Advertising is one of the prime revenue builders for many businesses, but setting a reasonable budget can be difficult. Since advertising is such a great way to raise brand awareness and draw in more customers, it’s easy to get carried away and spend far more than you need. At the same time, if you are too conservative with your marketing spend you might not get enough exposure, and your business could struggle.
The best way to address these issues is to plan an advertising budget based on careful deliberation and concrete data. Here’s how you can do just that.
Get a media audit to better understand your spend
One of the best ways to improve your advertising budget is to break down and analyse what you have spent on marketing in the past with a media audit.
If your budget is small, you may only use one or two media channels, but a larger company will likely be using several different medias, such as:
- social media,
- pay-per-click Google ads,
Your media audit should look at each media individually in order to properly evaluate the spend relative to that media type and its costs. Broadcast media won’t have the same pricing as print media, for example.
If you are working with only a small scale media budget and only one or two types, then you might be able to carry out your audit in house. If you are using a media agency or are working internationally, or with a range of medias, then you’ll want to get your media audit carried out by an independant company.
Media intelligence experts Auditstar offer a media audit that helps businesses find and sort through this information, working with media agencies to give business owners a clear insight into which parts of their advertising strategy are the most effective, and which parts are the least. Cleverism has a breakdown of techniques for tracking marketing success for those who want to try it themselves.
Evaluate media spend effectiveness
A media audit will allow you to see how well your media agency is doing, but will also give you clear indications of how effective your media spend is. Specifically, it will tell you which medias are the most beneficial.
Be aware that market changes mean that certain media might be better one year. For example, print media is becoming less valued by many readers and industries, but as a result it speaks to a more luxury and exclusive market.
Once you know which marketing avenues are connecting with your target audience, you will be able to adjust your budget by spending more in the most effective areas, and less in the least effective areas.
Check out your competition
Companies rarely make their advertising budgets public, but from looking at your competitors’ marketing campaigns you can try to gauge how much they are spending, and therefore how much you ought to be spending too if you want to keep up with them.
It’s important to be aware of where your competition is choosing to be visible, both industry-wise and at your business size. Choose your media to be seen as competitive, by appearing in the same TV slots, or target new avenues they haven’t invested in yet, such as social media video interstitials.
Set clear targets and goals for your next campaign
It is far easier to set a budget for a marketing campaign if you know what you are trying to achieve. With a target, you can do a better job of measuring success; if you miss it, you failed but learned about the market for the next campaign. If you reach or exceed it, you’ve succeeded and can push for bigger and better results.
Your targets should be as idealistic as possible whilst still being achievable. Some businesses use the SMART target-setting technique in their marketing strategies. SMART stands for Specific, Measurable, Agreed-upon, Realistic, and Time-based.
A specific target like this in a marketing context could be to increase Twitter engagement by 20% in three months. Or to increase overall brand awareness by 50% over a year. With solid targets like these, you will avoid spending without specific intentions: a surefire way to waste money.
The underlying principle for all of this planning guidance is this: don’t spend more than you can afford. A business should set an advertising budget in proportion to its size.
Apple may have recently upped their spend to a historic $1.8 billion per year, but it would be absurd for a smaller business to spend anywhere near that amount. At the same time, it is important to spend something on advertising, and to make sure your advertising budget is not too small to be effective.
To get this right, you have to make sure your budget is completely proportional to the size of your business. As Forbes advises, this involves thoroughly assessing your financial situation, looking at how much reliable revenue you make each month then deducting the cost of expenses from the total to find out just how much you can afford to set aside for advertising.