Q:
I'm a heavy radio advertiser, currently reaching 32 percent of
my area's 18- to 34-year-old population with a frequency of 2.9
each week, 52 weeks in a row. How much will my store traffic
increase if I increase my schedule to reach 48 percent of the
population with similar weekly frequency? How many more sales will
I make?
A:
Your question is far more complex than you realize, but I will do
my best to answer it. All things being equal, increasing your reach
from 32 percent to 48 percent (an increase of exactly 50 percent)
should increase your radio-driven traffic by exactly 50
percent. Now for the problems:
1. All things are never equal. My answer assumes there
will be no change in the number of competitors in your marketplace
or in the attractiveness or aggressiveness of existing
competitors--yet rarely do these remain static. If your competitors
drop the ball, you may experience a significant increase in traffic
without increasing your ad budget at all. Likewise, if your
"share of voice" increase is matched by similar increases
from your competitors, yours will be effectively nullified and
store traffic will remain at current levels. But what if they
increase their ad spending and you don't increase yours? You
want to do the math on that one?
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2. What percentage of your traffic is currently
radio-driven? What percentage is location-driven? What
percentage are repeat customers? What percentage are referrals?
Yes, a 50 percent increase in reach (without a decline in
frequency) should increase your radio-driven traffic by 50 percent.
But can you tell me how much of your traffic is currently due to
your advertising alone and is coming for no other reason?
Are you beginning to understand why it would be completely
irresponsible of me to predict the bottom-line impact of an
increase in advertising? But this is my day to be irresponsible, so
here's my best attempt at an answer: My instinct is that 50 to
70 percent of the typical retailer's store traffic is due to
location, signage, repeat customers, referrals and so on, and the
remaining 30 to 50 percent of store traffic is advertising-driven.
This would mean that a 50 percent increase in effective reach
should increase traffic by 15 to 25 percent.
To summarize what I said earlier, advertising-driven traffic
should increase by the same percentage that you increase your
effective reach, all other factors remaining equal. Now if you can
just plug in the exact number of selling opportunities that your
stores have each day as a direct result of advertising alone,
then-presto--you'll have your answer.
Bottom line: Every business owner must decide for themselves
what percentage of their profits to take out of their company and
how much to reinvest in their facilities, equipment, advertising
and people. Sadly, due to the near-universal fear that "if it
doesn't work, I've wasted my money," very few
entrepreneurs are willing to advertise as aggressively as they
should. Consequently, I would like to see you go to the next
level--if you can afford the dollars--and stomach the risk.
A closing thought: There's only one thing that business
owners are more reluctant to spend profits on than advertising, and
that's training their people. Their eternal question is, What
happens if I train them and they leave? But here's a better
one: What happens if you don't train them and they stay?
Nicknamed "the Wizard of Ads" by an early client,
Roy H.
Williams and his staff have often been the unseen, pivotal
force in amazing come-from-behind victories in the worlds of
business, politics, and finance. Williams is the author of The Wizard of Ads, Secret Formulas of the Wizard of Ads, Magical Worlds of the Wizard of Ads, Accidental Magicand Free the Beagle.
The opinions expressed in this column are those
of the author, not of Entrepreneur.com. All answers are intended to
be general in nature, without regard to specific geographical areas
or circumstances, and should only be relied upon after consulting
an appropriate expert, such as an attorney or
accountant.