Budget For Advertising

If you don’t have an ad budget, you need to set one. Usually, anywhere between 3% and 12% of revenues. It depends on whether you’re a service biz or a retail biz, profit margin, location, and how aggressive you want to be (competitive landscape, speed of desired growth, etc.).

If you’re a retail business, then your “visibility” plays into it. When you’re in a high traffic area, your rent is most likely higher, but so is your exposure. So, you don’t need to advertise as much. If your location is low traffic (cheaper rent), you need to increase your exposure (increase ad budget). Your profit margins also play into your ad budget, obviously. You’re going to be able to spend more on attracting purchasers of your product when you’ve got a 50% markup…versus 15%. Service businesses generally budget between 7% and 15%.

You need to advertise because you always have a competitor gunning for more market share. And you may THINK people know about you…but the reality can be quite different. And people can “know” about you…but often FORGET about you when the time comes for them to need what you have to offer.

Once you SET your ad budget, you might feel the need to distribute your ad dollars among many different ad mediums. Stop! When you do that, you end up “sprinkling” a few people here and there. To make advertising work, you need to “soak” your audience. Why? Because everyone is busy. And when you spread ads thinly across multiple ad mediums (radio, print, TV, Cable, magazines, billboards, etc.), they don’t get heard or seen enough times to make a difference. Start with ONE ad medium. And dominate it. You don’t have to try to reach everyone. If you want multiple ad mediums to work well together, the way Budweiser and Apple do it, you better have a pretty big ad budget.

If all you have the budget for, is a tiny cable TV program, that has about 1500 viewers per week…that’s ok. You have to start somewhere. You have to start getting into the minds of an audience repeatedly. And most importantly, when you create an ad message and campaign that gets attention and hits your prospects’ hot buttons (my specialty-wink wink), you start to bring in new customers. As you grow, then you can increase your ad budget and increase the audience.

If you have that small of an ad budget though, I’d recommend putting your efforts into making something stand out about your business. Get some word of mouth going about how you’re turning your industry upside down. Or take the time to make every precious customer you have…love you. Not like you. Love you. OR BETTER YET – instead of spending $200 a month on a small cable TV audience, you’d have better luck if you gave 20-dollar bills to 10 random people a month and say, “Hi, I’m ____ with _________. You should give us a try when you need a _________!”  And then walk away saying, “Have a nice day!” (Seriously, it would work better than the majority of sad advertising I see today!)

A good place to start with an ad budget…is on the RADIO. Radio allows you to communicate your ad message to an audience many times during a week at a much lower cost than TV or newspaper. Of course, you might think I’m biased because I work for Results Radio. But I decided a long time ago that my passion is helping small to medium-sized businesses GROW – no matter where I’m working. I’ve learned about the benefits and drawbacks to pretty much every advertising medium. Radio will always be my first recommendation to local businesses because of the power of sound (our memories prefer sound over sight only)…and the overall VALUE of it (you can air more ads, and I don’t charge you a nickel to make a new one).

There are lots of Radio commercial scheduling options. A good ad rep won’t bombard you with industry jargon and confuse the heck out of you.

You might get shown a $4500 per month ad schedule and think that it wouldn’t be too hard to pay for that with an extra few sales here and there. But you might also choke on your coffee if you saw a proposal of that amount. I’m not a fan of making up a schedule out of thin air with no budget to work with. The thing you need to know…is your AD BUDGET, remember? And not to “sprinkle” yourself out among multiple advertising mediums when you don’t have a lot of budget.

If you set the proper budget, have a great message to communicate to the public, and find a radio station or two to start out with…good things happen. New customers start finding you. New customers appear when you didn’t expect new customers to appear.

MY GOAL…is for my radio clients to grow and thrive and be as successful as they want to be. When that happens, I grow and thrive as well. See? Win-win.

Have a great week! Thank you for reading…and spreading the word about this cool radio guy you know.

Have a great day!

Duane Christensen

Results Radio Townsquare Media – Sioux Falls


My work website: http://duanechristensen.townsquareinteractive.com/ (And if you’d like a business website like this, or nothing like this, give me a shout. I’ll point you in the right direction)

And if you have questions about the cost of radio advertising, which radio stations would be a good fit, or how to get started attracting more customers, don’t be afraid to ask. I like to help good businesses take a bigger slice of the market.