How To Calculate ROI in Direct Response TV Advertising

Calculating the ROI of direct-response television (DRTV) advertising is a serious concern for entrepreneurs. This is a marketing investment that has been continuously challenged by product brand owners who are always on the lookout for accountability and measurable results.

TV advertising is indeed expensive, but the misconception that it’s not worth the investment is incredibly wrong. If it were true, many companies wouldn’t dare to invest, and advertisers would be out of a career. Nevertheless, any businessperson will prioritize profitability over anything else. The only way to do that is to calculate the ROI on DRTV advertising strategies.

 

5 Ways To Calculate ROI on DRTV Advertising

Here are several approaches to measure ROI on DRTV advertising.

 

Traditional Methodology

The traditional approach of calculating ROI involves a single-screen viewing. This methodology has a basic process, which is to divide the gross sales margin by the total advertising spend. The results are a rough estimate of the ROI.

The downside to this is that rough estimates aren’t always reliable for marketing budget allocations, whether for small or large-scale investments. Besides, measuring the effectiveness of DRTV advertising on all demographics involves a bit more complicated analysis.

 

Statistical Modeling

This approach requires observation of long-term sales data.

Round up a collected sales data for the past two to three years. The statistical modeling application provides an estimate of the correlation between sales and TV, meaning if DRTV advertising was able to influence sales.

The results will show the DRTV advertising sales coefficient, which breaks down how much sales are earned compared to the amount spent on the marketing investment. 

 

Geographical A/B Split-Testing

This method requires testing two regions: a TV region and a non-TV region. Observe activities in each region and take note if there are changes in sales. Compare the accumulative increase in the sales amount in both regions. Then, calculate the media costs in every increase in sales. For example, if you’re spending $200 per sale and earning $1,000 for every spend, you can notice the impact of a $200 dollar investment on DRTV advertising.

 

Online Portals

ROI can also be tracked through the back-end services of online portals.

Online portals from DRTV advertising and media platforms like TVA Media’s MEDIAblitZ! allow you to access automated sales activity data. This is an extensive media advertising that will help create brand awareness and generate solid sales, and it also provides trackability direct response ROI.

 

Effective Advertising Campaigns

Conducting effective advertising campaigns indicate high ROI probability.

TV ads turn out to be productive whenever there’s an immediate response in sales increase. In turn, the sales increase suggests the effectiveness of the DRTV advertisement.

 

Factors That Influence ROI in DRTV Advertising 

target audience

The main factor that influences ROI in DRTV advertising is the media buying plan. It involves the projected actions in every stage of the campaign.

The media buying plan should be strategic from preparation to scaling stages because it will pave the way to reaching maximum profitability even for beginners. Within the plan, a calculated ROI is included, which is the ideal target of the advertising campaign.

These are the factors that affect the fulfillment of the media buying plan:

 

 

Brand

It’s easier for well-known brands to catch the attention of the TV audience. They receive an immediate response in terms of sales since they’re past the brand awareness campaigns.

Unknown brands might want to start with brand awareness campaigns, which are often inclined to generate sales at the same time. 

 

 

Business Sector

The probability of getting a higher ROI from the DRTV advertising campaign depends on the business sector of the product or service.

The level of involvement in the business sector dictates the response rate of the audience, making it important to sell products that target a particular audience. Having a marked demographic is leverage for planning the right angle of the advertising campaign.

 

 

Audience

The targeted audience is within your scope of prospects. The question is, is the advertising campaign targeting an existing customer list or an entirely new set of audience?

Cold campaigns don’t necessarily mean that it’s aiming with both eyes closed. But they’re significantly lower than targeting warm prospects instead. It’s an absolute risk to switch the targeted audience, which might jeopardize the proposed ROI as well.

 

 

Creative

Campaign creation largely involves the creative used in advertising the product or service. And, the creative content is the core of the entire campaign.

Product brand owners need to have a uniquely tremendous idea that cuts through the chase of generating a huge ROI. Even with the right audience targeting, poor creative content can lead to a downfall.

 

 

Incentive Value

DRTV advertising compels the audience to act without delay. To do that, it has to promote valuable incentives.

Incentives work almost a hundred percent of the time. DRTV infomercials are often lined-up with massive discounts, trial offers, and limited-time promotions to spark the audience’s FOMO factor.

 

 

Timing

Everything is just about timing, even when launching DRTV advertising campaigns.

Advertisers find the right time of year, even the day as to when a product or service is positioned to stand-out among the countless competition, and toward the targeted audience. They know when the audience is non-responsive, which is another edge in TV advertising.

 

 

Follow-Up

Finally, reaching out to the audience with follow-ups serves as an extended connection from the initial interaction. Most importantly, it reminds them of your brand, product, or service.

Effective marketing involves scaling through various mediums. Positioning your advertising strategy via email marketing is a powerful method of increasing ROI results of the campaign.

 

The Impact of DRTV Advertising

Entrepreneurs trust the process of DRTV advertising because they are able to measure the significant impact of this marketing strategy on the success of their business. By focusing on the ad quality and outcome needs, the media buying plan established in every stage of advertising will generate immediate ROI.

Are you planning to invest in powerful DRTV ad campaigns for your product or service? Reach out to TVA Media Group today!

 

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