Advertising cost management. Efficient advertising spend management

At the initial stage of its commercial activities You'll be doing almost all of the advertising yourself, especially if you run "random" press ads from time to time. It should also be noted that at present in Russia there are still not so many real experts in the field of advertising, so knowing the basics of advertising can become one of the factors for your success in business.

As your business grows, the need for advertising campaign become fairly obvious on a regular basis. Accordingly, the amount of work associated with advertising your company will increase significantly.

There will come a time when you need to use the services of an advertising agency, consultant or advertising specialist. Maybe you even decide to invite an employee to work on a permanent or temporary basis who will deal with the advertising of your company.

It should also be noted that one day you decide to no longer engage in advertising your company yourself and shift the burden of solving all issues related to advertising on someone else's shoulders.

Let's return now to the initial stage of your commercial activity. It should be noted that advertising should not be done for the sake of advertising itself. Promotional activities are an integral part of your marketing plan and business plan as a whole.

sales volume;

the number of orders received (if you work in the service sector);

volume of production (if you are engaged in the production of goods).

The main thing is that you can satisfy the demand for the goods or services you offer after the advertising campaign.

To do this, you need to keep under constant control the amount of necessary inventory, the number of sales personnel, as well as the volume of production.

clearly formulate your wishes and suggestions to those people who will be engaged in advertising your company;

fix your expenses and analyze the actual results obtained;

The first point mentioned above is discussed in detail in the following brochures:

Checking the quality of work is related to the degree to which specialists in the field of advertising take into account your wishes and suggestions.

With regard to the preparation of printed materials, it is necessary to take into account three points: quality, turnaround time and price.

As a rule, the higher the quality, the higher the price. Therefore, if you want to save on advertising, be prepared in advance for the fact that the quality of work will be worse and cheaper materials will be used.

It is desirable for the advertiser to establish a record of the effectiveness of advertising. This allows you to get information about the advisability of advertising and its effectiveness. individual funds, determine the conditions for the optimal impact of advertising on potential buyers.

Absolutely accurately determine the effectiveness of individual means of advertising, advertising campaign in most cases is not possible. However, approximate calculations justify themselves, as they allow us to conclude that advertising activities are expedient.

Distinguish between the economic efficiency of advertising and the effectiveness psychological impact individual means of advertising on the human mind (attracting attention to advertising, fixing in memory, etc.). Moreover, the psychological impact is most effective if it leads potential consumers to make a purchase. Thus, the economic efficiency of advertising depends on the degree of its psychological impact on a person.

The economic efficiency of advertising is most often determined by measuring its impact on the development of trade. The most accurate way to determine the effect of advertising is only if the increase in sales of the product occurs immediately after exposure to advertising. This is most likely in cases of advertising new consumer goods.

At the same time, the purchase of an expensive durable product usually comes with a lot of deliberation. In this case, the effect of advertising may not appear immediately. First of all, the buyer learns about the release of the goods, then he is interested in detailed information about its quality and properties. After that, the buyer can give preference to the advertised product and affirm his desire to purchase it, and only in the end does he acquire it.

To identify the extent to which advertising has influenced the growth of turnover, analyze operational and accounting data. It should be borne in mind that in addition to advertising, the sale of goods is affected by its quality and consumer properties, price, appearance, as well as the location commercial enterprise, the level of customer service culture, the availability of similar products or products on sale.

For calculation economic effect you can use the following formula:

Td - additional turnover under the influence of advertising, rub.;

Ht - trade allowance for goods, in % of the selling price;

Ud - additional costs for the increase in turnover, rub.

In this case, we compare the effect obtained from the promotional event with the costs of its implementation. The results of this ratio can be expressed in three ways:

However, the data obtained is still insufficient to compare economic efficiency spending on various promotional activities. More accurately, the cost effectiveness of advertising characterizes its profitability.

The implementation of almost all advertising management functions is closely

related to the problem of financing, development and implementation advertising budget. The developed budget makes it possible to allocate resources more efficiently in the process of practical implementation of plans, to clearly identify the main executors. It also helps to ensure control not only over spending on advertising, but also over the effectiveness of advertising activities in general. The whole range of solutions for developing an advertising budget can be divided into two large blocks:

1. Determination of the total amount of funds allocated for advertising.
2. Distribution of advertising budget funds by items of its expenses.

