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.

Who is Your Ideal Customer?

The Right Message to the Right Customer

“How Do I Focus on Getting The Best Customers?”

As a business owner, this thought has most likely crossed your mind a time or two, regardless of how well things are going. One of the quickest ways for a business to waste money is not identifying who their target customer is when planning a marketing strategy. It would be imprudent to market a child’s toy to college students, just as it would not make sense to advertise a new cologne during Saturday morning cartoon shows.

Message in a bottle on a beach against the setting sun
Getting the Right Message to the Right Customer

In order to have a successful marketing venture it is imperative to know who your target customers are. Some key principles to help in identifying your best marketing group are:

  • Age
  • Gender
  • Demographics/Ethnicity
  • Status, including educational status, financial status, and family status.

Now, some people will certainly fit into many different groups, and each of these groups will use media differently. This also means that their responses will be different to the various messages in the advertisement.

“But isn’t this discrimination?”

No, it’s not. Let me explain by using an example of the Tesla automobile. If you were marketing the Tesla today, who would your target audience be, and what could change that? The original Tesla was priced over $100,000, which left you with a limited target audience. It also had a strong appeal to the younger executives, as opposed to an older audience. Therefore, you would be wise to choose to target media that focuses on this demographic. That said, this is all about to change! Tesla is releasing the new Model 3 this year, and with it is a price tag of $35,000, which will massively widen its base of potential customers. The car will be much more affordable, opening it to more of the middle-income buyers. Add to that the appeal of an electric range of 225 miles, and you’ve got another target market in the environmentally conscientious.

Just a little bit of market research can take you a long way in making sure that you target the right audience, which is critical. Having a great advertising campaign going to the wrong audience is illogical, and wasteful of time and money. By learning who your target customer is, you’ll be able to use it to your advantage and work better with your creative team to come up with great campaigns. Creative campaigns with the right message for the right customer in the right media, creating a win-win in your marketing, and increasing your sales.

Social Media Is Your Business

Is Your Business “Socially” Acceptable?

Man working on notebook, with a fresh cup of coffee.

We hear much about Social Media these days, and for many business owners, social media means different things.  The term is used vaguely and can be used to described any website, or app (an application downloaded to a mobile device), where people can connect with other people, brands, or businesses.

If we break the term up, we would define “social” as an interaction between people, much like a conversation. “Media” would be defined as a source of communication, like TV, newspapers, or in today’s more thought of usage, the internet. Social Media is a way to have a conversation or an interaction with your business through the internet. Whether we personally like or dislike social media, how can your business benefit in using social media?

It is estimated the average person has five social media accounts and spends over an hour visiting these throughout the day – yes – every day. For teens, it is even higher! It has become a way to stay connected in real time with friends and family, as well as getting the daily news, including sports, weather, and general information – and connect with local businesses.

Can My Business Really Benefit From Social Media?

Business Team um Computer im BroEvery business type is different and whether your customers want to stay connected and hear more about your business probably depends on your business and what you have to say. Or are you wanting to stay better connected with your customers? As an example, Olive Garden has over six million fans and a post from this past week yielded over 12,000 likes and 784 shares (the average person on Facebook has 338 friends. With 784 shares, that may mean almost a quarter million people who may not be connected to (liked) the Olive Garden, such as this picture/post.

Developing a social media plan as a part of your marketing plan makes sense. These are already your customers, and they may want to hear from your business. Deciding which social media sites will work for your business may be the tricky part – as they all may not be right for your business. Social media takes time and the right strategy may pay off big time.

Today’s top social media sites include Facebook, Instagram, Pinterest, Twitter, LinkedIn, and Snapchat. As well as a couple others, which may not seem like social media websites, but they certainly can be, for example, YouTube and Reddit. Don’t worry if you haven’t heard of all of these, as history tells us these will change over time. You might remember Myspace, Friendster, or Classmates? They may be around still, but they are nothing like how they used to be. It was only eight years ago Facebook became the Internet’s largest social network (overtaking Myspace in January 2009).

What social media will look like in another eight years is unknown, but based on history, it isn’t going anywhere soon. Having a social media plan for your business may help your company stay connected to its customers for a long, long, time. Social media may be thought of as free media, but it does take time to do it, and a plan to do it well.