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How Do I Know If This Is Going to Work?

 One of the most frequent questions we get from clients is how will they know if the money they spent on their ad buy or marketing plan was money well spent.

In other words, whether their campaign will goose revenues or whether it will end up like money down a black hole.

Since we’re in the full throes of the holiday shopping season it might be a good time to take a look at this question from a retailer perspective. For major retailers November and December sales can make or break them in a given year. For them advertising is a matter of life or death.

Kantar Media Ad Intelligence just released data on the Thanksgiving shopping weekend—including the all-important Black Friday.

Big box stores spend millions on Black Friday advertising.

Kantar and its research partner, location analytics specialist Placed, tracked the ad efficiency of major “category killing” retailers, including Wal-Mart, Target, Home Depot, Lowes and Macy’s. This allowed them to evaluate the results of their November advertising leading up to Black Friday. The goal was to determine how efficient traditional “offline” advertising is in driving customers into bricks-and-mortar stores.

For the analysis, Kantar added up retailers' broadcast and cable TV bills for the period starting on the first Sunday of November and ending on the day before Thanksgiving.

Placed then used its opt-in smartphone software to track shoppers’ locations and the retail stores they visited from Thanksgiving Day through the following Sunday.

The results?

Wal-Mart, the New York Yankees of holiday advertising, outspent its competitors by a factor of 2X going into Black Friday. In return, it dominated its competitors in terms of store traffic.

If you took all of the people who visited any of the 50 leading retailers that weekend, more than a third of them visited a Wal-Mart. That was more traffic than any other retailer generated through its advertising.

Because of its turnstile domination relative to its ad spend Wal-Mart’s cost of customer acquisition was lower than that of competing stores in its market segment.

But it’s worth noting that prior to Thanksgiving weekend Wal-Mart still had a 30 percent share of store visitors. So for all of its ad-spend Wal-Mart’s lift, in terms of customers in the store, was four percent although the base of shoppers Black Friday weekend was much larger.

So the answer to the question about how to tell if your money is being well spent is to make sure your agency has an objective way to measure what it costs to acquire each customer. That’s the real metric of advertising efficiency.

 Of course, in a retail world getting customers through the door isn’t the same as getting them to buy. But it is the red zone where the marketing department and its ad agency hand off the ball to sales to drive it home.

If you’d like more information on this research click over to Kantar or the Centerfor Media Research.

Happy ad buying!