Why measuring the ROI on your advertising is much harder than you think

There is never a week goes by that I’m not asked how to measure the Return on Investment (ROI) from digital and direct advertising.

At the risk of repetition, let me be clear:

1. Advertising = shouting at strangers to tell them you have a product or service available;

2. Marketing = whispering to the people that you already know (and the people that they can introduce you to). Sharing with them stories about the people whose lives you have changed for the better.

I understand why a private squat needs to advertise – the only community they have are the strangers.

I often struggle to understand why an existing business would advertise, when upselling and recommendation are so much cheaper and effective.

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So how do you measure ROI on advertising?

The first part of the answer depends upon what you intend to measure.

I would argue that the purpose of advertising is NOT to sign up new patients and/or sell treatment.

The purpose of advertising is to get those strangers to connect with you, whether it’s an online booking, a call or a visit.

Turning those prospects into patients is not the job of an advertising agency – that responsibility rests with your team – telephony, front desk, TCO and clinical. It’s why investing in advertising and not investing in team training is stupid.

Therefore, it seems that the ROI on advertising should be measured simply by the number of strangers who make an enquiry – if your team cannot convert them, it’s not the advertisers fault.

The picture isn’t always so simple.

Let’s consider first, though, where it is actually that simple – when you advertise on price.

Do that, and the strangers don’t care whether you have nice premises, a good team or excellent clinical care.

They want the best price and, in keeping with the Harvard Business School “Quality, Price, Time Triangle”, they will compromise on quality.

That’s nice and simple to understand but is frequently a race to the bottom which, as Seth Godin says, is made dangerous by the fact that you might win!

Cause of death: Groupon.

It’s when strangers are not responding to price but are looking for a quality product or service that the waters become muddy.

Why?

Consider your own actions when looking for a quality product or service – can I suggest that your route to market may look something like this:

1. Ask around your tribe for recommendations;

2. In the absence of a good recommendation, search organically on Google;

3. In the absence of a good search result, click on a Google or Facebook advert;

4. If there is anything of interest, click on the host’s web site;

5. If the web site looks appealing, read Google, Facebook or proprietary review sites;

6. If the reviews sound good – make first contact.

So the price hunters just want a good price.

The quality hunters have a considerably more complex route to market – which means that your advertising campaign has to be backed up, not just by good telephony and TCO but by a cracking web site, a well maintained Facebook Page, other relevant social media channels (all of which are full of patient stories) and an excellent track record on reviews.

In conclusion, that monthly report from your advertising agency that talks about impressions, clicks and bounces is only a very small part of the ROI story – to which needs to be added the effectiveness of your web site, the popularity of your social media channels and the effectiveness of your team.