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’ve historically invested your company’s marketing dollars.
The US Small Business Administration suggests investing 7% – 8% percent of your gross revenue for marketing & advertising if your business gross revenues are less than $5-million per year and assuming your business will yield a net margin of 10-12%. Depending on a wide variety of factors, including competition levels, location, industry and the reach of your service areas, 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, which could include business cards, brochures, website development, trade show participation, vehicle vinyls and yes, even the colourful little awning outside your door could get counted as part of your marketing budget. Brick and mortar businesses that depend on drop-ins, and that can 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 your brand, maybe you, like many others, aren’t entirely certain of what is really paying significant dividends on your advertising and marketing investments. Some businesses continuously buy from the same media channels because they can refer to old case studies, or certain pockets of success that have come from their time-honoured ad buying habits. Perhaps there was that one time, long ago, where you can remember how your ad campaign led to your company winning that “Pensky account.” Now you’re holding out for another possible instance of that kind of success -or fear losing another opportunity just 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’re not alone. Many media buyers admit that the thought of canceling some of their traditional methods of advertising and changing marketing channels, keeps them up at night. Better still, some just feel they need to live in the same ad spaces as their competition. Sound familiar?
Stop wasting money.
If you insist on sticking with what you know, despite what marketing experts may advise, it’s time to measure the results. One example of measuring results could be something as simple as employing unique phone numbers, email addresses and/or website URLs for each ad campaign and counting your calls, emails and website visits. This is by far the easiest way to understand your return on investment. At a glance you will know what to further support and what to kill.
Stop Investing in Decline.
Most advertisers may 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. As we already know, phone books are usually thrown straight into recycling bins without being opened. 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 that are standard on every smart phone. If you’re noticing an increase in product placement during your favourite television shows, it isn’t your imagination. Over the past decade, PVRs (personal video recorders) are standard issue, and skipping past TV spots is also standard. This of course results in far less visibility for television ads, which means the only reason you may be watching 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 returns. 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 through SEO. The challenge many experience with marketing has always been the inherent wasted spending. The concept of getting your message in front of as many consumers as possible and hoping they respond is no longer a practical marketing option.