Question

Topic: Advertising/PR

Advertising Conversion Rates

Posted by Anonymous on 2/3/2011 at 11:05 AM ET 50 Points
Hi I’ve conducted a survey which is a representational sample of the UK Population. 14% of ABC1 said they would buy my product within the next 2 years. Does this mean that the following assumption would make sense if I was to advertise in a magazine which targeted ABC1 and had a readership of 130,000:

Only half of the 14% are likely to read the ad so 7% (9,100) will read the ad, then half of that 7% will respond to the add by going to my website, so only 3.5% (4,550) will go to my site, then if my site has a conversion rate of 5%, only 0.175% (227) will actually buy anything.

Is this a sensible assumption or am I being too cautious?

cheers
To continue reading this question and the solution, sign up ... it's free!
SUBSCRIBE
Or, SIGN IN

RESPONSES

  • Posted by Peter (henna gaijin) on 2/3/2011 at 1:10 PM Accepted
    Total guesstimate, so no way to know if it is spot on, too high, or too low.

    The survey is a good start. It sounds like you set it up to give a decent representation of the magazine readership. But all this says is that 14% of the readers may buy (actual results may vary).

    Where do you get that half are likely to read the ad from? Never heard of a stat like this, but even if this is industry average, this can be varied based on size and placement of the ad. A small ad which is buried in the back will have much lower readership than a full page on the back cover, but still not clear whether either would get half the folks reading it. And the layout/colors also affect this.

    Similar question related to where the response rate percentage is from. The response from the readers is very much impacted on the content of the ad. Is there a Unique Selling proposition? Does the ad cause people to want to take the action you want (sounds like your desire is to go to the web site)?

    Then how effective your web site is at converting people would impact this last pat of your calculation. Some web sites are good, others suck at this. But if the web site is up and running, you can get an estimate of this by looking at the conversion rate from any current folks that find the web.
  • Posted on 2/3/2011 at 4:18 PM Author
    Thanks for your response Peter. The halving it each time was my own estimate to take out the complexities of ad content, placement, etc. I wanted to be able to use a percentage to estimate the effective drop out at each stage i.e. 50% of that 14% not reading the add and so on.

    The reason for wanting to do this is so that I can project whether or not a 14% possible demand for my product, when targeting ABC1, is high enough to be profitable when baring in mind the cost of adverting i.e. in this case £5,000 for a full page ad.

    So I suppose my question really is, is 14% a good enough demand?

    cheers

    Mike
  • Posted on 2/3/2011 at 5:09 PM Accepted
    If 14% said they'd buy within the next two years, then even if they were accurately reflecting their intent (questionable), you might only expect that about 0.6% are likely to be in the market in any one month. (14% / 24)

    So your magazine advertisement would have to run every month for 24 months in order for your projections to pan out -- even if the rough assumptions are correct. Alternatively, divide your results by 24 to get the likely effect in any one month.

    Of course, none of this is really operative. There's more variability in the assumptions than in the research finding. Even if your research showed 28% instead of 14%, the actual volume result would be more related to the other factors than to the reported purchase intent.

    My gut feel: Your approach is probably too optimistic. But that's not really based on any true understanding of the situation. I could be very wrong.
  • Posted by Jay Hamilton-Roth on 2/3/2011 at 11:26 PM Accepted
    I'd start by first drilling down about the 14% who "said" they would buy. Can you find out their past buying habits to know if they put their money where their mouth is? It's easy to "say" you'll buy something, but reality can be quite different.

    Also - there are a lot of variables that you're glossing over. Everything from your ad copy, to ad placement, to website copy, etc. As a minimum make your goal to get people who are interested in your product to be added to your email list. Then you can send out offers/newsletters to people who've expressed an interest and can continue the conversation at no additional ad cost.
  • Posted on 2/4/2011 at 9:14 AM Author
    Thanks for your responses, the particular researching i've conducted is to understand how likely people are to buy limited edition prints and paintings from the internet.

    I'm relatively new to conducting market research so very much experimenting at the moment with my surveys, cost of the surveys isn't a problem at the moment as I get them free from a friend who runs an agency.

    Some of the questions I asked the sample populations were:

    Can you see yourself buying a painting in the next 2 years?

    Can you see yourself buying printed artwork on canvas (canvas print) in the next 2 years?

    Then I asked them to select which demographic they fall into e.g. 45 - 54 years old earning below £25-35k per annum

    Now the more I study about market research the more I realise these questions have floors for example more people said they would buy prints than paintings. The floor is that people assume that paintings are more expensive than prints. I think I need to be asking a question to my population such as:

    If it was perfectly priced, can you see yourself buying a limited edition canvas print from the internet in the next 30 days?

    then ask the following question:

    - Imagine you are buying a limited edition canvas print from the internet which is around 80cm x 50cm in size, how much would you spend:
    - If you said no to the previous question select this option
    - £1 - £20
    - £20 - £29
    - £30 - £39
    - £40 - £49
    - £50 - £59
    - £60 - £69
    - £70 - £79
    - £80 - £89
    - £90 - £99
    - £100 - £124
    - £125 - £149
    - £150 - £174
    - £175 - £200
    - more than £200

    Question 1 would allow me to understand which demographic groups would like to own my product, regardless of price.

    The second question would allow me to understand the most common price that each demographic group are likely to pay for the product.

    do you think these are more accurate questions to ask seeing as my objective is to understand which demographic will be potentially the most profitable to target?

    p.s. sorry I didn't allocate more points to my question, this is the first post i've made on this board. cheers Mike
  • Posted on 2/4/2011 at 11:43 AM Author
    It’s an interesting point, I’m a believer in market research and from the questions I outlined in my previous post, wouldn’t the state of the economy be picked up through the answers to these questions (particularly the second question), people would respond to the question by selecting lower prices as their answer.

    By discretionary dollars, do you mean money that people think they have but when it comes to the crunch wouldn’t depart with?
BACK TO TOP

Post a Comment

Related Discussions

Community Info

Top 25 Experts
(Advertising/PR)