Among the existing approaches to determining the volume of the advertising budget of Magnat-S LLC, it is better to use the method based on cost planning, since Magnat-S LLC has no advertising practice, nothing to compare with, nothing to rely on.

Plan advertising costs represents an estimate of the costs of various planned promotional activities aimed at achieving the goals. This method is directly related to the second large block of problems in the development of an advertising budget - the distribution of advertising funds.

1. administrative expenses - wage new employee, overhead, etc.;
2. expenses for the purchase of advertising space (one of the largest items) - the purchase of space on newspaper pages and pages of magazines, catalogs;
3. expenses for preparation and participation in exhibitions;
4. expenses for the creation and maintenance of the site, advertising on the Internet.

Considering that the work of Magnat-S LLC is controlled by government bodies and the lack of data for some costs, the calculations are made as indicative and can only be used for educational purposes.

1. Administrative expenses.
- organization of a workplace for a new marketing specialist (furniture, stationery, appliances, etc.) = 5,000 + 1,000 + 13,000 = 19,000 rubles.
- an increase in the wage fund due to an additional staff unit and additional payments to other employees performing additional functions.

So far, we can only plan the salary of an advertising specialist. On this stage salary will be 15,000 rubles. A year - about 180,000 rubles.

2. The cost of placement in specialized journals and directories will also not amount to a significant amount at the initial stage, since the amount of funds for advertising is limited, and many directories place the minimum amount of information for free, and the cost of placement in most directories is 2-4 thousand rubles . for an annual placement. We confine ourselves to one directory "Price", i.e. 6 thousand rubles, and for placement in the Stroyekspert magazine per quarter, excluding summer (holiday season), about 15,000 rubles. A year - about 50,000 rubles.

Public relations costs. Since this task is also set for the future, the budget will be determined after a deep marketing analysis.

3. Expenses for preparation and participation in exhibitions.

The main expenses for the exhibition: payment for the exhibition space, registration fee, handouts. In 2009, we plan to participate in the XI specialized exhibition "Safety Formula". The cost of renting the exhibition space and the registration fee is 6,600 rubles. Manufacturing cost handouts- about 3000 rubles. Total for one exhibition - about 10,000 rubles. We plan to participate in three exhibitions in 2009. Total - 30 thousand rubles.

4. The cost of developing and maintaining the site.

To create a site, you should invite a specialist in this field from the side. And the support and updating of the site will be handled by an employee information department with the support and supervision of an advertising specialist. The average cost of creating a standard website in Chelyabinsk is about 20,000 rubles.

Stot. \u003d 19000 + 180000 + 50000 + 30000 + 20000 \u003d 300,000 rubles.

Calculate the efficiency expected after the appearance of an advertising specialist and the proposed activities.

The main material for the analysis of economic efficiency

The results of the company's promotional activities are statistical and accounting data on the growth of turnover. Based on these data, it is possible to investigate the economic efficiency of one advertising medium, an advertising campaign, and the entire advertising activity of the company as a whole.

The final conclusions about the economic efficiency of advertising are obtained by comparing the additional profit received as a result of advertising with the costs associated with its implementation.

Let's calculate the cost-effectiveness of advertising using this method on the example of sales data for January-February 2009, when some advertising tools had already begun to be used - the Price guide was published, the first two issues of the Stroykomplekt magazine. Thus, the costs amounted to: a reference book - 500 rubles (6,000 rubles for 12 months), publications - 10,000 (5,000 rubles monthly). Total - 10500 rubles.

Let's see how the sales volume has changed in these months (Figure 7).

Fig.7

There is a slight increase in sales, because. advertising activity is just beginning to be actively used in the enterprise and bear fruit. But, given that sales usually fall in January-February, the growth of 5 and 6.5% is quite noticeable.

The data in Table 6 indicate an additional turnover after the use of promotional tools, which amounted to 62,197 rubles.

Table 6

Data on the sales volume of Magnat-S LLC before and after the use of promotional tools

Based on the data of previous years, the profit leaves about 35% of the turnover. Thus, the additional profit for January-February will be 21,768 rubles, and advertising costs - 10,500 rubles. Total additional profit minus advertising will be 11,268 rubles. Therefore, these promotional activities were effective because they brought additional income.

