Advertising-To-Sales Ratio

AAA

DEFINITION of 'Advertising-To-Sales Ratio'

A measurement of the effectiveness of an advertising campaign calculated by dividing total advertising expenses by sales revenue. The advertising-to-sales ratio is designed to show whether the resources a firm spends on an advertising campaign helped to generate new sales. A high advertising-to-sales ratio indicates that high advertising expenses resulted in low sales revenue; this could mean the campaign was not successful. A low ratio may indicate that the advertising campaign generated sales.

INVESTOPEDIA EXPLAINS 'Advertising-To-Sales Ratio'

Businesses often run a variety of marketing campaigns on different mediums (newspaper, websites, radio, etc.) at one time, which can make it difficult to determine which campaigns, if any, were responsible for new sales. Close tracking of promotions can show which mediums perform better with certain ads, and the advertising-to-sales ratio could give insight into the effectiveness of the advertising spending. Some companies do not require as much advertising, such as utility companies, so comparisons should be made between similar companies. Some advertising campaigns are designed to foster long-term support, so looking only at the short-term results might not reflect the long-term benefits of great advertising.

RELATED TERMS
  1. Parasitic Advertising

    A type of marketing that promotes one product at the cost of ...
  2. Consumer Reports

    An evaluation of a new product, or a comparison between products, ...
  3. Promotion

    1.In terms of a career, a promotion refers to the advancement ...
  4. Value Proposition

    A business or marketing statement that summarizes why a consumer ...
  5. Rollout

    A slang term for the introduction of a new product or service ...
  6. Market Segmentation

    A marketing term referring to the aggregating of prospective ...
Related Articles
  1. Public Relations: Offering Businesses ...
    Entrepreneurship

    Public Relations: Offering Businesses ...

  2. Generational Marketing: Harvest The ...
    Retirement

    Generational Marketing: Harvest The ...

  3. The Marketing Director's Pitch
    Professionals

    The Marketing Director's Pitch

  4. Sales Director Career Provides Daily ...
    Professionals

    Sales Director Career Provides Daily ...

Hot Definitions
  1. Return On Sales - ROS

    A ratio widely used to evaluate a company's operational efficiency. ROS is also known as a firm's "operating profit margin". ...
  2. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  3. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  4. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  5. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  6. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
Trading Center