Your advertising budget is something you need to pay close attention to and adjust regularly to make sure you’re spending money wisely.
It takes time to reap the rewards of effective marketing and this can be a bit frustrating at times. Marketing isn’t a one-size-fits-all process and you may wonder why you’re trying so many different strategies that don’t seem to work.
Thankfully, when your advertising does hit and you’re gaining leads from your marketing efforts, you see how impactful and useful it can be. When you stay on top of your budget, you’ll see the profits you’ve desired, and your advertising can be part of the success.
Start with Your Business Goals
What are you trying to accomplish every month? This is one of the most important questions you should ask yourself and a month is the smallest unit of time you’ll deal with. When you’re developing your advertising budget, you want to start with this thought and move outward to longer timeframes.
Some questions you should also ask are:
• What are your objectives for the quarter?
• What do you want to get done this year? For the next three years?
• How many leads need to reach your sales team for you to be successful?
When operating a small business, a common amount to allocate to marketing is 7-8 percent of revenues. This amount can be split among several activities including brand development, promotional costs, and events.
Adjust Your Budget as You Grow
Do you expect your first month in business to be the ceiling for sales? Of course not, what you expect is that your business will grow over time and that will mean you need to adjust your advertising budget to address this growth. You will need to increase the allocation to marketing to reach more customers and impact further growth.
What Mode are You In?
Typically, businesses go through two modes: Growth and Planning. If you are in the Growth Mode, you’ll need to think about quick-hitting marketing objectives that can generate sales and improve your top-line revenue. When you’re in the Planning Mode, you’ll want to incorporate long-term marketing strategies that offer sustainable returns. If you’re lucky, you may find your business is in both modes at the same time.
Track and Understand Your Sales Funnel
Where do your leads come from? How many visitors do you have every month? Have many of the visits to your website, social media, or advertising turns into sales?
Thankfully, with the development of digital marketing, you can understand and track your sales funnel better than ever. There are tools that can break down every lead into the cost of marketing to help you understand how much you should be spending on your advertising budget.
Attempt to Predict Future Trends
Understanding the current trends isn’t too difficult but predicting the future can be difficult. Very few people would have predicted we would have a global pandemic and the impact of this event will likely affect several industries for many years.
What you want to attempt to do is understand the trend you’re in, previous trends, and try to figure out what to expect. For at least the first couple of years, it’s probably a good idea to be extremely conservative in your approach. This might mean you miss out on some sales, but if you protect your bottom line by spending wisely with your advertising budget, you’ll be glad you were more careful.
Some of the immediate sales trends that might be relatively easy to predict involve holiday times. Nearly every month there is a holiday that might give you a great opportunity for more sales. These events should be considered in your marketing budget.
Think of Your Advertising Budget as an Investment
What’s the difference between a cost and an investment? Typically, the difference is your mindset. While putting money into a savings account is easily seen as a direct investment, other investments you make are not as direct, including the money spent for advertising.
Create a mindset of investment for your advertising and let it become a way you generate income rather than a “necessary evil” which has become a negative persona of marketing. As you use this mindset, you might find it easier to put more money into the marketing budget for your company.
When it comes to your advertising budget, you have to learn how to adjust it for the best results. Treat your marketing as an investment, learn as you go, and remember that it’s necessary to drive leads and sales for your company.