You can begin the process of setting up an advertising budget by finding the answers to the right questions like:
- How big is your business: The size of the business will matter as it will determine the amount of capital you would need to make an impact on the desired audience.
- How much yearly income is generated: Depending on the yearly income generated by your business, you will be able to decide how much you can spare for advertising.
- What is your competition spending: We have explained this point in detail in the points below.
- What do you want to accomplish with your advertising: And, how much will that cost?
If your budget is too limited to make an impact in the market on a daily or weekly basis, save your cash until you’re having some special event or sale and then attack the media full-force.
How much to spend
The answer to this question should be ‘how much have you got’. Advertising has a way of depleting your bank account very quickly. So if you ask businesses the same question, the most common answer is ‘a percentage of gross sales’.
Percentage of sales method
This is one way of deciding the budget for advertising. Take your total last year’s gross sales or if you don’t have a last year use average industry standards. A specific percentage of that amount is allocated for advertising. Depending on the business this amount may be a daily, weekly, monthly or quarterly expense. One of the main reasons most businesses like this form of budgeting is the safety factor. Rather than having to “predict” the future and adjust, they are always dealing with a “known” amount. The down side is opportunities to capitalize on changing events or customer trends are often lost due to the restrictions of the budget which is tied to a set amount, not the current business climate.
Sustain impact in the marketplace
Each business is unique. What works for one company may or may not work for the other. Spend as much money on advertising as is required to make and sustain an impact in the marketplace. But don’t spend so much that you run the risk of putting your business into financial jeopardy.
Match the competition
Usually, companies try to figure out how much their competitors are spending in order to gain market share. Because they don’t want to lose market share, companies try to match each other’s expenses. Why? They want to ensure that they do not lose the market share. This is one of the ways how the advertising budgets are allocated today.
Set up an advertising budget after considering the related aspects. You will need to understand the importance of an advertising budget to your business. An advertising budget will aid your marketing strategy and deliver the necessary impact on your audience finally helping you to improve sales. Contact a professional agency which will help you put up advertisements.
Image source: https://www.picserver.org/
