Where you spend your pennies
on ads to yield dollars in sales
By Christine Selvig • Bankrate.com

Advertising is big business -- American businesses invested an estimated $176.5 billion in direct marketing last year, earning an average return of $8.69 on each dollar spent, according to the Direct Marketing Association.

And the biggest chunk of that big business is spent on direct marketing. It accounts for more than 57 percent of the country's total advertising budget. Direct marketing is advertising used to generate sales leads, store traffic and direct orders. It includes everything that directly hits the consumer -- including mail ads, catalogs, telephone marketing, and ads in newspapers, radio, magazines, TV and online.

Businesses mix their advertising budgets in the different media for different reasons. If your bottom line is generating sales, then newspaper advertising produces the best results, according to the association. Businesses captured $1 in sales for every 8.1 cents spent on direct marketing advertising in newspapers. It cost 8.8 cents to pull in a dollar's worth of sales from direct mail advertising.

Talking to folks on the phone remains a popular marketing tool. The association estimates businesses spent 12.5 cents on telephone marketing to produce $1 in sales.

Estimated costs to produce $1 in sales using direct marketing ads on television and through "other" media were slightly higher than 19 cents.

"Other" media includes Internet advertising. While it was in last place last year as an efficient generator of sales, that will change soon, according to the association's forecast. By 2004, the association predicts, the category of online advertising is expected to leap past radio and television in its effectiveness.

How do your direct marketing pennies stack up?

-- Posted: April 12, 2000