Conventional wisdom advises an ad budget that’s around 2 to 6% of your gross revenue. Depending on your location, this number is often too low to be effective. The value of advertising is to increase exposure of your business. If you’ve invested a lot of money in a prime location, you won’t need to spend a lot on advertising. A business owner in a location with less traffic will need to invest more money in advertising.

Roy Williams suggests a formula for calculating the ad budget for businesses in chapter 55 of his excellent book,
Secret Formulas of the Wizard of Ads. The formula assumes a retail business with a 100% markup (the difference between the selling price and the cost, expressed as a percentage of the cost).

1. Budget 10% to 12% of total projected sales for total cost of exposure.
2. Adjust this figure by the store’s average markup. If the average markup is 100%, then the formula is unadjusted: 10% to 12% of projected sales X 100%. If the average markup is only 91%, then the adjusted budget for total cost of exposure will also be reduced by 91%: 10% to 12% of projected sales X 91%.
3. Deduct your cost of occupancy from your adjusted total cost of exposure. The balance is your ad budget. Let’s say you project $1,000,000 in total annual sales, pay $36,000 in rent, and have a medium markup (92%). The formula for calculating a low ad budget would be: $1,000,000 X 10% = $100,000 (budget for total cost of exposure). $100,000 X 92% average markup = $92,000 (adjusted budget for total cost of exposure). $92,000 - $36,000 (cost of occupancy) = $56,000 ad budget. For a higher ad budget calculate 12% of projected sales.

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One size does not fit all when it comes to marketing a business. Advertising strategies should be tailored to your customer, the personality of your company, and the demands of your particular market. At Bottom Line Marketing we sit down with each client for an intense question and answer session regarding your image, your goals, and your budget. We do our research, and then work with you to develop a unique marketing plan that will make your business more successful.

Here are some general guidelines that are useful for advertising most businesses:

1. Choose advertising opportunities that match your brand and provide a
channel for your unique message.

• Associate your business with publications, stations, programs, and special events that will appeal to your target audience.
• Don’t assign too much value to offers that “mention your business” among a list of umpteen different sponsors or place your ad within a grouping of similar ads. It’s better to spend your money for your own distinct ads that show customers what’s special about your business.

2. Aim for frequency.

In general, it’s better to invest in media sources that hit customers with your message several times rather than just once.

3. Don’t spread your message too thin.

• It’s better to run lots of ads consistently with just a few good media sources than to dabble in several places.
• It’s better to blitz your audience with ads for a few days or a few weeks at a time and then take a break than to run a trickle of ads over a longer period of time.
• It’s better to run ads in consecutive days or weeks than to run them on alternate days or place them sporadically.

4. Take advantage of co-ops with companies whose products you sell.

Sometimes companies will help pay for advertising that mentions their products by name in conjunction with your business. This is usually a great deal if you are careful to follow co-op guidelines.

5. Be wary of advertising opportunities attached to “a good cause.”
Sometimes people will ask you to purchase advertising to sponsor local schools, support charities, etc. Before you hand over the money, ask yourself the following questions:

• Does this opportunity suit my business?
• Will these ads reach potential customers with enough frequency to make an impact?
• Will my ad get noticed, or will it drown in a pool of other ads or languish off the beaten path?
• Is the cost reasonable?

If the answer is “no”, turn it down. You can drain away a significant chunk of your ad budget by saying “yes” too often. Or, if you feel strongly about supporting this particular cause, ask what percentage of the money is donated to the cause and what percentage goes to the people selling the advertising. Unless a majority of the proceeds go to the charity, you’re better off just writing them a donation check.

See our media buying strategies to learn more.

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Getting good rates on your own can be tricky if you don’t have much experience buying advertising. Hiring a knowledgeable media buyer whom you trust is one of the best ways to make sure you’re getting the most for your money. But if you can’t afford to hire an agency or prefer to go it alone, we offer these tips for buying advertising:

1. Shop around and ask lots of questions.

• How many people does this media source reach within your market?
• Is this media source popular among your target audience?
• What ratings does this station (radio or TV) have in the markets you’re trying to reach? (Nielson, Arbitron, Griffin, etc.)
• What is the cost per rating point to advertise on this station?

2. Negotiate rates and ask about special deals.

• Always ask for a better offer. You can usually get a discount for committing to a yearly
  contract, running a certain number of ads within a given time, or placing more ads with a
  specific media source.
• Some media providers will let you trade gift certificates, discounted services, or products for advertising.

3. Educate yourself and develop networks.

• Study results. Keep track of which medias are generating the most leads and return on investment for your business. Adjust your advertising strategy accordingly.
• Read good books and websites.
• Talk to other business owners.
• Try forming a co-op with other similar businesses to pool your advertising resources and give members more marketing power.

Even if you do have experience buying advertising you may wish for a second opinion, or you may not have adequate time to devote to the task. Bottom Line Marketing has 25+ years of experience in buying and selling all types of media. And because Bottom Line places advertising buys for several clients a year, we have the leverage to ask media providers for better rates and get them to say “yes.” See our media buying strategies to learn more.

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Frequency. Most advertising fails because someone is “just trying to get their name out there.” Campaigns that work use fewer media and hammer the message home on a consistent basis. Instead of trying to reach 90% of the people and convince them 50% of the way, we will reach 40% of the people and convince them 100% of the way. You know your ads are working when you start hearing people say they’re sick of them.

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Campaigns are rarely killed by reaching the wrong people, more often they’re killed by saying the wrong thing! Here are three keys to a good advertising message:

1. If you speak from the heart, people will listen.
It’s our goal to provide our customers with a voice that screams from the heart what your company stands for, whether you’re a chiropractor working to bring better health to your community (play radio ad) or an RV dealer who sincerely loves selling “Family Fun” (play TV ad), You must find what is special about your business and sell it with passion, in your own unique way.

2. Transform features into benefits.
Features are things a product or service has. “Our funeral home has an on-site crematory.” Benefits are things the product or service does for the customer. “Our on-site crematory gives families peace of mind knowing their loved ones are always in our care.” (play radio ad) Benefits are more important to consumers than features because they answer the crucial question: What’s in it for me?

3. Tie your message to an emotional anchor.
To craft a message folks will remember and respond to, find something they already love, value, or have an emotional connection to. Then anchor those feelings to your business. (play TV ad) Repeat that association with enough frequency and consistency over a period of time, and you will be the first one people think of when they need what you have.

See our copywriting tips to learn more about ads that bring results.

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Consider “marketing outrageously.” Have you ever thought of sending Santa out on the town…in the summer?
(play TV ad) Giving away boots and drills at your jewelry store? (play radio ad) Jumping through a burning ring of fire on your bike? (see photo) With all the clutter of traditional advertising messages clogging the airwaves, sometimes your campaign needs something “outside the box” to wake people up. Bottom Line Marketing offers creative advertising strategies designed to surprise the mind and make your brand memorable while fitting seamlessly into your overall marketing campaign.

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Let’s find out! Should you wish for an initial consultation or to consider hiring us to make things happen,
contact Bottom Line Marketing. We just may be a match. You never know unless you call.

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