Questions

TV ads to sales conversion ratio?

I have a fairly good idea of my target demographics and how how to target them on TV. The budget is not huge, butcan decent campaign to show the ad several time for 2 weeks. My product is fairly low priced for 30 USD. So the question remains - what percentage of sales can I expect based on the people viewing the ad?

2answers

I don't think your product price supports TV advertising.

In the marketplace I'm in, TV advertising is relatively inexpensive. A couple tech friends and I ran a show for three seasons and conversion was not easy for us. I'm not saying that means it will automatically be difficult for you...just that you are expecting a pretty magic return on a 2-week investment.

You could have more, larger ticket, related products for sale in the funnel after the customer buys the initial product. You'd need a way of continuing to market to them, of course, to do this.

Radio's an alternative.

But the thing is, you're trying to do the newbie thing of combining Traffic generation and Conversion into a single step, wanting it to happen fast and without testing. This is a recipe for failure.

First you have to learn how to attract targeted leads (that's the Traffic phase.)

THEN you can learn how to Convert it into buyers.

What's your plan for Conversion? A phone number to call and salesperson to talk to? A web page with a sales letter? A mail-out CD?

As you can see there are several factors here, all of which have to be working for you to make sales. You could get traffic, but then fall down on the conversion phase (in fact, you probably will; that's the way it usually goes.) So is two weeks going to be enough? And how often will your ad be showing in that two week period?

There are so many factors here that can go wrong. Wrong demographic. Wrong airtime. Wrong pairing of product with show content. Wrong call to action. Wrong conversion tool. The list goes on...

...and two weeks probably isn't going to be enough testing time to fix everything. In your shoes, I'd save up more and get ready to test more steps and for a longer period.

When it comes to copywriting, something I have two decades of experience with, I have to share that most of the time the writer gets it wrong the first time. The message is off. The pain points don't bite in. The call to action doesn't work. And then they need to test and adjust until the next step DOES start working.

Those vitamin and supplement ads you see...the exercise programs...they've gone through iterations, let me tell you. They didn't do well the first time out. Then the team got to work and with the feedback they got adjusted and step by step got the funnel working.

This is not easy. You can't expect to throw a little money at television and expect everything to line up perfectly to make you a profit. You have a cost of customer acquisition. Figure out what that is. My gut says your product price doesn't support it. The cost of advertising, conversion, and fulfillment (getting the product to the customer) will almost surely be over $30.

If you can add a back end to the funnel (ie. more, higher-priced products) to buy...or a subscription product like the supplements...then maybe you can take a loss in the short term to profit in the medium term. Maybe you can develop a funnel where they buy the $30 thing now, and for every ten of the $30 buyers you get one $500 buyer (the guy who gets the apron and also buys the barbecue from you right then). That would change your revenue equation. But as things are, I don't see a win here.


Answered 2 years ago

I am advisor on advertisements so I would share my personal experience with you.There are two primary ways companies can calculate their advertising budgets. The first is through a straight percentage of sales and looks like this:

Total dollar sales: $100,000,000

Straight percentage of sales at 10%: $10,000,000

Advertising budget: $10,000,000

The second way to calculate your advertising budget is through a percentage of unit cost and it looks like this:

Cost per unit to manufacture: $4.00

Unit cost allocated to advertising: $1.00

Forecast sales: 1,000,000 units

Advertising budget: $1,000,000

You can use either of those two methods to calculate your advertising budget. Alternatively, you could base your budget on industry norms, some of which are listed here (all figures given as a percentage of sales):

Advertising Agencies: 0.3% of sales (oh, the irony!)
Amusement Parks: 7%
Apparel and Accessory Stores: 4.5%
Beverages: 7.3%
Business Services: 0.4%
Cigarettes: 2.2%
Commercial Printing: 7.4%
Computer and Office Equipment: 0.7%
Dairy Products: 1.4%
Distilled Liquor: 15.6%
Drug Stores: 0.7%
Department Stores: 4.7%
Restaurants: 3.1%
Family Clothing Stores: 2%
Furniture Stores: 8.5%
Grocery Stores: 0.9%
Household Appliances: 2.4%
Life Insurance: 1.2%
Motion Picture Theatres: 0.7%
Perfume: 13.7%
Retail Stores: 3.7%
Software: 2.9%
Shoe Stores: 2.1 %
Watches: 9.3%
Wine: 3.6%
(Source: Advertising Ratios and Budgets, Schonfeld & Associates)

Where does your budget come in as compared to your competitors? If you want to grow market share, you’ll need to be above your competition. If you want to maintain market share, you’ll need to match your competitors.

For further queries you can consult me.


Answered a year ago

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