Have you assessed your marketing budget recently? If you’ve been in business for any length of time, there may be a pattern of where you typically invest your company’s marketing funds.
Depending on a wide variety of factors,
such as competition level, location, industry andthe reach of your product or service, businesses typically budget between 3% and 6% of their gross sales revenue on marketing and advertising. This means if your business yields $1-million per year in gross sales, you might be investing about $4,000 per month (or more) into marketing your business ($40k – $60K per year). Sounds like a significant piece of the pie until you consider all that falls under your ‘marketing’ umbrella, such as business cards, brochures, website design, trade shows, vehicle vinyls and yes, even the colourful awning outside your door gets counted as part of your marketing budget. Businesses that plant themselves in high visibility locations will typically need to shell out more for rent and can therefore justify a lower marketing spend.
The big question: “what’s working and what isn’t?”
Measure it or Lose it: Setting a Realistic Advertising Budget.
If you’re a business owner or your job is to market a business, maybe you, like many others, aren’t entirely certain what really is paying significant returns on your advertising and marketing investments. Some businesses continuously buy the same media because they can reference certain pockets of success that have come from their time-honoured ad buying habits. Perhaps there was that one time, years ago, where you can remember how your ad campaign led to your company winning the “Pensky account.” Now you’re holding out for another possible instance of that kind of success -or fear losing another opportunity like it. Maybe a couple of friends told you they heard your spot on the radio or saw your billboard and you use those references as a form of measuring and influencing your choices in advertising mediums. Whatever your reasoning, you are not alone. Many media buyers admit that the thought of canceling some of their traditional methods of advertising and changing marketing channels scares them. Better still, some just feel they need to live in the same ad spaces as their competition. Sound like you?
Stop wasting money.
If you insist on sticking with what you know, despite what economists advise, it’s time to measure the results. Employ unique phone numbers, email addresses and/or website URLs for each ad campaign and count your calls, emails and visits. This is by far the easiest way to understand your return on investment. At a glance you will know what to reinforce and what to kill.
Investing in Decline.
Most advertisers need to wake up to the fact that there’s good reason traditional media and advertising giants are drowning in red, laying off employees and altogether closing their doors. Paid print publications, such as newspapers & magazines, have been hardest hit, with massive, double-digit declines in advertising revenue, as news and opinion content surround us online, instantly and free of charge. ‘Letting your fingers do the walking’ means something completely different in the 21st century. Don’t be sold on the seemingly imaginary, often inflated and typically outdated statistics of phone directories, that are usually discarded into recycling bins. Traditional terrestrial radio has long since lost its positioning as the main music player choice of offices and in-car entertainment, replaced by commercial free options such as satellite radio, streaming digital music and portable audio players, such as smartphones. If you’re noticing an increase in product placement during your favourite television shows, it isn’t your imagination. With personal video recorders (PVRs) available by your cable service provider for free or practically nothing, it’s a wonder why every household doesn’t already have one. This of course results in far less visibility for television ads, which means the only reason you may be watching TV commercials is because you’re wanting to see the ad spot you paid for.
Cut Your Marketing Losses.
Take an objective look at every dollar you spend on marketing your business and see if you can measure its ROI. More than likely there’s room for improvement there; dollars that can be moved around to perform better and much more efficiently for your company. Give consideration to newer marketing initiatives that can be tracked and measured, such as Internet marketing and/or an improved web presence. As mentioned above, use unique phone numbers or landing pages for each ad campaign so that you can fairly assess effectiveness and judge whether to cut back or increase their allocated budgets.