Know-How Exchange : Research/Metrics

Dear 06024542,
May I call you 0602?

Are you looking to estimate your revenue from the ads or are you looking to estimate the revenue from the response to the ads that your client advertisers would get?

The best way to answer either question is to conduct research. For your revenue from ads, survey businesses around town and ask them if they would be willing to advertise in this manner and what they'd pay. There are two parts to your survey results, qualitative, where you will be asking if they would advertise - that's a yes or no response - and then the quantitative for those who answer "yes" is how much would they pay. For the first question, you need 370 respondents to achieve 85% confidence that your sample result is no more than 5% off from the population results (what the 10,000 businesses in the area would answer if you could ask them all). For the second, you need only about 30 "yes" responses with a number to give you a high confidence that the sample mean represents the population mean. If you wanted to do a less quantitative approach to the price, you could ask questions like, "How likely are you to place an ad if the price was 1000# per month for 100? definitely, highly likely, likely, neither likely nor unlikely, unlikely, highly unlikely, and definitely not." Ask the same question for 800#, 600#, 400#, and 200#. Again, with a sample of 370, you'd have a pretty good feel for the price you could charge to get the most advertisers.

However, since MOST people don't want to bother with the best way to achieve this, then there's a "good 'nuf" answer. You make the statement that there is nothing like this in your world on which to base your estimate. I disagree. There are bill boards, signs on busses and taxis, signs in sports arenas, and I'm sure if you think hard enough about your town, other examples that are much the same as what you are thinking about. These aren't bicycles, but the concept is the same. And then there's other competition like handing out fliers or putting them on cars. There are newspaper ads, radio ads, and TV ads. These are your competition for ad dollars and knowing these costs helps you to base your price. Find out what these venues charge, pick a number of advertisers you expect, multiply. It's not very precise, but if your opposed to sampling, then this is another method. Regardless of whether you chose to sample or not, this part should be done as your “competitive analysis” anyway.

The second part - how much revenue for an advertiser can be derived from an ad on a bicycle and at bicycle stands - this is a little trickier. This part is important too, because you can use for your marketing of the concept. Ad response depends on how many opportunities there are for viewing, the likelihood that someone will read the ad, and then the likelihood that someone will act. The "act" part could be a long chain between the bikes and the revenue derived from the ad - much of which is out of your control. For instance, if the call to action is to dial a phone number, then the "purchase" decision depends on the effectiveness of the person on the phone. Additionally, the "act" percentage depends on how effective the ad is. Unless you are crafting the ads for the customers, then this is out of your control too. Therefore, all you can really discuss is the opportunity and the likelihood people will look at the ad. The other numbers come from the clients. Multiply opportunities by likelihood to read the ad and you have your part. You can guide your client through the rest of the process by asking questions like "for your present ads, how likely is someone to take the action?" and "If they take the action, how likely are they to buy?" If they buy, how much on the average do they spend?" Multiply your product by these three numbers and you have the likely revenue for that client.

I hope this helps.

Wayde

Probably because I live in the US I think "law suit" for any company who is advertised on the bike of some idiot who runs over someone's lawn. That's where WE are as a society. Not to mention the whiner who gets in a bike wreck because he's not used to a sign on his bike.

Stationary, that's a different story. You know the amount of foot traffic and auto traffic that will pass the signs.

Michael