The first hard and fast rule of advertisement budgeting is: There is no hard and fast rule. It all depends on your current income and revenue, what your goals are, and what mediums you want to use. If you’re a new startup business with a high goal mark, you may be spending a lot more on advertising than the mom and pop shop that has been in business for 40 years. Choosing to hire an ad campaign management company also changes things, as your budget increases if you choose to go that route. However, here are some general tips for figuring out how much to spend on your advertising process.
- Upfront Costs
Consider the upfront costs of your ad campaign: website domain costs, online ad placements, radio and television time, mailers, etc. All of these things cost a specific amount upfront and, most of the time, do not have other costs associated with them (except once you want to renew them).
- Upkeep Costs
Some advertisements are “pay-per-click,” so you’ll have a constant bill every month depending on your traffic online. There may be monthly costs with your website domain or security company, or a monthly fee to maintain your TV or radio slot. If you use SEO (search engine optimization) there are also upkeep fees associated with evaluating how your keywords are working for you. This is the area that people tend to underestimate, and can blow your budget if you’re not expecting it.
Some things, like purchasing lighted store signs, vehicles with your logo, sponsoring a team, or releasing a large project are all things that can cost an arm and a leg. However, these have massive returns on investment, so they’re worth considering. This may take more time to build up to if you’re a starter company, and should be part of your budgeting plan.
- When It Doesn’t Work
People often assume that their ad campaign is bound to work if they just throw enough money at it, but they soon find out this is simply not the case. You have to be willing to go with the flow, and switch approaches entirely if something is not working effectively. This can be hard, especially if you’ve already spent a lot of money on your first campaign. Leave enough room in your budget for the “Plan B” campaign.
- Hiring a Professional
Some people find the hands-off approach much more ideal, and will hire an advertisement management company to take over. This means that you’re paying for the services they provide, as well as the costs of advertising itself. This may be more cost-effective in the long run, however, as professionals know more about advertising and can create an effective campaign the first time around, or may be able to troubleshoot holes in your ad efforts without totally overhauling what you’ve already done. There are a lot of benefits to using a company that can help you run your marketing program, but it can also be difficult for startups to afford such a service.
No matter what method you use when advertising, expect specific costs to be associated with it. Research before buying, and also understand that things will go wrong at some point. Roll with the punches, and you’ll be fine.