Sorry to distract you from all the cat videos - but this article may make you look good in front of your boss, so marketers: read on!

Measuring ROI - or Catching the Golden Snitch...

Getting your ROI measurements right can very much feel like catching the Golden Snitch...

Return on Investment (ROI) is a way to measure the effectiveness of forms of advertising. It analyses the profits against the costs or the financial investment. Learning about ROI in different forms of advertising can help businesses to make informed choices when deciding where to effectively channel their marketing budget.

Advertising can be very expensive so it's really important to understand what works for your business and brings you the best "bang for your buck" so to speak!

There are several ways that we can start to think about measuring ROI on promotional products. Here we'll explain a few of them in further detail...

Cost Per Impression

This basically means the average amount of money that is spent for a campaign against the number of times that someone sees the advertisement.

Working out your Cost Per Impression

Cost Per Impression is a vital bit of information if you want to understand the effectiveness of your campaigns...

Let's take a look at a promo product based example, and break down the steps to arrive at the cost per impression (or CPI):

You buy 100 umbrellas with your logo printed on them. They cost £10 each. That makes our total spend £1000 (100 x £10). So far, so good.

As part of your latest promotion, you give each of your 100 umbrellas to a client.

Now, consider that on average, it rains 156 days in every year. That means that your client is going to reach for their umbrella (complete with your branding) an average of 156 days per year too. Furthermore, the average lifespan of one of these umbrellas is three years... three years worth of rainy days equates to 468 (3 years x 156 days) impressions for each umbrella. And you sent out 100 of these umbrellas. So that's approximately 46800 impressions overall! Boom.

Now we have our overall cost and total number of impressions, we can use them to work out the CPI. You spent £1000, and got 46800 impressions. Divide your £1000 by 46800 to get your cost per impression:

£1000 / 46800 = £0.0213675

That gives us a CPI of 2p each (this is a conservative estimate, based on one person seeing your branded umbrella per rainy day). Nice work! You can now measure this against other forms of advertising.

Incremental Margin

This is where you compare investment in promotional products against investment elsewhere, you can then compare which yields higher returns.

Incrememntal Margin

Use Incremental Margins to measure the effectiveness of your campaigns...

In this case, the expense of your promotion is deducted from the money you've made. The resulting figure is then divided by the expense figure, and you have your ROI.

The formula is: ROI = (Revenue generated – Promotion Expense) / Promotion Expense

Let's say you spent £100 on a promotion, and it made you £600. If we go by the above formula, we have:

(£600 - £100) / £100, or £500 / £100 = 5.

You have made 5 times what you spent, so your Return on Investment is 5.

Call to Action

If you ensure that all of products are branded with a definitive call to action then ROI and effectiveness can be measured by the number of people who respond to the call to action after the launch or product giveaway.

Call to Action

A Call to Action is a vital part of most promotions...

So, make sure you include a website, email address, social media page link or link to a competition as part of the branding on your promotional merchandise - you can then measure your ROI on how many people respond!

Landing Pages

The Call to action rule is fair enough, but it can't really hone in on specific campaigns. To do that, you can use Landing Pages to figure out where your internet traffic is coming from...

Say you are planning a new campaign, for which you are going to give away some promotional products. Each one of these products will have your web address printed on them. You can measure how many people visit your website through services like Google Analytics – but you want to measure how many people get to your website specifically from this campaign.

A dedicated landing page can do just that. Set up a landing page (sometimes called a 'splash' page) on your website with a unique URL, and print that address on your promo products instead of just your main web address. Now, by measuring traffic to that page, you can use Analytics to measure how many people found themselves on your website as a direct result of this campaign. Vóila!

Tracked Landing Pages

By using tracked landing pages with your promotions, you can easily measure the effectiveness of the campaigns by analysing the online traffic via each dedicated landing page...

You can set up as many landing pages you want, and measure the effectiveness of different campaigns.

A/B Testing

You can test various aspects of your promotional products and their impact on the ROI through A/B testing. For example, you can study the impact of a change of product type, colour, type of packaging etc. on consumer behaviour. Something to remember is that ROI needs to be tested on a continual basis so that it can be improved over time.

AB Testing - which is better?

Using A/B Testing in your promotions can really help determine how to refine
your marketing efforts in the future...

There really is no one size fits all approach to measuring ROI on promotional products - which explains why it is so tricky to define. Businesses tend to develop their own models and techniques to calculate the effectiveness of all of their promotional activities.

So as a guide, consider your objective first, what are you trying to achieve by purchasing promotional products for your business? With this in mind, you can make sure that you choose the right products for your audience, then brand them with a strong, clear and definitive call to action. This should ensure that the measuring of the ROI is kept as simple as possible.

Research shows us that a whopping 50% of the UK public say they have taken action after receiving a promotional product, compared with only 19% for TV advertising, 11% for online ads, 10% for print and 9% for direct mail. Also worth considering is the fact that in terms of long-term marketing there's nothing better – over a third of all recipients revealed that they still had their free promotional gifts a full four years after receiving them! *

Promotional merchandising can be a useful and effective part of your marketing toolkit. However, care and consideration should be given to how its use fits into your overall marketing and business strategy to ensure that you always get the best return on your investment!

* Stats from Independent research carried out by BPMA (British Promotional Merchandise Association) - 2013