Advertising

A local eye doctor, Dr. Corneal, is interested in expanding her business. The retail store next to her medical office is available for rent. She’d like to expand and open a larger frame selection including high-end sunglasses. She’s already built an attractive website and now she is planning on advertising to increase her business. Her advertising options include:

Google Paid Ads

Local Newspaper Advertising

Local Magazine Advertising

Radio Advertising

For each form of advertising, she has created a separate landing page to track site visitors generated from each ad.

To start you off, Dr. Corneal is providing you with her definitions of Prospects, Leads, Opportunities, Customers.

Definitions:

Prospect – Anyone who lives within 15 miles of Dr. Corneal’s medical practice.

Lead – Anyone who lives within 15 miles (a prospect) who wears glasses or is interested in fashion sunglass frames.

Opportunity – Anyone who lives within 15 miles (a prospect) who wears glasses or is interested in fashion sunglass frames (a lead) and responds to a call to action.

Call to Action – the ads include a call to action that lead potential customers to a landing page offering 20% off on the first exam.

Customer – people who purchase as a result of the promotion.

Questions:

1. Using the assumptions provided in Excel Spreadsheet, what is the total number of customers generated from this advertising?

2. If Dr. Corneal’s customers spend $300 on average, what is the total revenue generated from this advertising?

3. The cost to purchase the advertising is as follows:

Google Ads: $5,000

Newspapers: $3,000

Magazines: $6,000

Radio:  $1,000

Using these costs and the revenue generated from each ad source, calculate the overall ROI and the ROI per advertising source. How do these number help you plan your advertising budget going forward? To answer this question, define ROI, explain how ROI is used (see your book), apply the numbers you have calculated and show how you would use these numbers for planning purposes.