Video Transcript
Anyone that’s ever had any kind of control or influence over a marketing or advertising budget has been presented with opportunities to buy from different media platforms or whatever it may be, and those opportunities typically have a couple of factors associated with them. They have the number of impressions we’re gonna make on people and the cost of that advertising, but that’s typically where it stops from the ability to objectively measure and analyze buys on their face value, right? So we’ve got to figure out additional ways to look at different opportunities and figure out which one is the better opportunity.
Ultimately, we want the best bang for our buck, right? So this, I just wanna give a general foundational formula that we use, not to decide when it’s splitting hairs, but more so to figure out where the gaps are, to figure out what the really good opportunities are, and what the opportunities we shouldn’t even be considering are, and then you can kinda get into the nuances of your industry and your market and everything else, because, as we know, everything has nuance associated with it.
What I’m going to go over is going to be a formulaic approach to something you already do. You do it via heuristics, and you think that’s better than this for this reason. Yeah, I know it costs more, but it’s better because of blank, right? So that’s essentially putting that idea on paper. Let’s assume, for this example, that we’re a healthcare clinic of some sort, so we’re trying to hit potential patients within our target demographic. So I’m going to kind of go over this example, and I’m not going to give you specifics on, this is this type of advertising buy or that kind of advertising buy. I more so want to give you just general information to lay the foundation for how to assess each opportunity, so that you could, at the end of it, really say, this is a better opportunity because of this. So let’s dive in. Let’s say we’ve got two opportunities on the table, right? We’ve got opportunity A and opportunity B, right? So from there, what you typically get with any kind of, whether it’s direct mail, TV, commercial, digital, advertisement, signage, whatever, they’re gonna be able to give you some kind of impression number. So let’s say, for this example, that for A, they’re saying 10,000 impressions are gonna be associated with this. And for B, we’ve got 5,000, so here’s what you see a lot of times on its face, whatever it is. You see, for $200 we can hit 10,000 people with A, or for $175 we can hit 5,000 people with B. That’s a lot of times what we see in these you look at this, and a lot of times, if you’re just judging it based on these metrics, you quickly go, A. A seems like, I know we’re paying 25 more bucks, but it’s double the people. But then you really kind of dive into it, and you say, wait, wait, wait, before we do that, this one is much better because of blank, right? You start getting into these ideas of the quality of the impression and how many people were actually hitting in our target demographic, just as a general example, from this idea of percentage of target demographic.
Let’s say you send a direct mailer out to a certain zip code. We have census data that can tell us how many people of a certain age group are within that zip code. And so we say, okay, whatever you know, we’re going back to the healthcare clinic example. Let’s say the surgery we’re talking about is 98% of them are for people that are 55 and above. And we know the census data tells us that 40% of this zip code is 55 and above. So it’s just a general example, so if I’m sending a direct mailer to that zip code, and I know that 40% of the households meet that criteria, then I know that from a percentage demographic standpoint, that 40% of my buy is at my target demographic in that direct mail. So that’s just, one example, but I wanted to kind of give you an idea of what I’m talking about here when I say so we have our number of impressions right? Now we want to figure out of these impressions that we’re making. How many of them do we believe, generally will hit our target demographic? Right? The population that has a purchase decision or could take an action within a certain time frame. So let’s say, for this example, that for A based on the type of placement it is. That number is 40%. 40% of these 10,000 we believe, fall into that category of our targeted demographic. Let’s say for B, for whatever reason. It’s a magazine directly targeted at seniors for some reason, or whatever it is, let’s say B we feel like, yet again, these are assumptions. Trying to put subjective numbers into an objective formula to produce some kind of information set that we can make decisions based off of, right? So let’s say 80% of the 5,000 we believe are within our target demographic, for B, the way that B is placed. Then we have the subjective thing that I’m gonna call quality score. I’m making this up. There are things called quality score, but for the purposes of this, if you Google quality score is not what’s gonna come up. But that’s what I’m gonna call it for this example. What is the quality of each one of those impressions, there’s a massive difference between a non skippable 30 second ad versus a one second text message that pops up on a screen and goes away at a, you know, let’s say at a ball game. Is everybody paying attention to the screen when that’s popping up, you know, is the text enough? Is the one second impression enough versus a 30 second storytelling narrative? And those are extreme examples, but you kind of get it, like how much from a quality score, what do you believe a direct mailer is worth to your target demographic?