The concept of efficiency in advertising, on the one hand, is closely related to the concept of economic efficiency in general, and on the other hand, it has its own specifics. Most general definition efficiency is the ratio of the result and the costs incurred to achieve given result. In principle, this definition also applies to the effectiveness of advertising, where the degree of achievement of the goal set within the framework of advertising activities can be considered as a result, and the costs of achieving this goal can be considered as costs. At the same time, it is necessary to have a clear understanding of three key points, without which it is not necessary to talk about the practical calculation of advertising effectiveness.

1. There are a number of limitations that have to be taken into account when analyzing the effectiveness of advertising - firstly, not everything and not always can be taken into account and calculated here, and secondly, not everything that can be calculated can be valuation, thirdly, it is not always possible to accurately determine the result obtained during the implementation of advertising, and not other marketing activities.
2. The final effectiveness of advertising activity is influenced by both internal factors (the effectiveness of the advertising strategy, the effectiveness of advertising products and the effectiveness of the media plan), which depend on the advertiser or his advertising agency, and external factors that do not depend on the actions of either the advertiser or the agency (market conditions, behavior of competitors, changes in consumer behavior, government influence on the market, etc.), and all of them need to be analyzed separately.

Therefore, it is almost impossible to obtain absolutely accurate data on the economic effectiveness of advertising.

Efficiency = Total Profit / Amount of Costs

According to statistics, in LLC "Magnat-S" the increase in turnover occurs annually by 50-60%, thus, the expected turnover in 2009 will be 9423369 rubles, and the costs according to the same logic will be 9208432 rubles.

Thus, we calculate the efficiency at the same level of profit.

Efficiency = 9423369 / 9208432 = 1.023

Suppose that the developed proposals will increase the turnover of the enterprise by another 10%. The expected turnover will be 6,478,566 rubles, and the costs will increase by an average of 5%, that is, they will average 6,043,033 thousand rubles. Based on these values, we calculate the profitability marketing activities.

Rb \u003d T / Stot. x 100%

Where T - turnover, rub.; Stot. - total costs.

Rb = 6478566 / 6043033 * 100% = 107.3

Consequently, the costs of improving advertising activities will quickly pay off, and the expected effect of the proposed activities will not be long in coming.

Due to the lack of funds, it has become unprofitable for many companies to use a variety of advertising media. Convince marketers to abandon ineffective and expensive advertising and help choose the most optimal solutions financial director maybe using a simple questionnaire and an indicator such as return on investment.

With the onset of the crisis, almost all companies cut their budgets for advertising - its market as a whole in the first quarter of 2009 alone decreased by almost 30 percent compared to 2008. The largest decline - by 42 percent - was observed in print media, on radio reached 38 percent. At the same time, the volume of Internet advertising decreased by only 15 percent (according to the Association of Communication Agencies of Russia (ACAR)) and by the end of the year, according to preliminary forecasts, the market for this advertising will grow by 40 percent. This is explained by the fact that in the conditions of the strictest economy, companies are ready to pay only for controlled results, for new buyers.

The return on online advertising can be predicted and measured. Visitor counters, for example, Google Analytics, Yandex.Metrica, make it possible to evaluate the audience in many ways - the time spent on the site, how many pages were viewed, whether the application was completed, etc. This means that the CFO has a real opportunity to control advertising costs and measure the cost effectiveness of its placement.

To solve this problem, the ROI (Return on investments) indicator is ideal - return on investment - the ratio of profit received to invested funds. When evaluating the effectiveness of investments in advertising, this indicator is defined as the ratio of the volume of sales caused by past advertising to the total costs of a specific advertising campaign.

Advertising revenue planning

ROI alone is clearly not enough to evaluate the return on advertising. In practice, conversion rates are used to determine how much additional sales a given promotion will generate. Now everything is in order.

positional task (Rank-task) - to place an advertising message on a specific medium in order to attract attention target audience to a product or service;
the budget task is to maximize the number of contacts with the audience (ad impressions, website clicks) within a limited budget;
CPA-task (Cost per action) - push the audience to take action (calls, applications, registration);
The goal of ROI is to make advertising pay off and increase the return on investment in advertising as much as possible.

