How to Evaluate Your TV Advertising ROI

There is no argument that TV is very useful in generating mass awareness, attention and, more importantly, sales. However, to see the impact your TV ad is having, you must first evaluate your TV campaign return on investment, or ROI, and learn how to measure it accurately.

Return on Investment, or ROI, is essentially a calculation of what the company will gain or lose in relation to resources invested to make something happen. Ideally, one wants the ROI value to be more than what was spent. This would be considered a positive ROI. ROI is measured numerically, whether it be in dollars or assets.

How Do I Know My ROI?

Companies first need to define their goals, or what they will consider a positive return. Is it money, subscribers, accounts, survey awareness, presence in a number of cities, or all of the above? This becomes the metric to aim for, or more specifically, the performance goals. Second, each campaign, whether on TV or another medium needs to specifically define what will be done, with which target market, and what kind of penetration level is expected. In other words, if you spend $60,000 on a commercial campaign in Las Vegas, you should know the number of homes you expect to reach and how that translates to specific sales projection within a set timeframe. This is just an example, but it gives decision-makers a real, tangible metric to expect and measure against. In ROI terms, we call this “alignment.”

Metrics & Metrics

Next, it’s important to have standard Key Performance Indicators or KPIs on hand. If someone has an inflated  idea of performance, typical KPIs bring people back down to earth. So, using our example above, if a regional KPI indicates that for every $25,000 spent on TV one can reach 40,000 homes, then expecting 100,000 as defined above is out of the ordinary and probably a low probability of occurring. Referencing general market KPIs within an industry gives a splash of cold water and realism to ROI projections, grounding them in realistic result ranges. 

Putting It All Together

Now, getting started. Initiate the campaign and track as many relevant statistics as possible. Make sure to keep trends history records in addition to in-the-moment measurements. This will become extremely useful later when trying to figure out why blips and deviations occurred versus expected results. Essentially, your TV campaign ROI should follow a straightforward formula:

(Sales Growth – Marketing Investment) / Marketing Investment = ROI

Where marketers get into trouble is the time window over how long this formula should take. Your general KPIs can give you a rule of thumb to work with instead of providing  the dreaded response, “We’re not sure.” Remember, once you put a time window on the table, you’re locked into it as an expectation. So, give yourself a realistic target, not an overly optimistic one.

Your ROI Doesn't Have to be Impossible to Achieve

Your TV advertising ROI can be found if you spend some time doing the math, compared to overall KPI results, and crafting a concrete, realistic plan of attack. Start small and work your way up. You don't have to get into TV technical marketing alone; by partnering with a reputable media company, their experts provide both ROI campaign startup guidance, involved support, and follow up maintenance monitoring.