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Suggest You - The Fundamentals of Direct Response Radio Advertising
Sure, these motivational CDs will give you a quick adrenaline rush to get out there and get those prospects! After all, how can it get more motivational than listening another testimonial rags to riches story?The stories are motivational alright and the upline will tell you that you need to keep on buying these tapes because it is food for your mind that will keep you going on with the business. What they forgot to tell you is that they are profiting BIG from you buying those useless tapes or CDs!Think about it, if one of the biggest distributors in your company has about 5,000 downline in his team and each and every week you buy another stupid motivational tape for $7 a pop, how much money did he just make? He just made $35,000 PER WEEK if everyone in his downline purchased those useless CDs.Well let say only one fifth of his downline purchases the CDs, he still made $7,000 a week or $48,000 per month from you! Yup, that is the greedy side of your upline he will never mention to you.You see, behind all that supposed benefits of staying on the system and feeding your brain the good stuff, in actuality, the REAL untold reason why they want you to buy their crappy CDs is that they are making a killing off of you!How did I figure? Well, I used to be in one of those systems. But ever since I have turned into an internet marketer selling information products like CDs and audio files, I can see through all those lies.If your MLM company truly cared about your well being, why not make the CDs $1 instead, so that it covers reproduction and shipping costs for the benefit of the downline? Now you know wh
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn
Are you a southern California homeowner or business owner? If you are, have you heard of Southern California mold testing before? If you have not, you will want to take time to familiarize yourself with it, as it can play an important part in your life.Although it is nice to know that California mold testing is important, you may be wondering exactly why that is so. One of the many reasons why California mold testing is so important is because of what it is. California mold testing is done by a professional, who is often referred to as a mold inspector or mold removal expert. These experts, with their knowledge and a number of tools, can not only determine if your home has a mold problem, but they can also determine what type of mold you are faced with. Having an exact type of mold often makes it easier for the mold to be treated and removed.Perhaps, the most important reason as to why Southern California mold testing is important is because it can let you know if there is mold in your home. This may have a direct impact on your health. There are some types of mold, like black mold, which are considered extremely dangerous. These mold types can be harmful to your health. Most commonly, those who have close or direct contact with mold develop breathing difficulties, but more serious health problems have been linked to mold, namely black mold. Of course, for Southern California mold testing to work out to your advantage and help your health, you will need to take action. Should your Southern California mold testing results come back positive, you will need to take steps to get the mold removed from your home.Anoth
First, Two Important Concepts
Throw out all you think you know about advertising, radio advertising, and especially direct response advertising. It's best to begin with a clean slate, a blank whiteboard so-to-speak. There are two important concepts I want to introduce before moving forward.
Concept One: Radio as A Highway From Your Business to Your Potential Customers
Think of radio advertising as a 5,000 lane highway from your business to groups (station audiences) of your potential customers. The many lanes on this highway are the many different radio stations and radio networks that are available for you air your radio advertisement. It is on these "lanes" that you send your message to your customers.
The lanes are clustered in such a way that they reach groups collections of customers who have similar tastes and demographic profiles. Therefore, some of these lanes lead to groups that have a high concentration of people who match your target customer profile. As a result, advertising on those lanes (stations) is more profitable than others with a lower concentration of your target customer profile. These groupings are the radio formats, which are used in radio advertising to enhance the efficiency of, or return on, advertising efforts. For more about radio formats, see our summary at http://www.strategicmediainc.com/radio-advertising.php.
Concept Two: Radio Advertising is a Profit-Driver, Not a Cost Center
At this juncture, the one thing many business people can't seem to put out of their mind is the one of "how much does it cost" to advertise on radio. We've written extensively about this question because it is one of the most common that we get. The problem is that embedded in this question is the presupposition that radio advertising is a cost. The concept that one needs to fully grasp is that radio advertising is not a cost center. That is, it does not stand alone without any relation to revenue or profit. It is detrimental to think of direct response radio advertising as a cost because that leads to managing as though it's a cost, which means minimizing or eliminating it. Contrast this with managing it like it's an investment, and maximizing the return you realize on it.
