It is important to note that the DRR metric is not relat to the payback of a business or a certain type of goods. When calculating it, only direct advertising costs are take into account, for example, television or online. The formula overseas data does not take into account the cost of production and other costs not relat to advertising (for this, there are POI, ROMI metrics).
It turns out that a low
DRR does not indicate good profit. It only indicates that advertising campaigns are working effectively. To get a full picture of profitability, you ne to calculate other metrics.
Difficulties in defining the indicator: what nes to be taken into account and cannot be miss
It seems simple: we insert the yerbary master tonic (fire cider values into the formula, calculate, and if the DRR is less than 100%, then the advertising is effective. However, many do not take into account how long the transaction lasts. If you are promoting sushi delivery or another “quick purchase”, then there are no problems. But if your products are expensive, then the buyer decides to buy longer than the campaign lasts, and this must be taken into account in the calculation.
For example, advertising lasts for one month (March)
During this time, managers receive 15 requests, 5 of which immiately buy the product, and the remaining ten move further along the sales funnel. 5 of them close the deal only in April, and another 5 in May.
With a regular calculation of the DRR, we would only take into account the income and expenses for March and miss out on about 70% of the profit receiv thanks to the advertising campaign. With full coverage of all values, the indicator would be higher.
Thus, if the sales cycle is long, then ukraine business directory you ne to either show advertising during the entire period of the consumer’s movement along the sales funnel, or view the path of all requests that came from advertising, and calculate the DRR after the time has elaps.
Another point that is often miss when determining the DRR is the profit receiv during the placement of advertising. When assessing outdoor, radio or TV advertising, it will not be possible to assess this indicator, but with digital promotion the situation is different.
