Finally we can measure advertising

According to the swedish survey Saljindikatorn 1 of 2 marketing managers says they know the effects of their advertising investments.

One must ask how the other half reason. Those who do not even think they can respond to what they achieve at work.

But honestly, we have known this for a hundred years now. John Wanamakers classic quote “Half the money I spent on advertising is wasted, the trouble is I do not know which half” has followed us and to some extent perhaps shaped our industry.

To start with I dont believe half the advertising money is wasted. One question is enough, how many act on an advertising campaign? 50 percent is pure wishful thinking. Of the 65 billion SEK swedish companies annually shovel into the bonfire of advertising a tiny percent is converted to the estimated heat for more than crows

Marketing managers obviously can´t defend their budget and the decline in mediai investments are currently the strongest since the survey began measuring. In January 2009 media purchases decreased by 24 percent compared with same period last year. In February 21 percent.

Let us instead flip the question when we get the chance. What happens when we are withholding investment?

The formula that gives marketing a relevant key figures look like this: GD / ID = EMI.

Growth Development (overall business objectives such as market share or sales in relation to the previous period) by the Investment Development (Investment in relation to the previous period) = Evolution of market investment.

We can use the familiar swedish telecom corporation Telia as an example. The company cut 200 million SEK from this year’s media budget. For the sake of simplicity we assume that they still retain their market share. The development of market investment is this: 1 / 0, 7 = 1.4. An efficiency of 40%.

A lot of money is lost anyway and we must get used to the fact that they never come back. What makes this downturn unique is that it coincides with the dramatic change in the media world. Old media versus new media. Examples of smart, cost-effective solutions can be seen more and more and talk about social media can not have escaped anyone. Telia and all other hopefully start thinking about how they go from monologue to dialogue instead of making funny movies.

The marketing manager who now learn how to create relationships without expensive media investments is unlikely to yearn back to the days when half their spendings went up in smoke.