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Evaluating Advertising Campaigns

It is through the process of review and evaluation that an organization has the opportunity to learn and develop. In turn, this enables management to refine its competitive position and to provide for higher levels of customer satisfaction.

The use of marketing communications is a management activity, one that requires the use of rigorous research and testing procedures in addition to continual evaluation. This is necessary because planned communications involve a wide variety of stakeholders and have the potential to consume a vast amount of resources.

The evaluation of planned marketing communications consists of two distinct elements:

The first element is concerned with the way the ad communicates. Thus, it deals with the development and testing of individual messages. An advertising message has to achieve, among other things, a balance of emotion and information in order that the communication objectives and message strategy be achieved. To accomplish this, testing is required to ensure that the intended message is encoded correctly and is capable of being decoded accurately by the target audience. This testing could be pre or post testing.

The second element concerns the overall impact and effect that a campaign has on sales once a communication plan has been released. This post-test factor is critical, as it will either confirm or reject management’s judgment about the viability of their communication strategy.
 

THE ROLE OF EVALUATION IN PLANNED COMMUNICATIONS
 

The evaluation process is a key part of marketing communications. The findings and results of the evaluation process feed back into the next campaign and provide indicators and benchmarks for further management decisions.

The primary role of evaluating the performance of a communications is to see that the advertising objective has been met and that the strategy has been effective.

The secondary role is to ensure that the strategy has been executed efficiently, that the full potential of the individual promotional tools has been extracted and that resources have been used economically.

TOO MUCH OR TOO LITTLE?

Companies are generally interested in finding whether they are overspending or underspending in advertising. One way to figure that out is to use the formula given below.

Share of voice is the company’s share of advertising expenditure that earns a share of the consumer’s mind, and ultimately the market. Comparing that to market share provides an idea as to the feasibility of the company’s ad spend.

Company

Ad Spend (Rs)

Share of Voice ( % )

Market Share ( % )

Advertising Effectiveness

( Mkt share / Share of voice )

A

20,00,000

57.1

40

.70

B

10,00,000

28.6

28.6

1

C

5,00,000

14.3

31.4

2.19

Total

35,00,000

100

100

 

An advertising effectiveness ratio of 1 means an effective level of ad expenditure, while a ratio less than 1 indicates a relatively ineffective advertising level.

As can be seen from the above table, firm A spends Rs. 20 lakhs of the total industry expenditure of Rs. 35 lakhs. Thus, its share of voice is 57.1%. However, its market share is only 40%. So we can say that firm A is either overspending or misspending. Firm B has a market share equal in proportion to its share of voice. It spends effectively on advertising, while firm C is super efficient, and could probably increase expenditures.

Filed in: Advertising

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