When you have a display advertising campaign, it’s crucial to monitor the results. This involves evaluating the performance, impact and profit of your campaign. By assessing these factors, you can determine if you’re getting your desired return on investment (ROI).
A customized retail display is always an excellent choice for promoting your service or product. Having measurable results helps you plan your marketing strategy because you know what works and what doesn’t. Learn more about measuring ROI for your custom displays.
What Is ROI?
In marketing, ROI measures the cost of marketing campaigns compared to the profit they generate. Businesses typically use ROI to:
- Decide which direction to take: If a campaign needs to generate more revenue, you can adjust it. On the other hand, if a campaign generates plenty of revenue, you might keep it as is.
- Set your marketing budget: You need to calculate the ROI to select the funding for the next round of campaigns. For instance, point of purchase (POP) ads might generate more profits than online ads, so you may want to allocate more funds to POP advertising.
- Measure campaign success: Calculating your ROI lets you measure your campaign success, which helps you identify the right mix of online and offline advertising campaigns.
- Competitive analysis: When you calculate your ROI, you can compare your performance to the performance of other companies in your industry. You can use publicly available financial data to estimate your competitors’ ROIs.
How to Calculate the ROI of Retail Displays
Here are the two steps for calculating ROI and measuring your display’s performance:
- Determine your key performance indicators: Your key performance indicators (KPI) are the goals you want to accomplish with your advertisement. It can be anything from increasing brand awareness to improving sales. However, the goal must be specific. For instance, your KPI might be increasing profits by 25% at a certain retail location. The more detailed the goal is, the more easily you can calculate your ROI and track progress.
- Use a formula to calculate ROI: You can use a few different formulas to calculate ROI. One way to calculate your ROI is to subtract the cost of the investment from the total profit, then divide that by the cost of the investment. For example, if you spent $1500 on a campaign ad and earned $2000 from sales, your profit was $500. Then, divide the profit ($500) by the total investment ($1500). The result gives you an ROI of 0.33 or 33%.
Key Factors to Consider When Determining Your ROI
There are a few other factors that can affect your ROI, including:
- Campaign run-time: It’s critical to understand when you’ll get your ROI. If your campaign is running for many years, you will be able to accurately calculate the ROI at the end of the campaign.
- Total revenue: When measuring ROI, you should consider the total revenue for a campaign. By looking at the total revenue, you can determine the budget, overall marketing impact and strategic planning.
- Gross margin ROI: The gross margin ROI considers the costs to keep it compared to what you would gain if you turned it into cash. You can calculate the gross margin ROI by taking your annual sales minus the cost of sales divided by your inventory.
- Seasonal displays: If you use a seasonal POP display, you should compare the benefits you receive when you use it to the times you don’t. This helps you get performance measurements for seasonal displays.
- Sell-through rate: The sell-through rate is a percentage that looks at the amount of inventory versus what sells. To calculate the sell-through rate, you divide your sales by the stock on hand and times it by 100. You can use this to compare the performance of one marketing technique to another, such as a customized display compared to no display.
- Gross profit: Gross profit helps you understand the total revenue of your marketing efforts and considers the cost of production or delivery. All you do is subtract that cost from your total revenue.
- Net profit: Your net profit is your gross profit minus additional expenses. This is another way to assess the impact of your marketing campaign.
- New customers: Knowing how many new customers you’ve acquired shows you how well your advertising campaign is working. If you have many new customers, you may consider your marketing a success, depending on your goals.
Tips for Improving Your ROI
A good ROI is anything that leaves you with a profit once you subtract the cost of spending. However, if you’re dissatisfied with your ROI, try using these eight tips to improve it:
- Invest in POP displays: POP displays offer many benefits, including increasing brand awareness, granting your visibility in major retail stores, stronger merchandising, increasing product appeal and increasing sales
- Measure external factors: There’s more to your campaign than ROI. When establishing your marketing goals, you should also decide which external factors affect your ROI and how to measure them.
- Determine costs: Factor in the cost for creative development, agency fees and personnel so you can create your ROI strategies and decide what metrics to include in your calculations.
- Try different marketing channels: Test different campaign channels to determine which ones work best. You can utilize email marketing, digital advertising, social media marketing and many other platforms.
- Survey your target audience: Asking your target audience what they want is the best way to find out. By surveying consumers, you can get answers to your marketing questions and plan your strategy.
- Focus on your spending and income: You can analyze your spending at different stages of your marketing campaign to find areas where you’re spending more than you’re gaining.
- Experiment: Experimentation identifies growth opportunities and provides valuable insights. For instance, you can run two advertising campaigns and compare the results.
- Focus on your customer: When your marketing campaign resonates with your customers, they are more likely to purchase your product. You can do this by putting your customer at the center of your marketing strategy and considering what advertisement would entice them to buy your product.
Create a Custom POP Display to Increase Your ROI
An excellent way to increase and measure your ROI is with a custom POP display. Custom POP displays offer countless benefits, such as being affordable and appealing to customers.
Creative Displays Now has provided customers with high-quality custom displays for almost 60 years. As a premier designer and manufacturer of POP displays, we produce various custom corrugated cardboard product displays under one roof. From design to distribution, we’ve got your back. We’re experts in our industry and know the display requirements for major retailers. Contact us to get an estimate or discuss your custom display ideas.