What helps you decide to spend your money on advertising?

We are a very customer focused start up, we know that the cost is not the only factor. So what is it that you would look for and or expect?

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Lisa Ormenyessy

Lisa Ormenyessy Business Coach and Marketing Specialist at

I totally concur Steve, another number you will want to work out is the life time value of a client against the acquisition cost of the client.

For example - if you spent $100's of dollars and only picked up one client whose first purchase with you was only $50 then on the face of it it would look like a poor ROI.

However - If over the next 3 years that customer ends up spending $20,000 with you (as $50 was your entry level product and you continue to up sell throughout your marketing/sales funnel) then a couple of hundred dollars spend for a $20K client is good.

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Steve Osborne

Steve Osborne director at

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Steve

The only thing that influences advertising spend is ROI – return on investment.

After you've factored in all the variables – available budget, target market, sales cycle, media channel, creative execution, desired outcome, plus a little bit of gut feeling – you're left with measuring how many prospects/leads/enquiries/sales were generated per dollar spent.

That measurement assumes you've defined what a good quality lead looks like, as opposed to a large volume of enquiry from less-than-perfect candidates.

For example, a low-cost competition campaign on Facebook may yield X entries, only a small percentage of whom are actually interested in purchase. As opposed to spending the same amount on direct mail to a targeted database, and receiving far fewer, but more highly qualified leads.

To that end, there is in my view, no difference between "brand" and "retail" advertising. Unless the campaign achieves a ROI, it can be judged to have failed. Sometimes we have to learn these lessons the expensive way.

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