Advertising.. The Numbers Game: Cost, Reach, Frequency, and Conversions
by Danielle Myers | Feb 15, 2022
When it comes to advertising, you may have heard that “frequency is key.” What this means is that the more often someone sees your ad, the more likely they are to take action. This makes sense – if someone is constantly being reminded of your product or service, they’re more likely to buy it. However, simply increasing the frequency of your ad is not always enough. You also need to make sure that you’re targeting the right people and that your ad content is effective. In this blog post, we’ll discuss the numbers game and how cost, reach, frequency, and conversions all play a role in Advertising success!
Let’s start here
The Numbers Game – Advertising 101: You may have heard that “frequency is key” when it comes to advertising. What this means is the more often someone sees your ad, then they’re more likely to take action on it (i.e., buy something or engage with some content). Makes sense right? If someone keeps being reminded of your product or service, then they’re more likely to buy it or enquire about it.
However, frequency is not the only number you need to concern yourself with when Advertising. You also need to make sure that you’re targeting the right people and that your ad content is effective.
More about your advertisement’s frequency
In order to calculate your ad Frequency, you must first know how many times an individual sees a specific advertisement. This can be done by dividing the number of impressions made with their reach in either days or weeks. Depending on what type is being used for advertising platforms, your frequency can change. For example, if we were advertising online through this site and our ads had 5k displays across 6 different channels then each unique user would see us between 1-2 times which gives us an average frequency rate of 2.
When running an ad campaign, it’s important to know what your goal is. Are you trying to get people talking about your product or service? Increase website traffic? Generate leads? Once you know this, it’s important to set a frequency cap that will help ensure users aren’t being bombarded with ads and then make changes as needed based on feedback from those who have seen them already. Too high of a frequency can have the opposite effect, turning people off and potentially costing you conversions so ad developers beware.
Next, let’s discuss your advertisement’s REACH.
This metric determines how many people will see your ad. Generally, you want to aim for a reach that is as large as possible so that more people can learn about your product or service. However, it’s important to keep in mind the cost of reaching this number of people and the frequency that you will be able to reach them with your budget.
Reach is often determined by the size and location of your target audience. Advertising to your local community or direct market is often more cost-effective than advertising internationally. Also, advertising to smaller, niche communities within a town or city can also help you get more bang for your buck.
Let’s look at an example: Say there are 100,000 people living in the area that your business serves. Advertising to this entire population with a frequency of once per month will cost you more than advertising to an audience of only 20,000 people with a frequency of once per week. Segmenting this smaller audience will allow you to reach more people and make the most out of your budget.
The Advertising Numbers Game can be tricky to learn and master, but we’re here to help!
Next, Show me the money! The cost of your ad spend isn’t calculated by the dollars spent on the ad..
but, you should also consider the hours put towards a project and/or your agency’s rate. Agencies are just like any other company that bases their rates on overhead costs, production time, and education level needed for project and campaign execution. Advertising is an investment in growing your business…and the cost involved with it reflects those results.
Agencies don’t just put up a billboard, or run a couple of Facebook ads and call it good–there is research that goes into building the client’s campaign as you are their customer! Advertising dollars are like investments…a little amount can bring in big results!
The cost of advertising also considers what kind of creative (the production/design/etc) your agency will be putting together for your campaign. Again, the creative type is determined by research around your target market and consideration of your campaign’s goals.
The sales or conversions brought in during your campaign can also be calculated after the campaign to know short-term costs. During these reports your customer’s lifecycle.
Lastly, the BIG number CONVERSION rate!
Remember, we’re talking about digital advertising here. The goal of your marketing campaign is to convert people from seeing your ads to taking action on what you want them to do (e.g., purchase a product or service).
You can calculate this number by dividing the total number of conversions by the total impressions. For example, if you had 100 clicks and five conversions, your conversion rate would be calculated as follows: 5/100 = 5%.
It’s important to track this metric so that you can ensure your campaign is effective and keeping pace with your goals. However, it’s also important to keep in mind that your conversion rate will fluctuate due to a variety of factors These factors include seasonality and wider market trends. We DISCOURAGE making frequent and abrupt changes.
Examples are nice
For example, if the overall demand for your product increases during the holiday season, then you can expect your conversion rates to do the same! You may need more conversions in order to reach your goals because there are more people looking at ads. However, the number of people clicking on them has not necessarily changed.
The moral of this story is that you should only make changes to your campaign if the numbers indicate you should do so. Otherwise, we recommend running your campaigns consistently in order to get a true sense of how well they’re performing.
That’s it for this post!
We hope you’ve found it helpful and informative. Stay tuned for more great content from the marketing experts at Myers Marketing Management!
We will see you in the NUMBER GAME 🙂
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