And that’s another thing here. Like, we’ve got to take our target demographic and the way that some populations interact with certain mediums, whether that’s television. What do you do with your direct mail? What do you do with your you know, the ads you see on Facebook, what do you do? Like different populations interact differently, so the quality score will be different based on your target demographic, but let’s say, in general, we feel like the quality of these two types of advertisements are very similar. But we believe that B is slightly better than A. B is slightly better. We believe they’re both above average. Now you’re saying they’re going, how do I come up with this number? So the number is for the calculation that we’re kind of putting together zero to one, 0.1, 0.2. You do not have to get into splitting hairs and say, 0.433 for this one. This is not an incredibly scientific approach. Yet again, this is a foundational thing that we can generally create gaps between buys we should consider and buys we shouldn’t. Right? When I’m looking at this and thinking about my target demographic, thinking about the quality of that impression in general. If I was to rank like, here’s all the things that didn’t work for us, they’re all below 0.5. Here’s the things that were kind of average or about 0.5, here are the things that have been above average based on your experience in the industry, based on your company, based on your market, all these things. So let’s say we believe both of these based on historical knowledge, are above average, right? So above average types of media, types of placement, but let’s say we believe B, we’ve seen slightly better results, or maybe we haven’t seen better results.
Our research says there’s better results, you gotta start somewhere and there’s the thing like this number, and this number will change as you place more buys and see more results. These numbers will change, and they won’t change just because of you. They’ll change because the way that the end user is interacting with us.. What different mediums were 20 years ago are being, some mediums are being consumed much less, some are being consumed much more. So it’s a constantly evolving thing. So let’s say, so we’re gonna say 0.6 as a quality score for A, 0.7 slightly better for B than A based on our expertise, right? So we take that and we say, okay, we’ve got the number of impressions we’re gonna make. We’ve got the percentage we believe that our target demographic is within that number, and then we have the quality of that impression that we believe. What we will come up with is a number that represents our quality impressions, yet again, made up. But for the purposes of this, you understand the general concept, I hope. So 10,000 times the 40% we’ll get 4,000 times the 0.6. We’re gonna end up with 2,400 And then 5,000 times the 80% it’s gonna give us 4,000 times the 0.7 is gonna get us 2,800. So we’ve got this 2,800 number and 2,400 number. What should this tell us? What’s the general idea of what this should indicate to us, that if the cost were the same, So when we look costs, we say 2,800 divided by our dollars spent. So how many quality impressions am I getting per dollar? That’s what this number is. So if I say 2,400 divided by $200 I get 12. If I say 2,800 divided by $175 than this. But what is the massive driver of all this? Cost. Cost, cost, cost. So for the purpose of this, let’s take this out, and let’s say this buy was not $175. This buy was $350. Then what’s our quality impressions per dollar spent? Eight. Suddenly this becomes our better buy, right? So the idea is you want to come up with a general number, which is our quality impressions. That determines which one is the more valuable buy. and that, my handwriting is so good, that will produce this objective number that you can then measure buys by. What you’re gonna see a lot of times is these numbers get closer and closer based on different mediums, different things, but you’ll have some chaff that you can quickly cut out and not even have to put mental energy behind. This is the general formula we use when we’re trying to maximize a budget to ascertain what are our best opportunities. And it’s usually not this straightforward. It’s usually not just A and B, it’s A through Z, right? And we’re going through and some of these we have numbers for, and then there’s some, you know, sponsorship opportunity with a little league team. Different things that you don’t have these kind of numbers for, that you got to kind of guesstimate at right, but guesstimating is better than just not doing anything. So working through these numbers and changing them as you learn more and you place these buys to come up with better quality impressions per dollar spent, scores that you can assess as you’re trying to place buys.
So hopefully this is helpful from the perspective of just having some foundational knowledge on how to assess different opportunities when you have an advertising and marketing budget.
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