Advertising budget allocation.

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What is a business without advertising well don’t get me wrong advertising can come in different ways it could be through referrals, Mouth – Mouth, social media, print and so on in as much as it has a wide or specific reach in relation to your target audience.

The impact of advertising on a business can not be undermined as it is one of the ways in which your business is shown to more people, find new customers and also offer services or show new products to existing customers.

How to allocate an advertising budget.

Figuring out how much to spend on advertising should begin with your sales revenues. The cost of advertising will be paid for by sales and increasing sales is your goal of an ad campaign. Therefore, there are two formulas that the SBA recommends small businesses use when deciding how much to spend on advertising:

1. How much money do you need to promote the sale of a certain product at a given price? The SBA uses the example that if you spend $10 of the selling price of an item that cost $300 on advertising, then you should be willing to spend $3,000 in advertising to sell 300 units and generate $90,000 in sales.

2. The other way is to set aside a flat percentage of your total projected sales revenues for advertising. So if you plan to dedicate five percent of your revenues and you expect to bring in $100,000 in sales that year, you would spend $5,000 on advertising.

Once you have a handle on how much money you plan to budget for advertising, you need to figure out when you should spend that money during the next 12 months. The SBA has free sample worksheets and templates that you help you budget for advertising. While the plotting of this data may be time-consuming, it can help you compare your actual sales against the goals you set in crafting your advertising strategy. This way, you can decide whether to make changes.

Selecting an advertising channel.

Once a business decides how much money it can allocate for advertising, it must then decide where it should spend that money. Certainly the options are many, including print media (newspapers, magazines, direct mail), radio, television (ranging from 30-second ads to 30-minute infomercials), and the Internet (search engine optimization, banner, Social media and pop-up ads).

One must also note that every media has its own type of audience so it’s advisable you select a media whose audiences corresponds with yours.

The mix of media that is eventually chosen to carry the business’s message is really the heart of the advertising strategy.

What are your opinions on advertising media let us know in the comments section.

Author: Austine