If your advertising budget is set by what your competitors are doing, it might be time for a change. Once you’ve made a point to set your own marketing budget, the first question will inevitably be “how much?” According to a recent BusinessWeek article, this is question every company struggles with, big and small.
The answer? There isn’t one—not a definitive one, anyway. But you can follow these steps to find out what is best for your company.
Step one: What is the advertising-to-sales ratio in your industry? Public companies put information you need to figure this out in their financial statements. If you can’t find a similar, public business, start at 5 percent. This is then adjusted based on your market size, the cost of local media and how quickly you would like to grow. Tip: if you’re in a service business, you should start at a percentage higher than 5, as many professional service companies do 8 percent.
Step two: Realize that advertising (as in paid ads on radio or television) isn’t the only tool. Your budget should include marketing efforts such as events, vehicle wrapping and online marketing efforts.
Step three: Know your audience and what will be most effective. All the marketing dollars in the world are worth nothing if you’re spending them in the wrong place.
To read the article in full, click here.
Source:
BusinessWeek: What Should You Spend On Advertising?
