In today’s world, there are so many different places a business can advertise. It isn’t just the newspaper and television commercials anymore. It is social media, streaming services, at the movie theater before the show begins, electronic billboards, apps and so much more. So how can a business even start to determine where they should advertise and how much money they should be spending? Let’s discuss traditional advertising and marketing spend to get the most out of your budget.
Have a Marketing Plan that Includes Advertising
Word of mouth advertising is great, but it only gets a business so far. Creating a marketing plan that incorporates advertising through different mediums can be far more effective. Within your marketing plan, a target audience should be determined. Their age, likes, trends, etc. can help to navigate where they gather most of their information. And once you take a deeper look at those items, you can then determine which medium will work best for your business.
A marketing plan without an advertising budget is like fishing without a worm. You might get lucky and catch something, but it isn’t going to happen as fast as you’d like, and it might not be your target customer. With an advertising budget, that is your worm that you are putting on the hook to lure in the right customers.
How Much Should A Business Spend on Advertising?
There isn’t a magic number when it comes to advertising budget. Your marketing team or advertising agency can help determine what the best budget is specifically for your business and where they feel you will get the most bang for your buck. The business owner, manager, whoever is making the call on spending, needs to be comfortable and feel confident in the budget and return on investment.
That is not to say there isn’t a general rule of thumb. Within the business world, the general consensus is to aim at spending between 2-5% of your sales revenue on marketing. Small Business Trends reports a lower number at 1.08% of revenue for advertising, but of course it will vary from industry to industry. Some industries spend more, like retailers at about 4% while restaurants spend 1.93%. Business to Consumer (B2C) companies typically spent slightly more on average, with product companies spending 9.6% and B2C services companies spending 11.8%. Those percentages might scare someone but let’s put it into perspective. If your revenue were $1 million per year, your marketing and advertising budget should be $50,000 annually based on the 5% of sales revenue rule. From that $50k, you can drop different amounts into different marketing and advertising buckets.
Track Your Return On Investment
When you are just starting out, it might seem like a hard decision to do a lot of advertising, but once you get rolling, it is a good idea to be reinvesting revenue back into the business through more advertising. You need to keep that momentum going, keep on pulling in more customers. But it is always best to track your return on investment in every medium.
Measuring your spending and the effectiveness of the advertising should happen quarterly. It does take some time to garner effective data, so if you are just starting out, give the advertising some time to get out there. Become a detective and find out which advertising works best for your target audience and which medium brings in the most business.
What are My Advertising Opportunities?
Working with an advertising agency like Triple-Nine Digital can help your business research which targeting tactics will work best for you. While we are always open to exploring new and different ways of advertising, here are the tactics that we pride ourselves on:
This displays your ad on websites and mobile apps, frequented by users matching your target audience.
Search Engine Marketing (Google Search/Ads)
The average web user won’t go past the first five listings on a search engine results page. In fact, more than 67% of all clicks go to the top five listings.
Increase online traffic and visibility of your business with Google Search and be on top of search results at the moment customers are searching for your products and services.
Social Media Advertising
Displays your ad on social platforms frequented by users matching your target audience.
Video Pre Roll, OTT and CTV
Target your customers with your existing video on platforms like YouTube, Facebook, and OTT/CTV platforms and channels such as Roku, Sling, AppleTV, CNN, Fox, CBS and more.
Google Discover and Direct Email Marketing
Powerful, cost effective programs to promote products, services and events by delivering ads to Gmail accounts and targeted email lists.
Waze GPS App
Your ad appears in targeted search results or when a driver is near your location.
The Bottom Line
Every business is different. Every budget is different. What works for one business may not work for another and that is fine! Let’s talk through your thoughts and ideas on what advertising means to you and how we can help drive more traffic for your business. Once we create a plan and put it into action, we will adjust as necessary, reminding you and our team of the goals and evaluating performances so we are all on the right track to success.