How Much Money Should I Spend on My Advertising?

Is There a Magic Formula?

We’ve now entered the world of Marketing Budgeting, 2.0 as so many things have changed in the past few years. The internet and social media have changed the landscaping of media, but the basics remain the same. Having a budget for your marketing makes sticking to the marketing plan a bit easier.

If you Google “How Much Money Do I Spend On My Advertising,” maybe this blog will come up number one, but there are many articles on this topic. This also depends on what type of business you have. The marketing of a restaurant is very different than the marketing of a manufacturing plant. If you have outside sales people responsible for generating sales, your marketing budget may be a little less. The goal of any marketing plan is to maintain and/or grow the business.

Ways a business grows –

  • New Customers
  • Existing customers spend more money on visit
  • Existing customers come in more often
  • Existing customers tell their friends who become customers (referral)
  • Add product or service line to help with all the above

Do a Google search for this topic and you will find businesses will budget between 3-10% of their sales on marketing. A pretty big variance. That’s the challenge – what is the right advertising budget for your business. We work with many local businesses and we look to gain agreement on what the marketing budget is to start out with. If your growth is more aggressive, it may be towards the higher end of the spectrum. If your growth is steady growth, we look for middle ground here, using 5-6% as our target budget in the planning process. Marketing is to help you grow your business so the investment into marketing is an important one. This is very different than the planning of your media buying or the evaluating of your media choices. If you feel the advertising is not working, then think about what needs to be changed up to make it work better. It wouldn’t make sense to stop advertising just because you haven’t found the “magic” formula…..yet.

As your company grows, your marketing budget dollars will grow, even though the marketing percentage will remain the same. The number may seem high, but so are your total sales. As one of our clients was looking hard at their P & L to see how they were doing, they asked everyone to really watch their numbers – except marketing – this went untouched – as they had learned the lessons of keeping consistent with the marketing budget means consistency with future sales and growth.

One last message here – if you are too busy and getting too many calls/customers where you can’t take on any business for the next month – shift the marketing dollars. Either change up your marketing mix to improve your brand or use the dollars later in the year. Marketing can be for many things, including customer appreciation activities and/or customer gifts or promotional items. Keep steady on the marketing budget, plan the work and work the plan, and you will start to feel better about the investment you are making for the long-term success of your company.

Promotional Materials – How Can They Work for Your Business?

This piece of advertising is often overlooked by businesses today and the benefits are not thought of as much as in years past. It isn’t the effectiveness, as much as it may be just not budgeting for it or for promotional material being more of an afterthought.

Promotional Material is a great way for a business to promote itself for the following reasons:

  • A nice way to say thank you to an existing client
  • A great way to show appreciation to some of your better/best clients
  • Keeps your name in front of your existing clients after they purchased from you
  • Helps drive name/brand recognition
  • Sticks around for a long time

Today’s studies show businesses who use promotional material grow their business more than those who do not. This may be the chicken or the egg question, but certainly something to consider.

Promotional Materials have seen price decreases with the increase of a more global economy. There is fierce competition driving the prices of promotional items down, which has brought prices down for the local promotional companies, who are basically middlemen for these larger, sometimes international companies.

Corporate identity template set. Vector

Be Creative and Have Fun

Promotional Items can be effective with some of the basic things people think about when they think of promotional advertising. Things like pens, magnets, stickers and note-pads.

How about car air fresheners or chip clips, or toys with your brand on it? A little more creative possibly and less likely a chance of getting lost in the shuffle.

Find a way to make your give-away sticky. Make it something someone would use or have around for a while, keeping your name in front of them.

Who can’t afford to give a loyal customer something with your business name on it that costs less than a dollar? That dollar will, or should, give you a solid return on your investment and promote good will for your customers.

The Lost Art of Community Involvement

Businesses that are involved in their community are seen more positively by consumers. If your business is already active in the community, then you know how important it is to have great customer satisfaction. Every business at some point should look to get involved in their community, to help the community (or town or neighborhood) where their business is located. There are multiple benefits for businesses who are community involved:

  • Increase Brand Awareness
  • Increase Positive Perception about Your Business
  • Increase Employee Moral by Team Involvement (even if you have to pay employees to participate)
  • Increase Word of Mouth Advertising

Who can remember the team they played on in little league (or another sport), and who some of the sponsors were? How many of these businesses are still around today?

Lost art of Community Involvement blog

Choosing the Right Cause

If you personally support a cause, you may want to look and see if it would be a good fit for your business to support that cause too. There are some groups or charities that donating money or time to will do little in promoting your business. There are other groups that when promoted effectively, donating time or money can bring positive results for that business. Think about how your business can benefit from being involved in your community. Making this a focus will provide a win-win for everyone.

What is your brand?

For many businesses, a brand is their name, it’s their logo, it’s their colors. To a consumer a brand is about the product or service you think about when you need that product or service. Your brand distinguishes you from your competitors in your marketplace.

If you were to ask 100 people about who they would choose for your product or service, how many ofthem would choose you? Is this a good number for your business?

What is your brand blog

A solid brand strategy works to increase this number and more importantly measurably increase your sales in your target market. It works hand in hand with your marketing and should be considered with any marketing plan already in place.

Is this important to your business? It should be. When you think of a cold drink, what brand comes to mind? Even local businesses can create a local brand in their marketplace and it is easier than it may seem.

What is more important than the brand is brand recognition. This is what a good branding strategy does. We believe in name recognition in a marketplace and we see the importance of building your local brand.

The brand strategy is a part of a solid marketing strategy and must be done cohesively. When this is working well repeat and referral business will grow more than it is currently and it will bring in new customers. In some cases, an effective branding strategy can have impact within a couple of months.

A brand strategy works to insure your marketing is consistent and your brand is exposed to more and more people in your target market. This helps increase the effectiveness in all your marketing efforts, both in the immediate and in the distant future.