or revenue.
To measure the ROI, you take the gross sales margin and divide it by the ad campaign cost.
Gross sales margins are simply the increase in sales revenue minus costs to run the ad campaign, which includes production costs and purchasing air time. For instance, after a $2,000 month-long ad campaign, a small business with a sales increase of $5,000 has a gross sales margin of $3,000. Let us use this example to calculate the ROI.
After you have calculated the gross sales margin (in this case $3,000), you can divide it by the total cost of the advertising campaign ($2,000). This would result in a 150% ROI.
TV advertising can be very effective and can have a lot of benefits! Although advertisement channels have changed throughout the years, television advertising is still a great way to meet your goals.
With this in mind, a good percentage of television advertising is between 300%-500%. If we are using the 300% ROI as an example, this would mean you generate $3 in sales for every dollar you spend on advertising.
Calculating return on investment is similar to any other form of advertising. Whether you’re trying to increase sales or increase brand awareness on TV, your ROI results will reflect that goal.
At Nartak Media Group, we’ve found television solutions for almost any client and budget! We constantly seek affordable and effective television options that get our client’s message in front of the right people and grow sales. Are you ready to get started? Contact us today!