If you’ve owned or operated a successful business, large or small, you know that the best business decisions are based on numbers. In general, return on investment, whether it’s the return on a capital investment for equipment or an investment for advertising, is a key factor in good business decisions.
With that in mind, let’s take a look at a case study for ROI for limited advertising spend for your business. First we need to establish the ground rules and assumptions:
The basic rules that we will use
- Compare the return on investment of using an outdoor sign to that of print advertising in a local monthly magazine.
- Generate ROI numbers based on a six-month time period.
- Use the most representative numbers, especially in the case of print advertising, but keep in mind that each market is different.
- Use the same assumptions for new customers and revenue generated by both methods (although my experience is that outdoor banner is more localized than print advertising and will get more new customers through your doors).
The assumptions we will use
- Print advertising costs $600 per month for 1/4 page published monthly – $3,600 total spend over a six-month period.
- The banner has a one-time cost of $280 and is exposed every business day to local traffic. We will assume an additional $100 to hang or purchase brackets to hang the banner.
- Both advertising methods will bring in 6 new customers per month, each spending $100.
Calculation of return on investment
print advertising – The investment is 3,600 in six months. The return is $3,600 over six months. The return on investment is 0.
outdoor banner – 10′ W x 4′ H with 2 hour design time, $20 shipping and $100 to hang adds up to a $380 investment over six months. The return is $3,600 over six months. The return on investment is $3,600 minus $380, or $3,220 divided by $380, or about 850%.
Again, numbers are assumed and every business is different. However, you can get an idea of how to make a smart business decision by choosing advertising methods on a budget.
Banner printing is priced at $4 to $5 per square foot not including design and shipping. Design costs can range from $25-$50 per hour and typically require 1-3 hours for one banner. Some internet companies provide free design services, allow you to upload your own design, and offer free shipping.