The quantitative transition of customers from one task to another, from one stage of sales to another is called a conversion. For example, out of 1000 people who want to buy an apartment, 300 people saw an ad (positional task) and 20 people went to the desired site (budget task). Of these 20 clients who were interested in buying an apartment, 5 called the developer's office and only 3 people made a purchase. Knowing such ratios, such as the number of people who bought an apartment to those who saw the ad (conversion rates), and the amount by which purchases were ultimately made, it is easy to plan the additional income received by the company through advertising.

Practitioners experience
Evgeny Kanevsky, Financial Director of MIEL-Investments in suburban real estate

An important question is where to get the data if advertising is only planned to be placed. There may be several solutions here.

First, you can operate on the results of similar advertising campaigns carried out relatively recently. In other words, consider that the response to the ad will be the same as last time.

Secondly, it is useful to conduct a test run of advertising. For example, advertising is placed on the site for 10 days. Throughout this time, results are tracked, conversion rates are determined. And only after that a decision is made about the effectiveness of such advertising and the advisability of its further use.

By the way, determining conversion rates is necessary not only in order to ultimately calculate ROI and evaluate the effectiveness of advertising costs. Using this data, the company can manage the effectiveness of sales and customer service. Thus, to avoid lost profits, which is possible at any stage of sales.

For example, at the initial stage, when it was necessary to attract the attention of the target audience, the company lost part of its potential clients due to the fact that the ad is incorrectly composed. In the future, those who went to the site could not find the necessary information, and those who called, for example, were not answered too promptly or were not given complete information.

Three indicators to monitor the effectiveness of advertising

Oleg Moseev, financial director of GC "AvtoSpetsTsentr",
about the approach to managing advertising costs

Having studied the return on various media, we transferred most of the budget this year to online advertising. Evaluation of the effectiveness of advertising is obligatory for us, and the whole process is regulated quite seriously. General standard advertising costs for us - at least 1 percent of revenue.

We evaluate the effectiveness of advertising by a number of indicators: “cost of a call” (the ratio of the budget for advertising to the number of calls), “cost of one contract”, “costs per car sold” (many car brands are delivered to order). One-time promotions stand apart, according to different reasons not included in our media plans.

So, in August last year, it became clear that it was urgent to sell warehouses. The task of marketers is to determine which advertising platforms will solve the problem as quickly as possible. This is easy to do, knowing the patterns of attracting customers, relying on the "cost of a call" indicator and conversion rates (calls - to visits, visits - to sales). For example, in order to sell 100 cars, you need to “lure” 200 buyers to the salon, and 400 in the mass segment (conversion of visits to sales in the first case is 50%, in the second - 25%). This means that calls to the salon for the premium segment need at least 400 (conversion to visits - 50%), and for mass brands - 800.

When making recommendations on advertising media, marketers are responsible for the result: a variable part of their salaries depends on whether the salons are “provided” with the calls and visits needed for the sales plan. These indicators are included in Employee KPIs marketing and approved in the budget.

Understanding whether a company is losing money due to shortcomings in advertising strategy or advertising sales organization is no less important than calculating whether advertising is cost-effective. In fact, conversion calculation is needed to manage ROI. Comparing the conversion rates of different advertising campaigns with each other, you can identify at which stage of the sales chain there are shortcomings.

Advertising ROI Example

Using the example of a car dealership, we will explain how you can estimate the cost of advertising and influence its effectiveness.

So, the company "Alpha" (customer) sells cars and advertises Renault Logan, focusing on customers in Moscow and the region, in Yandex.Direct through advertising agency"Beta". The task set for the agency is to ensure the maximum number of transitions to the customer's website. The number of ad impressions per day is 8000, the number of clicks to the company's website per day is 100, the price of one click is 10 rubles, the number of sales is 1.

During the advertising campaign, the ad was shown 80,000 times, clicks to the customer's website were made 3294 times (4.12% CTR - Click per rate, the ratio of the number of "clicks" to the number of ad impressions), conversion to calls - 0.91 percent (30 calls), conversion of calls into sales - 20 percent (6 sales).

