Advertising is often the last thing businesses consider when budgeting, but a well-planned advertising campaign can be extremely beneficial! Here are some reasons why establishing an advertising budget and advertising consistently will improve your business.

Why You Need an Advertising Budget

Why You Need an Advertising Budget

Your business is doing well and you are busy with the work you currently have. But what happens when business drops off and you find yourself looking for projects? That is when you realize that it would have been a good idea to invest in advertising.

Although it may seem like advertising is not an area for which you need to make a formal plan, it is crucial to advertise to help mitigate the effects of slowdowns. If you leave advertising until business drops to an uncomfortable level, you are already behind the eight-ball and it may take a long time to recover. In North America, $217.51 billion will be spent on media ads alone in 2017. A well-planned advertising campaign can be extremely beneficial, and advertising when times are good will dramatically reduce the likelihood that a business will see a major decline in revenue. So, how much do you advertise and where to get the best outcomes? Here are some reasons why establishing an ad budget and advertising consistently will improve your business.

Why Should You Advertise Even When Times Are Good?

A common mistake businesses make is only spending their advertising budget when business takes a dip. Staying ahead and advertising at all times will ensure that you are not left trying to catch up to the competition. That does not mean you need to put in thousands of dollars year-round for advertising. Instead, spend more of your budget during the times when business is slow, and use less in times of high revenue. One of the best times to use your advertising budget is in an economic downturn. Although it is a difficult time for most, it is a great opportunity to reach out and steal market share, using creative marketing to bring in those prospective customers. Determine the ebbs and flows of your business and use that knowledge to identify the best times for you to advertise.

How Much Should You Advertise?

Advertising budgets vary in size and investment level. If you have a business that works project to project, it can be especially important to invest more in advertising. Project-based businesses need to have that constant outreach to bring in a steady stream of new clients and ensure that business continues to rise. In contrast, a business that has a consistent supply of customers daily (retail stores, busy offices, etc.) has the option to spend less of their advertising budget year-round. They can focus more of their budget in down times or seasonally.

It is a common marker that businesses looking to grow or increase their revenue should invest roughly 10-15% of its revenue into the advertising budget. Keep in mind that depending on how popular your brand or business is, this number will vary. If your business wants to stay constant without much growth, a recommended budget is around 5% for retention. Be aware that if you are starting up a new business, you do not have prior customers to fall back on and must start from a blank slate. In these instances, it is beneficial to invest 20-30% when starting out. This will assist in creating awareness about your brand and building a loyal customer base.

Where Should You Spend Your Advertising Budget?

Another piece to consider when budgeting is where to advertise. If your primary audience uses public transit, you may need to budget more to pay for higher-priced transit ads. On the other hand, if your target audience sits in coffee shops reading newspapers and magazines, print is a better option. Print advertisements typically cost less than billboard and tv/radio advertising, and can be more effective. As long as you advertise in a place that your audience will take notice, the cost is not looked as yet another painful expense but as an investment that helps generate a strong return. In addition to large print advertising, you can choose small, quick, and inxpensive advertising via social media. All of the social channels (Facebook, Twitter, LinkedIn, Instagram, etc.) have advertising options that allow you to select how long you want to advertise and how many people you want to reach. It is a great resource to use alongside other media (radio, TV, print, etc.). As long as you have a firm understanding of where you need to advertise to reach your prospective client base, budgeting to reach them will be a breeze.

Using Your Advertising Budget Wisely

Knowing when to spend more or less on advertising is vital to save your money (as well as boost income). Another way to ensure you are not throwing your cash into the fire is to ensure that you reach the correct audience. If you spend your advertising budget completely on Twitter ads, but your audience reads magazines in waiting rooms, you have wasted both your time and money. Get to know your audience, where they vacation, what they do for fun, what they like, their shopping habits. Using this information will allow you to understand where and how to advertise! It is also necessary to stay on top of current events in the locations in which you advertise. It would be unwise to advertise in downtown locations during holidays when no one is around. Keep track of the events, current happenings, and popular fads that may cause your advertisement to be over-shadowed or unseen!

Keep your advertising budget consistent to ensure the highest return. Once you have decided on the program for your business (time, medium, location, audience) you can start to invest in your business right away. If business-to-business magazines are where you need to be, give us a call at 403 769 9359 or drop a line at ads@businessedge.ca.

Sources:

http://smallbusiness.chron.com/average-marketing-advertising-budget-company-30993.html

http://www.digitalaltitude.co/need-know-advertising-budget/

http://smallbusiness.chron.com/important-marketing-budget-61627.html

https://magazinescanada.ca/news/media-ad-spend-in-canada-to-reach-10-74-billion-in-2017/