Direct response radio advertising - by its very definition - is a profit-driver. If it's not driving a profit, it would not exist - or at the very least it would not be called direct response radio advertising but instead "brand" or "awareness" advertising. Profitability is a fundamental aspect of direct response radio advertising.
On To the Fundamentals
Now that we've cleared our minds and allowed for two basic concepts about how to think about radio advertising, let's move on to the meat of the fundamentals of direct response radio advertising.
The Basic Formula
We'll begin with the basic formula involved in all direct response advertising:
You buy placement in radio media to air your radio ad, which gets your message broadcast to a certain number of people. This results in a cost per person reached with your message. In advertising this is known as CPM, or cost per thousand impressions of your ad.
Some percentage of those people will respond (call, visit your web site, visit your store), giving you a response rate.
Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.
From this formula, you will derive your media "CPO", or "cost per order", which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called "cost per acquisition" ("CPA").
The important question at this point is this: Is the lifetime value ("LTV") of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn
Everybody shops on line today since the launching of Ebay, Amazon.com and other companies. iAdvertising your business online is probably the best way to reach a large audience when you are marketing on a budget. The following are a few cleaver and unique marketing ideas to promote your product or business:Yellow Pages: The Yellow Pages directories are good sources of advertising. Almost every business can benefit from advertising in the Yellow Pages of the telephone directory. Listing your business in the Yellow Pages will inform clients of the location and services that you provide.Radio: Contact your local radio stations for their advertising prices. The best prices are usually offered during non-peak times.Television: The best times to advertise on television are non-peak times, usually late at night. You may contact the television station in your area to find out more information on their advertising prices.Newspapers: Contact the classified department of your local newspaper regarding placing an advertisement with them. Before placing the advertisement, you must decide who your target audience. For example, if you only want to reach Maryland residents in your local area, you might want to advertise in the paper that serves that local area.Brochures: You may also use brochures in the company's presentation package. This package should include the company's stationary, brochure, and business card.Business Cards: The personalized business cards can be used as a form of advertising that will give others information about the business. The information on the card will give them the name
The lanes are clustered in such a way that they reach groups collections of customers who have similar tastes and demographic profiles. Therefore, some of these lanes lead to groups that have a high concentration of people who match your target customer profile. As a result, advertising on those lanes (stations) is more profitable than others with a lower concentration of your target customer profile. These groupings are the radio formats, which are used in radio advertising to enhance the efficiency of, or return on, advertising efforts. For more about radio formats, see our summary at http://www.strategicmediainc.com/radio-advertising.php.
Concept Two: Radio Advertising is a Profit-Driver, Not a Cost Center
At this juncture, the one thing many business people can't seem to put out of their mind is the one of "how much does it cost" to advertise on radio. We've written extensively about this question because it is one of the most common that we get. The problem is that embedded in this question is the presupposition that radio advertising is a cost. The concept that one needs to fully grasp is that radio advertising is not a cost center. That is, it does not stand alone without any relation to revenue or profit. It is detrimental to think of direct response radio advertising as a cost because that leads to managing as though it's a cost, which means minimizing or eliminating it. Contrast this with managing it like it's an investment, and maximizing the return you realize on it.
Direct response radio advertising - by its very definition - is a profit-driver. If it's not driving a profit, it would not exist - or at the very least it would not be called direct response radio advertising but instead "brand" or "awareness" advertising. Profitability is a fundamental aspect of direct response radio advertising.
On To the Fundamentals
Now that we've cleared our minds and allowed for two basic concepts about how to think about radio advertising, let's move on to the meat of the fundamentals of direct response radio advertising.
The Basic Formula
We'll begin with the basic formula involved in all direct response advertising:
You buy placement in radio media to air your radio ad, which gets your message broadcast to a certain number of people. This results in a cost per person reached with your message. In advertising this is known as CPM, or cost per thousand impressions of your ad.
Some percentage of those people will respond (call, visit your web site, visit your store), giving you a response rate.
Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.
From this formula, you will derive your media "CPO", or "cost per order", which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called "cost per acquisition" ("CPA").
