What is it? DRR is the share of advertising expenses, a special metric used to evaluate the return on investment in product promotion. It is used in retail, B2B, services, and manufacturing.
What to pay attention to? To calculate the DRR, it is necessary to collect information on marketing costs, identify the share of clients from the promotion channels used, calculate the income received from the advertising campaign and take into account additional factors depending on the type of business.
The article explains:
The essence and objectives of the DRR
Difference between hungary email list DRR and other metrics
Examples of calculating the share of advertising expenses
What to consider when calculating the DRR
Calculation of the share of advertising expenses in Yandex.Direct
Optimal values of DRR
Ways to improve the share of advertising expenses
Reducing DRR in contextual advertising
Ways to reduce DRR on the marketplace
Frequently asked questions about DRR
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The essence and objectives of the DRR
Every advertising specialist is familiar with the abbreviation DRR, which stands for "share of advertising expenses". This is an indicator of the return on the budget allocated for advertising purposes.
To calculate the DRR result as a percentage, you need to use the formula:
ADR = Advertising Expenses / Advertising Revenue x 100
The obtained result is necessary in order to:
Conduct an analysis of advertising payback for a given period. Some companies notice that advertising pays for itself perfectly over a period of time, and then suddenly there is a decline in interest in the product being sold. In such cases, they begin to figure out what exactly served as the reason for the loss of advertising relevance.
Compare the degrees of benefit from all the promotion channels used by the company. For example, there is no point in spending budget money on TV advertising if the target audience interacts little with this promotion channel. It is necessary to determine the most profitable ones and direct all finances there in order to receive tangible profit.
Share of advertising expenses
Source: shutterstock.com
Accuracy of calculations is possible only if all input data are taken into account:
Time. It rarely happens that advertising immediately provides a large influx of customers. Some time must pass for the result to appear. For example, algorithms need 6-8 days to search for the target audience in the Yandex advertising network. It is more objective to take periods from 30 to 365 days for analysis.
Budget. This includes not only the money spent over a certain period of time. It also includes the cost of advertising, copywriting costs, and designer costs.
Promotion channels. Comparing the effectiveness of all advertising channels will not give such an accurate result as can be obtained by working individually on the results obtained from outdoor advertising, contextual advertising, and TV advertising.
Profit. When calculating revenue, you will have to take into account all the sales methods. This way, you can understand which of them has a greater impact on potential customers.