Re: Overture effectiveness -- not

From: Jim Novo <jimnovo_at_sprintmail.com>
Date: Mon 11 Mar 2002 22:10:16 -0600

Steve Harrison typed:

> I'm surprised to still see figures such as "$1 spent for
> every $25 earned" being bandied as representing a
> meaningful measure of an advertising campaign's value.

Steve, I didn't say "earned", I said profits, $25 in profits.

> While a 1:25 spend-to-earn ratio may be meaningful for
> one company, or one product or product line, it's
> curious that such math would be suggested as any sort of
> universal yardstick to gauge the profitability, and
> especially the productivity, of advertising in Overture
> or any other PPC.

Respectfully Steve, profit is profit, and as far as I am
concerned, a very good universal "yardstick". Some
people know how to calculate profit, and are quite aware
of the mystical concepts you presented like product margin.

When I said is for every $1 she spends on Overture ads she
generates $25 in profit, and that's what I meant. After
all costs, including raw material cost, manufacturing
cost, shipping and handling costs, cost of the ads, etc.
etc. she makes $25 in profit for each $1 she spends. Puts
$25 in the bank net of all costs. While it is clear many
people don't understand how to calculate profits, I'm not
one of them.

I hope that clears the situation up for you.

Jim

Jim Novo | Author: Turning Customer Data into Profits
Learn the techniques and models used in High ROI
Customer Marketing at: http://www.jimnovo.com





Received on Mon Mar 11 2002 - 22:10:16 CST