• by Jim Meskauskas , June 19, 2003

I'm going to make this one short and sweet, folks.

Yes, yes... keep your cheers and applause to a minimum.

I just want to take a few moments to run a thought by you all that I'm going to guess might come in handy. When you are talking to your clients, pitching a piece of business, or discussing amongst yourselves the myriad virtues of online advertising, chances are you most often refer to the medium's unprecedented accountability as it compares with other media. Like no other vessel for carrying advertising messages to the public, web-based advertising lends itself to a 'connect-the-dots' approach to its effectiveness that more accurately reflects a causal relationship between and advertising event and its impact. But next time you are talking to your clients, pitching a piece of business, or discussing amongst yourselves the myriad virtues of online advertising, consider the medium's unprecedented accountability to its next logical conclusion: advertising-to-sales ratio.

I've mentioned the advertising-to-sales ratio on one or two occasions over the years as THE primary killer app of online advertising. It was coming across it for a client again, the data made possible by online advertising and the technology that tracks it, which makes me want to bring it up again now.

For the uninitiated, the advertising-to-sales ratio is a pretty straight-forward and simple numerical relationship. How much advertising dollars are necessary to generate some amount of revenue? So, if I spend $100 in advertising and I see a yield of $1000 as a direct result of that advertising, typically through sales, then my advertising-to-sales ratio is 1:10. That's a pretty good return on investment, isn't it?

Well, the technology has existed for years now to track just this kind of relationship, yet it is always a surprise when people (clients and potential clients, in particular) are surprised when you tell them that this is something that can be done with Internet advertising.

These days there is so much emphasis on the "branding value" of advertising on the Internet -- and how if only a client would spend 15% of their budgets online they could move the needle on traditional brand metrics by 5 points over the index of the average length of the hair on a gnat's chin - that matters such as tangible results like dollar-in and dollar-out have sort of been neglected.

But there are still a great many clients who have business models that are reliant on selling widgets, and some of those businesses sell widgets that can be sold through the same medium that is being used to introduce those widgets to a consumer. Being able to tell your client how much revenue is brought in by how many dollars you spent trying to bring in that revenue is quite possibly the most important thing you can tell them.

Adservers like Atlas DMT, Doubleclick, and Mediaplex are all equipped with the capability to pass on revenue data and associate that revenue with each and every advertising asset that is run for a campaign. They have been for quite some time. But like the human brain, we so often only use a fraction of the capacity of the tools we have at our disposal.

Next time you are at a loss as to how to merchandise the benefits of the web medium to a client with something to sell, remember the idea of advertising-to-sales ratio and use that as the core of an argument to convince that client that there is, indeed, an tangible benefit to advertising online.