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Ads and Subtracts

Last week, we took a look into what goes into an advertising campaign. From the cost of individual ads, and plans, to the revenue gained, from a single click, ads are an excellent investment, for anyone looking to grow the exposure, on their product.

When creating an ad, it is important to remember, this ad represents the product, but it also represents the company, and anyone affiliated. This means that the ad should also reflect the company's "brand", and what their mission is. Some ads are made to be money grabbers. Others are meant to intrigue the audience, and get more subscribers. But if the ad doesn't reflect the company, or the product, then more potential customers will be less inclined to click future ads.

Determining the budget, for an advertising plan, should be the next step. First, an elasticity of demand must be found. To do this, determine the change in demand of the product, and divide the change in selling price of each unit. This can be best portrayed with a "slope" on a grid. The slope is determined by taking the change in quantity between two directly connected periods (i.e. Q2-Q1) and dividing that by the change in price between the same two periods (i.e. P2-P1). Doing this for three or four periods establishes a slope, either linear, or non-linear. Once the slope has been found, the Elasticity of Demand (AED) can be found, by multiplying the slope and the division between the price of the first period, and the quantity of the first period. Elasticity= slope * (P1/Q1) This chart will reveal the area, where production will have the best margin ratio.

Moving further, into the advertising plan, the next step is to determine what advertisement type, will provide the best reach. To find this, look into the definition of each type of ad. Cost Per Thousand Impressions (CPM), which measures how much is spent to reach a thousand consumers. Cost Per Click (CPC), which measures how much is spent, each time a consumer opens an ad, clicks a link, or visits a site. Cost Per Action (CPA), which measures only when the clicked link leads to a download, or purchase, from the site. There are many other types of advertising, including PPC, CTR, and Conversion Rates. Researching into each type, and their costs on the platform desired, will give the best solution, to budgeting any ad campaign.

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