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ROI on T-shirts

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Re: ROI on T-shirts

#11

Post by bretthardin »

bstpierre wrote: post #7

It's an interesting methodology. Some thoughts: (1) 12 times is way too low for number of wears. I'm probably extreme, but I've got tech shirts that could apply for a drivers license; I've easily worn some of them hundreds of times -- let's say every other week for the last 500+ weeks. (The older shirts are too worn thin/ragged to wear in public any more though.) (2) I'm not sure CTR is going to be as high as an expl…

Those are some excellent points.

1. I totally agree. It is a variable and one that is in the spreadsheet.

2. I need to look into traditional CPM to understand how to calculate. I may revisit this post in the future using CPM as the calculation.

Re: ROI on T-shirts

#12

Post by simulate »

The formula you are using looks correct, but the value estimations are mostly wild-ass guesses, particularly the CTR. My own guess is that CTR for t-shirts would be much lower than traditional online ads, but who knows?

Suggestion: create a unique URL on the t-shirts so that you can test effectiveness-- a landing page for the t-shirt. That way you could even test alternative t-shirt designs, if you wanted to.

Re: ROI on T-shirts

#14

Post by bretthardin »

loumf wrote: post #9
bretthardin wrote: post #2

We did some ROI calculations on purchasing and distributing t-shirts. Do you guys think that we missed anything, or made the wrong assumptions?

Aside from it not being ROI, I thought it was as good as any guess. What I was hoping for was a clever way of measuring some of the things you assumed. I think what you calculated is called customer acquisition cost. ROI is how much you made from your investment in a given time, usually as a multiple of the investment -- sometimes it's quoted in time to breakeven.

Once I read this comment, I think it clicked. The result of what we calculated is customer acquisition cost. But, we were trying to figure out if T-shirts were worth the upfront cost. I am not a marketer, so I am 100% sure I am confused by the terminology.

Re: ROI on T-shirts

#15

Post by bretthardin »

simulate wrote: post #12

The formula you are using looks correct, but the value estimations are mostly wild-ass guesses, particularly the CTR. My own guess is that CTR for t-shirts would be much lower than traditional online ads, but who knows? Suggestion: create a unique URL on the t-shirts so that you can test effectiveness-- a landing page for the t-shirt. That way you could even test alternative t-shirt designs, if you wanted to.

This is an interesting idea. However, I think the result would be people searching for the company name, rather than typing in the URL.

Re: ROI on T-shirts

#16

Post by alanfang »

simulate wrote: post #12

The formula you are using looks correct, but the value estimations are mostly wild-ass guesses, particularly the CTR. My own guess is that CTR for t-shirts would be much lower than traditional online ads, but who knows? Suggestion: create a unique URL on the t-shirts so that you can test effectiveness-- a landing page for the t-shirt. That way you could even test alternative t-shirt designs, if you wanted to.

To me the CTR seems reasonable, if anything I would guess that 0.14% is a low estimate. The conversion rate on the other hand is sky high. Even for a free software product expecting a 7% conversion rate on fairly untargeted traffic is unreasonable.

Re: ROI on T-shirts

#17

Post by hsmyers »

bstpierre wrote: post #7

It's an interesting methodology. Some thoughts: (1) 12 times is way too low for number of wears. I'm probably extreme, but I've got tech shirts that could apply for a drivers license; I've easily worn some of them hundreds of times -- let's say every other week for the last 500+ weeks. (The older shirts are too worn thin/ragged to wear in public any more though.) (2) I'm not sure CTR is going to be as high as an expl…

Know what you mean. One of my favorites is the Netscape Lighthouse T. Only nit I have with what you say is that you should get over the 'too worn thin/ragged' thing. Far as I can tell, no one cares anymore. How often do you see jeans without holes anymore? Admittedly since I come from Idaho, there are a certain class of cowboy who wouldn't be caught dead in un-starched holey jeans, but every study needs outliers yes?

Re: ROI on T-shirts

#18

Post by TylerE »

simulate wrote: post #12

The formula you are using looks correct, but the value estimations are mostly wild-ass guesses, particularly the CTR. My own guess is that CTR for t-shirts would be much lower than traditional online ads, but who knows? Suggestion: create a unique URL on the t-shirts so that you can test effectiveness-- a landing page for the t-shirt. That way you could even test alternative t-shirt designs, if you wanted to.

Would work?

Getting someone to type in foo.com off the back of a shirt is probably hard. Getting someone to go to foo.com/blah is harder.

Re: ROI on T-shirts

#19

Post by loumf »

bretthardin wrote: post #14
loumf wrote: post #9

Earlier quoted context omitted.

Aside from it not being ROI, I thought it was as good as any guess. What I was hoping for was a clever way of measuring some of the things you assumed. I think what you calculated is called customer acquisition cost. ROI is how much you made from your investment in a given time, usually as a multiple of the investment -- sometimes it's quoted in time to breakeven.

Once I read this comment, I think it clicked. The result of what we calculated is customer acquisition cost. But, we were trying to figure out if T-shirts were worth the upfront cost. I am not a marketer, so I am 100% sure I am confused by the terminology.

To get ROI, you need to also know the value of a customer. If each customer pays 2 x Customer Acquisition cost in the first month, then the ROI is 2 in the first month. If it's a subscription, and 100% stay for a year, then it's 24 (or 2400%) in the first year.

Pro-ROI calculations take into account the time-value of money and taxes.

Re: ROI on T-shirts

#20

Post by loumf »

objclxt wrote: post #10
maxko87 wrote: post #4

I think this is a cool calculation, and the numbers seem pretty reasonable. One benefit from tshirts that isn't taken into account here is simple exposure -- even if someone who sees the shirt doesn't follow up on the company themselves, let alone become a user, they are at least more likely to remember and recall the name. (Coming from MIT, it seems like Palantir and Dropbox had a lot of success getting good word-of…

Given we both just posted within two minutes of each other about how great the Dropbox t-shirts are I think we can conclude it was quite the investment for them!

Is this it? http://stream.mcohen.me/entry/dropbox-t-shirt---back-22-173.... -- this is great because it almost begs anyone who sees it to ask you what it means.
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