Suppose you areDiptyque's marketing vice-president in charge of its anniversary sales of its'Discovery Set' consisting of 5 of the brand's bestselling fragrances. You were given a marketing budget of $1.5 million for the upcoming sale for one 30-second direct-response internet ad. The ad provides the website address that will allowDiptyque's to track when a hit has resulted from people seeing this particular ad. You get 0.5 million hits on that website. Is this good? How many Discovery Sets did you eventually sell as a result? Did the ad pay for itself or not? Could you have done better by spending your money on some other form of advertising

Let's say that of the 0.5 million visitors to your site, 0.012 percent ordered the Discovery Set by visiting your website. You, of course, created a special Web addressjustfor this commercial, so you could accurately evaluate how many responses and orders this one ad produced. Let's also say that the price the Discovery Set went from $210 to its sales price of $115, including shipping and handling. The variable costs come to $52.50. You had an advertising allowable of $30 per order. So, now you can make some calculations

1. Calculate the (Contribution) Unit Margin
2. Calculate the number of orders or hits
3. Calculate Break even
4. Calculate the net profit
5. Calculate the ROAI (Return on Investment for Advertising) as a percent. Do not include the % sign
6. Calculate the cost per order (CPO). Do not include the $ sign
7. Did you meet your advertising allowable?