www.mathprepa.com

When deciding whether to advertise in a magazine or online it’s important to use past information on revenues especially where adverts run into many thousands of pounds.

If you are selling one product on a one hit basis, the mathematical calculations can be very simple based on how similar ads have performed in the past.

In the case of news paper ads where the news paper is likely to be thrown away after say a week, all the sales should come in the first week. If the add was a waste of money, you would know very soon.

When marketing a product such as a ringtones subscription service, the maths involved would be much more complex.

For example:

• A business could borrow money from the bank at 10% APR
• It spent £10k on news paper advertising.
• It had to pay for the add before it was printed and didn’t get any credit.
• It promoted a ringtones subscription service.
• It got paid 30 days month end from the time it billed the ringtones.
• It suffered a 0.5% charge back rate from dissatisfied customers.

In order to calculate if the ad was worth while you would need to work out a mathematic model on the previous performance of the ringtones subscription. Some people would only get hit once with the service, and then un subscribe, and some people would un subscribe after say 4 weeks, and some people would never un subscribe and continue to be billed until they cancelled their phone contract.

A simple way would be to work out the average value of the average performing subscriber, however, as revenues would come in over months, or even years, the cost of the businesses borrowings would come into play and interest to loans would have to be taken into consideration.

A way many companies hooked people into ringtones subscription services was they offered free mp3 ringtones and the first one was free, but in order to get the free ringtone they had to join the weekly subscription program.