Business
Fact-checked

At WiseGEEK, we're committed to delivering accurate, trustworthy information. Our expert-authored content is rigorously fact-checked and sourced from credible authorities. Discover how we uphold the highest standards in providing you with reliable knowledge.

Learn more...

What is an Advertising Sales Ratio?

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum

One of the most important ways to gauge the success of an advertising campaign is by the amount of new business that is generated by the advertising. In order to help accurately evaluate whether any given campaign can be judged successful, the application of the standard advertising sales ratio is employed. Essentially, the advertising sales ratio is the relationship between the amount of resources invested in advertising campaigns compared to the amount of new business that is generated as a direct result of the campaign. Here is some information on the type of detail that the advertising sales ratio can provide, and how using the ratio method can help improve the effectiveness of future campaigns.

Because the advertising sales ratio is a means of comparing the amount of rewards received to the expenses associated with the advertising effort, use of the ratio method can quickly identify if a particular campaign is generating results. The figures may indicate that the campaign is not living up to the results that were expected. If that is the case, then the advertiser has the opportunity to replace the campaign quickly, without incurring further low returns on the investment. At the same time, the ratio will clearly show whether a campaign is beginning to build momentum. If that is the case, the advertising strategy may need nothing more than some minor retooling to hasten the influx of new business. Knowing what the actual returns are will help the advertiser to know what needs to happen next in order to produce the desired results.

The success of an advertising campaign is determined by the amount of new business generated by it.
The success of an advertising campaign is determined by the amount of new business generated by it.

The advertising sales ratio is also a great way to qualify the viability of specific customer markets within a campaign, and devote resources to those where there is potential for new business. For example, if an analysis of the total sale generation indicates that the campaign is performing very well with one sector of the target audience, but is producing no results with another sector, then refocusing the efforts on sectors that are responding to the campaign will increase the generated sales. Thus, the advertiser can stop wasting resources on areas where no revenue can be reasonably expected, and provide more attention to areas where a return on the investment can be reasonably expected.

Newspaper advertisements are one aspect of a company's marketing campaign.
Newspaper advertisements are one aspect of a company's marketing campaign.

The advertising sales ratio can also be used to streamline the advertising process, by removing any elements that are not performing well. For instance, if newspaper ads are not performing well, but online ads are producing a great deal of new business, then shift the focus away from newspapers and eliminate the costs associated with print ads. The end result will be fewer expenses on the front end, and a higher percentage of return on the back end.

A modern marketing strategy should include an online component.
A modern marketing strategy should include an online component.

Employing the principle of the advertising sales ratio can provide data that will strengthen the advertising campaign. By using the data to focus on target audiences that will respond with new business and to evaluate the advertising methods used as part of the campaign, the advertising sales ratio allows the advertiser to get the highest return for the resources spent in the effort.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including WiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

Learn more...
Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including WiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

Learn more...

Discussion Comments

hyrax53

The advertising to sales ratio can be closer than you might think. Some types of stores, like grocery stores for example, work on a very tight profit margin. A failed advertising campaign or bad set of price promotions can sink a store that is already not doing well, while a successful one can lead to a store's expansion.

Post your comments
Login:
Forgot password?
Register:
    • The success of an advertising campaign is determined by the amount of new business generated by it.
      By: Johanna Mühlbauer
      The success of an advertising campaign is determined by the amount of new business generated by it.
    • Newspaper advertisements are one aspect of a company's marketing campaign.
      By: minoandriani
      Newspaper advertisements are one aspect of a company's marketing campaign.
    • A modern marketing strategy should include an online component.
      By: arthurhidden
      A modern marketing strategy should include an online component.