Managing an advertising budget for your business
Ad campaigns play a key role in most marketing strategies, but
to get the best bang per buck you need to spend your money wisely
on the target market that's right for your business. This guide
takes you through the process of working out a sensible budget
through to measure response.
- Working out a budget
- Measuring results
- Responding to results
1) Working out a budget
A good rule of thumb for ad budget is 3% of turnover. Be
prepared to spread your budget across a variety of channels (print,
online, radio etc) - one type will seldom be enough as each channel
has its own strengths and weaknesses. For example, a complex sales
message might be better delivered in the trade press, whereas a
one-day only sale could be more effectively promoted on local
radio. Ad campaigns work best when run over a length of time -
customers often need reminding. Commit enough budget to cover the
full campaign period. Media owners will usually drop from
rate card - for example, you should get a better deal if you're
taking out repeat advertising.
- Work out your budget
- Make sure it covers the length of the campaign and multiple
media
- Negotiate hard
2) Measure results
At the beginning of any campaign you need to set a minimum
response rate. To work out this rate you can use previous campaigns
as a benchmark. If this is your first campaign then any advertising
agency you work with should be able to advise you on reasonable
response rates to expect. You also need to work out how to
measure response. Cost per target customer reached is a useful
metric and can allow you to compare the value offered by different
advertising channels.
- Make sure your staff ask where customers heard about your
business, or attach unique codes or phone numbers to ads so you can
track response accurately.
- Agree the metrics to measure response
- Work out your cost per customer/lead
3) Respond to results
Track the results of advertising in terms of orders placed and
enquiries, and readjust your ad spend accordingly. If the
print ads are working but you're getting no response from radio, it
could be time to reallocate your budget accordingly. It's also
important to keep the campaign fresh - you could consider dropping
the campaign for a couple of months. This is especially true for
press advertising, which can lose effectiveness the longer an ad
runs. Introduce new campaigns regularly - usually after three
months.
- Analyse results regularly so you can work out the best channel
for your business, the most effective size of ad and the
appropriate length and frequency of campaign
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