The important question at this point is this: Is the lifetime value ("LTV") of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn
The UK’s Records Management Society defines records management as, “the process by which a company manages all the elements of records whether externally or internally generated and in any format or media type, from their inception/receipt, all the way through to their disposal”. In this digital age many organisations have set up comprehensive systems to ensure that electronic records are safely stored and backed up, with a plan in place should an unexpected crisis occur. This makes a great deal of sense since some estimates suggest that over 90% of businesses that have had a major data processing disaster will go out of business within 5 years.These days most employees rely on electronic systems to do their job and lost or damaged files can spell disaster. However while IT systems are often carefully considered and any perceived emergencies planned for, paper records can frequently be neglected. It’s difficult to pinpoint why this is except to say that perhaps manual records are considered unimportant when compared to expensive IT systems. Perhaps it is also the case that the sheer physicality of a paper record makes people (wrongly) believe it is not as important to safeguard as a computer file that could more easily be destroyed or corrupted. But to take this viewpoint is ill advised and short sighted.Many organisations are under a legal obligation to keep certain records for a specified period of time. For example, financial institutions are now required to keep mortgage loan files for up to ten years after the loan has been repaid. Some medical records must be stored throughout the life of the patient and government in
Direct response radio advertising - by its very definition - is a profit-driver. If it's not driving a profit, it would not exist - or at the very least it would not be called direct response radio advertising but instead "brand" or "awareness" advertising. Profitability is a fundamental aspect of direct response radio advertising.
On To the Fundamentals
Now that we've cleared our minds and allowed for two basic concepts about how to think about radio advertising, let's move on to the meat of the fundamentals of direct response radio advertising.
The Basic Formula
We'll begin with the basic formula involved in all direct response advertising:
You buy placement in radio media to air your radio ad, which gets your message broadcast to a certain number of people. This results in a cost per person reached with your message. In advertising this is known as CPM, or cost per thousand impressions of your ad.
Some percentage of those people will respond (call, visit your web site, visit your store), giving you a response rate.
Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.
From this formula, you will derive your media "CPO", or "cost per order", which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called "cost per acquisition" ("CPA").
The important question at this point is this: Is the lifetime value ("LTV") of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn
Due to more unnecessary disclosure by the Federal Trade Commission franchising companies must be more vigilant to keep company information out of the hands of international terrorists. With increasing rules of discrimination a franchisor is forced to give vital information to anyone who asks for it. Including a group which supports international terrorism. Of course the FTC just doesn’t get it, they would rather sacrifice American lives and enforce political correctness and require unnecessary disclosure to protect consumers, but if the international terrorists get the information it could be deadly to Americans who are also consumers.Many companies are careful to watch who gets a copy of their Uniform Franchise Offering Circular, UFOCs, yet we are finding more and more states wish to put them online. Some franchising websites make it easy to buy them online. All of this massive unnecessary disclosure or MUD can be acquired with a few clicks on the Internet. All of which the Federal Trade Commission is requiring to be included in the disclosure documents, such as a list of every franchisee and their address.Now, as many see this new rule in UFOC disclosure adopted by the FTC, they want franchisors to send a UFOC with all this information to someone who sends in a form claiming that they are interested in buying a franchise. Many are suggesting that franchisors make CDROMS and send them out, or put the information all on their websites. Better yet the great state of CA is putting all this information on line of all registered franchises. Is this nuts? Anyone can send an email, request information, fill out a form on a web sit
Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.
From this formula, you will derive your media "CPO", or "cost per order", which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called "cost per acquisition" ("CPA").
The important question at this point is this: Is the lifetime value ("LTV") of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn
Lean manufacturing refers to the ways of eliminating waste from the manufacturing process of any product. Lean manufacturing increases the quality of the product including the profit levels and helps in reducing production costs. A lower lead and set up time, low equipment costs and better position in the market can also be counted as the additional advantages of the Lean Manufacturing System. However, to implement a proper lean manufacturing system some basic principles are required to be followed or implemented.One of the most important principles may be to produce a product without defects, where each part of the product is examined after manufacturing. In this way, any defects detected can be corrected or eliminated at the earliest possible stage instead of reaching to the final stage and going over the whole process from the beginning. The final product can therefore be kept perfect and flawless. Avoiding all activities and materials that do not add value to the final product is also very important, which in turn requires to be replaced by the optimum use of valuable resources such as manpower, capital and land.Giving value and importance to the workers and all the people involved in the production can also make a lot of difference. Workers are the people who are closest to the product and thus, their opinions and decisions regarding the betterment of the product can add a lot of value to it. Hence, their inputs need to be valued and considered as important and necessary. Manufacturers also need to be constantly improving themselves and remain flexible in their production depending on the market demands. Maintaining a health
If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn a lot from this. Identify widely appealing, complementary items and ensure they are offered as part of the sales process.
