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    6 Replies Latest reply on Oct 14, 2008 11:16 PM by HigherProfits

    Advertising and Marketing Dollars

    HumanArrow Adventurer
      What percentage of your company's revenue should be used for advertising and marketing?


      Human Arrow
      Directing Traffic To Your Business!
        • Re: Advertising and Marketing Dollars
          LUCKIEST Guide
          Advertising and Marketing Dollars

          To really answer your question, I guess I would need to know more about Human Arrow (the company).
          How long has it been in business?? Have you developed a Business and Marketing Plan??
          Do you have an Accountant??

          Part of the Bus and Market Plan includes income and expenses. As you grow, the plan will help keep you on track and make sure the business is progressing as you intended.
          Then you go to a spread sheet and say what of I increase my Advertising by % % (WHAT HAPPENS)??
          What if I increase my Marketing by XX (WHAT HAPPENS)??

          As you know SCORE can help.
          Good luck again, LUCKIEST
          • Re: Advertising and Marketing Dollars
            Bluesuit Adventurer
            Great question. Hopefully, other business owners will weigh in and share their budget allocations. The one thought I do have on this issue is that you should make sure that the dollars spent is getting in the best return. There seems to be so many options these days - spend on a website, an online ad, flyers, or signage, buying an ad in the paper. Just make sure what you do spend, brings in the expected amount of customers or purchases.
            • Re: Advertising and Marketing Dollars
              Iwrite Pioneer
              I hate giving percentages because there are individual factors that have to be considered.

              What I advise client to do is plan out what they hope to accomplish, who they want to reach, determine what is the best way to reach them and then build a budget based on their plan.

              I don't want to sound flippant, but measuring the effectiveness of marketing and adverting can complicated. Judging the success or failure of any effort on the number of sales or clients that contact you is dangerous. People want immediate returns on their investments but that may not always be possible. Sometimes, there may be a strong competitor in the marketplace that has built trust and recognition - the cost of converting customers to your business may require a larger effort than if the competitor was not in the marketplace.

              I have seen people open a new business and run a couple of ads, and get upset because they have not gotten the returns they wanted. But they have neglected to understand the landscape they are playing on. There is already another business offering the same product or service that has a strong presence.

              Not to sound like a geek but it is the Star Wars thing: Defending the high ground requires a lot less energy than taking it. People like throwing out numbers and figures but this is really a complicated process when done correctly. Shortcuts get you short returns.

              There is no short or quick answer to this. Do your homework, get a lay of the land, play up your strengths and defend your weaknesses. Plan out your marketing and advertising - the two are not the same, understand this. And come to accept that not every part of your marketing plan and adverting plan can be viewed in terms of Return On Investment (ROI). Some efforts will only be realized over time.

              I know this may create more questions than answers but it is the best way to approach this. It is how the large companies try to do it or has been my experience in the last 20 years working in advertising.
              • Re: Advertising and Marketing Dollars
                I suggest a better metric is to determine the value of a customer in the short term and in the long term.

                And the longer term value of the customer is less if the product or service is a "one-time event".

                If you are providing a product or service that has a "continuity" or "continuing revenue stream" from product or service delivery, a good economic could be 2-4 times the profit of the first revenue.

                See paragraph 2 above.
                • Re: Advertising and Marketing Dollars
                  JoeReuth Newbie
                  There is great source available for this (and best of all it's FREE!!)

                  Any public library with a decent business section or a college or university library should have a copy of the Financial Studies of the Small Business published by Financial Research Associates. You'll find advertising to sales ratios for most businesses of various size breakdowns up to $2M in asset size.

                  Having a benchmark to compare to is very important when deciding your advertising and marketing budget.


                  Joe Reuth
                  • Re: Advertising and Marketing Dollars
                    HigherProfits Wayfarer
                    I always tell client's it's not about how much money you spend, it's about the results you get...

                    Some of the best marketing methods involve little or no money... Make sure to not get wrapped up in the Ad-spend theory of business because people selling you ad space aren't always on your side.

                    You should focus on implementing strategic plans over tactical moves. They'll yield greater results with less resources committed. If you need help just contact me.

                    To Higher Profits,
                    Dave Ryan, Consultant
                    Higher Profits Marketing
                    dave at