There is no doubt among advertising professionals that advertising helps to grow your business. It reinforces your brand, brings in new customers/clients, keeps you ahead of your competition, and creates a customer base that ensures your viability should times get hard.
But the advertising budget is where CEOs sometimes get hung up. An advertising budget is far different for a small business than it is for a huge conglomerate. The bottom line is to figure how much that budget should be and plan for it.
The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales and your net profit margin — after all expenses — is in the 10 percent to 12 percent range.
In 2010 the Chief Marketing Officers, or CMO, Council conducted a survey of its 6,000 chief marketing officer members to assess marketing and advertising spending across a wide range of industries. The survey results revealed that 58 percent of chief marketing officers spent less than 4 percent of gross revenue on marketing, 16 percent spent between 5 and 6 percent, 23 percent spent more than 6 percent, while 2 percent spent more than 20 percent. This survey seems to suggest that if you set your spending level between 0 percent and 6 percent of gross revenue, you will be in good company that includes 74 percent of the CMO Council membership.
Okay, even if you’re at the low end of advertising spending, say 4%, a lot of
advertising can be done with an end result of increasing your sales.
For 1 million in sales, that’s $40,000. But for a small business start-up making a mere $100,000, it’s $4,000—an investment that would surely pay off in getting that business branded.
The larger business would be able to do more expensive advertising that would certainly be beneficial, such as magazines, newspapers, pay-per-click advertising with Google, list buying, and large direct mail campaigns—along with less expensive advertising like email blasts, social media, blogs, and public relations.
But small and midsize businesses can do things like having their website professionally written and designed and optimized with appropriate keywords to get them found in a Google search; email blasts, social media, blogs, public relations, and smaller, direct mail campaigns (possibly a postcard mailing to area residents), all of which are quite inexpensive.
Advertising should be ongoing with a consistent message
going out to your target audience.
Important things to remember when developing a strategy are to target the audience you want to reach with a language and a look they can relate to AND keep the advertising effort ongoing—slam bam seldom works to any great advantage.
Founded in 1992, Advertising That Works is a full-service advertising agency offering print advertising, direct mail, web content/design, search engine optimization (SEO), blogs, email marketing, social media, public relations, strategic planning, media research, budget planning, and media buying.
We get results for our clients because of our extensive research of the client company and research of their target audience, an advertising strategy based on this research, and killer creative that speaks to prospects in a language they understand and that delivers a consistent message and call to action.
Advertising That Works would like to help you grow your business. Contact us for a FREE consultation: info@advertising-works.com or 978.397.7971.