One of the issues faces greets all marketers is the subject of Return on Investment (ROI), and the justification of spending on one form of advertising or another. This article discusses this issue in the context of promotional merchandise and identifies the difficulties of measuring an absolute ROI. We will also see that it is possible to compare to other forms of advertising to determine cost effectiveness.
1. Incremental Sales
To determine the ROI one would need to measure the costs of a promotion and the incremental sales revenue generated. If the promotion generated 3 times more margin than its costs then the ROI would be 3. But the simple maths do not give us a simple answer. Whilst the costs of a promotional product campaign is easy to measure, the problem lies in the incremental sales increase and thus the incremental margin increase.
If a promotional product is released to the sales team and sales jump significantly then clearly one can see the incremental sales. However, in the real world life is not so simple. Often a new promotional product is only part of a campaign involving other forms of promotion such as emails or direct mail. Did the giveaway at the exhibition generate the additional sales or the design of the stand? To measure incremental sales requires that you separate out the different aspects of the promotion which is easier said than done. There are some ways to do this though.
1.1 Call to Action
Your promotional product should always have a call to action within it – a phone number and/or a web site address. Measurement aside, always have contact details within the product otherwise it is safe to safe the ROI will not be very high!
If the website address used on the promo product is unique to the promotional product then it is possible to measure the responsiveness. By creating a unique landing page then Google Analytics will tell you the number of visitors you receive. If the landing page for the promotion has an ‘Order Here’ or ‘Contact me’ button one can see the number of those taking action.
Your IT department or webmaster can set up a landing page very easily and indeed you are probably using them already for email campaigns, Adword or Facebook campaigns. The difficulty for promotional products is that whilst putting a button on an email linking to a unique landing page is straight forward, this is not so easy for a giveaway. Usually a landing page takes the format:
An email can hide this address behind a button - a promotional product would require the user to type or search the whole address and clearly many will go straight to the www.mainsite.com and you will never know how many did this. This is not always the case – unique landing pages are often printed in competition forms and users can only find the competition from the landing page address and not the main site. But generally we would not advise this for promotional gifts.
The other way to achieve the objective is create a whole new web domain www.othersite.com – this site could be bought for a relatively small sum and one does not need to build a whole new site behind the domain, merely place a ‘301 redirect’ on the site to your usual site (again IT and Webmaster can help here). Now Google Analytics can measure the unique traffic. If your customers buy directly from your website then you have a measure of incremental sales. If they do not, then you will need to assume the conversion rate of this traffic to be the same as your normal conversion rate to get an incremental sales figure.
1.2 A/B Split testing
A/B split testing is concept familiar to most marketers and used in a number of areas not just promotional goods. Clearly the sales impact of any promotional product can be tested by say using the Northern Sales territory whilst leaving the Southern sales territory as a control. This is fine if you have two geographic areas or routes to market that you can A/B split test – but for many this is difficult. Indeed, the promotional gift is often, by is very nature, but one element of a campaign whose impact is difficult to isolate.
All this seems pretty negative in terms of measuring a definitive ROI but that does not mean a measurement is not possible. The other approach is to look at the cost of impressions.
2. Cost of Impressions
The other way to measure the return on investment is to look at the cost of impression – the cost of the brand being seen per person. In comparison to other forms of advertising promotional products score well here, not least of which because according to the PPAI 26% of promotional goods are passed on to someone else. The PPAI did some major surveys looking at the frequency of use and exposure and calculated the cost per impression of about £0.005.
This number may not carry too much meaning but when compared to other media advertising it can be seen to be highly cost effective.
TV Advertising - £6.50-8.50/impression for the slot on UK TV – although the US Advertising body claim that it can as low as £0.02 for a 30 second advert.
Google Ad - £1-£5/impression depending on how targeted the campaign
Obviously, as well as cost per impression one has to consider the ‘right’ impression and Google would claim that cost per click advertising is highly focussed and targeted if done properly.
But, at £0.005/impression promotional goods are excellent value and if chosen well and used in the right campaign can be equally targeted.
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