2. Increase repeat purchase. You have paid to acquire that customer, now develop a relationship and continue to meet their needs to drive repeat purchase. If they only buy once from you, you don't have a very viable business unless that first purchase is incredibly high margin.
3. Reduce your cost structure. Take advantage of your increased volume to negotiate better product costs, shipping costs, etc.
Improving Cost Per Order
Just as there are a number of ways to increase LTV, there are also many ways to decrease the CPO.
1. Reduce the media cost per person reached. Also known as CPM, this is a standard metric used in advertising. It reflects the cost to reach 1000 people. (remember that CPM stands for "cost per thousand" impressions of your message). This is a constant focus of any good direct response radio agency, and the element in direct response radio advertising that has received the most attention. This is why every dollar of media in direct response radio is remnant advertising. But that's not all that should be considered when looking to reduce CPM. Leveraging database technology and using scientific testing methodology, it is possible to identify the optimum schedule to use in placing the media. Thus optimizing the media schedule can meaningfully reduce CPM.
2. Increase response rate. Again, media scheduling will play a role here. In addition, use of radio formats to effectively target the right customers is vital to optimizing response rate. But perhaps the greatest impact on response rate in direct response radio advertising is the messaging in the radio ad itself. Great direct response radio ads significantly enhance the responsiveness of the media dollars spent. Your radio agency's ability to create radio ads that elicit response from your potential customers is a crucial element in direct response radio advertising success.
3. Increase conversion rates. Increasing the percentage of inquiries that become customers can have an enormous impact on campaign profitability. The factors that will most impact conversion rate are your sales scripting, web copy, product offers, pricing, and your guarantee or return policy. As much as any other variable, these factors need to be tested and continuously refined.
Implications and Conclusions
Now that you understand the fundamentals of direct response radio advertising, let's look at the implications and conclusions that these fundamentals illuminate:
1. The role of database technology and analysis
By now it is clear that optimizing both lifetime value and cost per order maximizes your business profitability. But doing these things also requires capturing and analyzing an enormous quantity of data. To do this in a way that allows for distilling insights requires a robust database specifically tuned for direct response radio, along with well-refined analysis approaches. Fortunately, database technology and robust analysis are a part of the services your radio agency will provide for you.
2. The importance of ongoing testing
Any discussion of the fundamentals of direct response radio advertising (or any type of direct response advertising) would be incomplete without addressing the topic of testing. When you look at the above approaches to maximizing campaign profitability, you see the key metrics that must be impacted. But how do you actually impact them? How do you know whether offer A is better than offer B? or C? How do you know whether copy D drives a better response rate than the control? How do you know whether the sales scripting or the pricing structure could be improved by certain changes? The only way to know these things is to test. As a result, testing is a never-ending element in direct response radio advertising efforts. If you are not testing, you are slowly going out of business.
3. Success in direct response radio advertising is about more than costs
As we've mentioned, one of the biggest questions we get is "how much does it cost to advertise on the radio?". Done correctly, direct response radio advertising is not a cost center, it's a profit center. It's a very efficient way to acquire new customers at a low CPO. To learn more on the topic of radio advertising costs and how to budget for radio advertising, see our article at http://www.strategicmediainc.com/radio-advertising-articles/.
4. Nearly any business can grow profitably with direct response radio advertising
It is difficult for me to think of businesses that cannot benefit from the kind of radio advertising that we are involved in. Direct response radio advertising is different from other forms of advertising because it is accountable for results, and the only way it can be accountable is to leverage a set of technological and human systems and processes to accurately capture, analyze and interpret results of the advertising. Once you have that in place, you have es
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