Alfa's advertising campaign costs were RUB 48,751, the average purchase price was RUB 400,000, and the car dealership commission (gross profit) was 10 percent (RUB 40,000). Accordingly, the gross profit from the placement of online advertising amounted to 240,000 rubles. (6 sales x 40,000 rubles), and the ROI value, respectively, is 492.3 percent (240,000 rubles: 48,751 rubles x 100%).
Since not everyone who visited the company's website called the office, Alfa's management set a new task: to increase the conversion of clicks to the site into calls.

The Beta agency took a number of measures. The contact number was placed on the header of the main page of the customer's website, where the number is clearly visible to users. We also added contact information to the end of the section devoted to the description of Renault Logan, accompanying it with the text: "Consult on this car model." Advertisements have been corrected strictly in accordance with the request. For example, if a user requested "Logan in a complete set", then in the ad that was displayed on the request, exactly "Renault Logan cars in a complete set" appeared.

As a result, for the same 80,000 ad impressions and the same advertising budget, the advertising campaign indicators have changed. The CTR indicator increased to 7.5 percent (transitions to the customer's website took place 6,000 times), conversion to calls increased to 1.1 percent (66 calls were received to the Alpha office). The number of sales reached 13 (66 x 20%). Gross profit increased from 240,000 to 520,000 rubles, that is, Alpha received an additional 280,000 rubles.

Blitz test for marketers

It is clear that the effectiveness of advertising is a headache for marketers. And the CFO can only offer a tool for evaluating the effectiveness of advertising spending. At the same time, the direct task of the company's chief financier is to exclude uncontrolled spending of funds, form a viable budget, and also stop possible abuses by employees. When advertising money is wasted or the amount of lost profits approaches the income received, the CFO's "intervention" in the process is appropriate and reasonable. At the same time, there is no need to delve into all the subtleties of the work of marketers. To assess the quality of their work, the financial director can use a fairly simple question-nickname (see table)

Questionnaire Questions to check for marketing staff

CFO questions	Correct answer	Incorrect answer
What do we pay our advertising agency for, what is the result of their work?	For the number of visits to the site of certain consumers, the number of calls, applications, sales volume	For advertising
What is our conversion rate, for example, of ad impressions to site visits? To what extent do these values deviate from the industry average?	Specific conversion values are announced. There are specific suggestions on how to influence them	What is a conversion? We do not keep such statistics. This work should be done by an advertising agency, we completely trust it.
How can we increase the value of conversions?	Review advertisements, add an application form on the site, make changes to the location of information blocks on the site, etc.	For what? Advertising pays for itself, and that's enough
How do we measure conversion?	Counters installed on our site Google analytics and Yandex. Metrics; we record the number of calls, requests and sales from advertising	We don’t count it, we don’t keep statistics, the main thing is that a buyer comes to advertising and there is a sale
What is the purpose of our advertising campaign?	Increase return on investment; target values are given	Get clicks to the site, master the advertising budget
What is the ROI value of our advertising campaign for the last month?	Specific values are given	We do not make such calculations. What is ROI?
What are the stages of our sales process? What are the problems with each of them?	Specific steps are named and “bottlenecks” are indicated	We advertise, we don't sell. We don't have any problems

If the CFO's questions are adequately answered, it's safe to say that the company is controlling its advertising investment and is striving to increase its return on investment. However, a stable result in the form of an acceptable ROI and sales growth will not be given by one-time "fire" events, but by systematic control of advertising costs.

It is also important that it is installed personal responsibility for each stage of the advertising sales chain and for each ruble invested in it.

In practice, different approaches are possible. Target value ROI is calculated on certain period, preferably financial service(or together with the sales department) and brought to the marketing department as one of the key indicators. In fact, we are talking about predetermined standards. Note that there are no strict ROI standards today; they can only be discussed in relation to individual industries. Thus, the accumulated statistics show that in the field of real estate sales, ROI on Internet advertising can reach 1000 percent or more. And in intermediary services(insurance broker, etc.) and 100 percent is considered a good indicator(Advertising paid off).

Another option is when ROI is not set as target marketing department, but is calculated by them to select the most suitable contractor. Since ROI promotions is integral part the profitability of the company itself, the first option seems more justified.