How do you know if you’re investing too much or too little into some kind of
advertising or marketing?
Here’s the “simple” way to determine a general sense of “how much” you need to do….
How much COMPETITION do you have? A little? Then, you don’t have to advertise as much. A lot? Good luck. You better have something to say that differentiates you from the competition or give people a reason to choose you instead of all the other businesses that seem exactly like you.
How much do you want to grow and how fast? If it’s a lot… in a short period of time, then you better pony up some cash.
How complicated is your product or service? Does “your target” easily understand what you’re offering? Or are you going to have to really SELL them on it? The more complicated the message (your advertising), then you’ll need a more complicated ad. You’ll need a longer ad usually. You’ll need to compare what you do to something else that is more easily understandable. Compare what you do to something that almost everyone “gets”. Or give us a scenario of why and when someone might need what you offer. You could use a sentence in your advertising like, “It’s like _______, only faster.” OR “Do you know how when you _______ and _______ and you’re thinking OMG I’m going to pull my hair out…well, we fix that. We make that go away forever.” (get my point?)
If you have a niche that nobody else is promoting, but is desirable to your target, then you don’t have to have a very complicated message. Just get attention with a good headline and be crystal clear with your message. Don’t overload your ad with things you don’t need. Don’t force any humor into your ad if you don’t need to.
Hey… if you don’t have much competition… congratulations! Then, all you have to do is let enough people know that you’re open for business and then serve those customers extremely well so they tell others and so they come back again and again.
BUT… I’m thinking you might have more competition than you think you do. It’s just not “traditional” competition or someone that’s in your precise type of business. For example, if there are no INDOOR go-cart tracks in your market, you may think you’ll have no competition if you open one. (Great idea! Especially, in a place where winters get stupidly cold.) But during the summer, you’ll have some other competition – a few other tracks. You’ll get all of the winter entertainment seekers though, right? Not so fast. That word “entertainment” is the key to focus on here…
We only have so much money we can spend on “entertainment”. You might think it’s going to be a perfect weekend for everyone to come out and hand over their cash…but that weekend might just be the opening of the latest Halo movie, stupid humor comedy, or the next sweet ass Star Wars film. You’re competing with every other “entertainment” type of business, not just go-cart tracks. Movie theaters, trampoline places, sprint car tracks, local sporting events, ski bumps, etc.
And if you’re a restaurant that serves the same kind and caliber of food as 35 other restaurants in a 3-mile radius, good luck. Then, you for SURE need to keep advertising consistently. Part of advertising for restaurants is to remind us that you’re there and that you’re an option. Because we’re getting bombarded with offers and coupons and half-price deals every day. By the way… why not just advertise why you’re good and how you’re good and tell us a good story along the way so we remember you? Like on the radio. Then, you won’t have to give away all your profits with coupons. Then, when you attract the new customers, you better be able to back up what you’re saying in your ads.
Are you a MATTRESS STORE? Oh Mama. Did you know that JCPenney sells mattresses? Dude. If you’re a “middle man” mattress store or a furniture store that sells mattresses… you’re competing on price and you probably offer every crappy mattress out there. And maybe a couple decent ones, but you’re overcharging everyone grossly. Good luck.
I think the only chance you have is if you’re a mattress company that builds your own. Someone who has a proprietary “mattress formula”… and you actually care about your customers. You have to care that you’re producing a good product… and you have to NOT mark it up 1000%. THEN, you’ll have a shot in this crazy Sioux Falls mattress market.
BECAUSE YOU HAVE SO MUCH COMPETITION… Your mattress advertising will have to push the limits. Both your Ad Budget and your Ad Content has to push their limits. You’ll have to be consistent with your radio ad schedule and your ads will have to cut through the mattress advertising clutter and “puffery”. They’ll have to demand attention. But you’ll have to make a lot of friends with your ads. Cause people to fall in love with your fresh approach to helping people sleep better.
Assess your complete market situation before you decide to pump any money into something. You could be spending more than you need to… or not nearly enough to make an impact.
Keep the “fat” out of your ads! Don’t fill me full of clichés and fluff and B.S. Give me some substance. Entertain me a little. Keep me listening. Wow me. Because I have plenty of other crap to do. It won’t take much for me to ignore every ounce of your wimpy and gutless advertising. There’s an imaginary line you shouldn’t cross with how “creative” or “weird” or “out there” your ads are. But the best performing ads will go right up to that line and flirt with it for a bit.
The more “beefy” and full of flavor your ads are… means THEY WORK BETTER. Which means you get more big bang for you buck than the average, crappy ad.
For a general “ballpark” local advertising budget, take a percentage of your revenues (or your next year’s revenue goal if you’re looking to grow even more), like 5 to 12% depending on your competition and your profit margins… and stick to it. Adjust it annually based on how things are going overall. Of course there are many factors to consider – let me know if you want to talk “budget” or “cost of exposure” in more detail. Because maybe you’re a retail store that would benefit a lot more by moving to a higher-visibility area instead of putting the extra money into advertising. Maybe you wouldn’t.
Ok, maybe there’s not anything “simple” to figuring out how much to advertise. But guess what? There is NO EASY BAKE FORMULA that lets you off the hook of actually learning a little bit about this (or finding the right person to HELP you think it through). You WISH there was a formula! You and every other business owner. Sorry Charlie. Hey… you can always talk to me. I’m the guy who has your best interest at heart and who knows how to make advertising work. And I’ll let you know what kinds of things to avoid overpaying for… or avoid completely.
How much should you advertise? Not too much. Not too little. Let’s find your sweet spot. We can do that by assessing your competition, their advertising, their ad message, and their ad frequency… and then compare that to yours.