What Should You Spend on Advertising? – Businessweek

Pile of Cash

With the start of a new year comes new goals and new budgets. One bothersome question that small business owners wrestle with all the time is how much of your budget and/or income should be dedicated to marketing or advertising. The successful business will have an answer to this question. The failures will not.

Cover of BusinessWeek

Read this article from Businessweek then come back and let me enlighten you with more tangible information.

What Should You Spend on Advertising? – Businessweek.

A marketing expert said in a seminar I attended today that each business should dedicate 10-15% of their gross income to marketing. He correctly pointed out the few business actually do this. The Businessweek article says to look for examples from similar public traded companies and base your decision on them. Another way, they say, is to start at 5% of revenue and move your spending up or down depending on several factors. It’s assumed that “revenue” they refer to is “net-revenue” otherwise I can’t imagine them recommending that a growing business would spend so little.

In a blog entitled Marketing as a Percentage of Revenue Benchmarks blogger Jeff Grill  provides far more detailed survey results on what other companies do, and thus gains credibility in my eyes.

Time invested in marketing/advertising must be factored in. And when doing so judge the time in terms of dollars. How much would it cost you to hire someone to do what you do? That’s the determining factor. Far too many entrepreneurs pay themselves far too little, and one should not base their calculations on such an unrealistic figure.

From my standpoint business owners and managers are no different from others and can get lost in the world of marketing, or social media; two not too divergent characters any more. Your time is best spent making money. Any “How-to” book on starting or running your own business will tell you this. Find a marketing expert who can demonstrate the success they will bring for you or the time they will save for you will ultimately make you more money, since you’ll be focused on serving your customers and making money.

Another great mistake made by small business is to pull back money from advertising when the economy softens. It’s exactly the opposite of what should be done. When dollars are hard to come by you need to increase your efforts to get some. Cut back elsewhere.

Total Broadcasting Service helps small business in so many different fields. we strive to be a one stop shop for small business marketing. Website design, Video production, radio advertising, and SEO expertise are our primary areas of focus. We’d be honored if you called us to assist your business.

Thanks for visiting. Comments are welcome.