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View Full Version : How much do you spend on advertising?



vangogh
08-06-2008, 03:37 PM
How much do people usually spend on advertising each month? Do you have a budget? Where do you typically advertise and what results have you had?

orion_joel
08-07-2008, 01:28 AM
I have never really done the serious amount of advertising that i should be doing to make a resonable return on my business. As it stands there is actually only one year that i spent money on advertising.

In that one year i probably spent about $300 between a few different areas. About $100 was spent on Google Adwords, which actually did give me a reasonable return on investment, i think i made a few thousand dollars profit from the half a dozen sales i made from those google ads. The other money was spent on ideas of flyer drops and a couple of direct mailings which never returned anything.

The sad thing is that i know i need to spend money on advertising to improve the returns of my business however it is something that i have just never persued to a reasonable extent.

Steve B
08-07-2008, 06:02 AM
Advertising is vitally important to my business - since I pretty much don't get repeat business - so finding the next job is always a challenge.

I don't believe in budgets - so I spend money whenever I feel I will get a positive return on investment. I spend a lot on Google Adwords, direct mail print advertising, phone books, sponsoring sports teams etc. I've tried just about everything and found that nothing works particularly well and nothing seems to completely fail either. I wish more things would fail so I would know to stop doing them.

Joel - spending hundreds and getting back thousands - that sounds like a dream come true! I consider advertising successful even if I break even - at least then I might have another customer or two that will refer me to a friend in the future.

vangogh
08-07-2008, 11:27 AM
@Joel - I generally don't spend a lot of money advertising either. I mostly spend time getting my name out there. Of course I don't have an endless supply of time so more money will probably go into advertising in the future.

@SteveB - You and I differ that way. If I do a good job the first time around it often leads to repeat business. That's a good point about the budget. A lot of people just look at how much they're going to spend, but forget to factor in how much that spend is going to bring back to them.

If you spend $10 and make $12 as a result, you haven't really spent anything.

degadar
08-07-2008, 11:59 AM
I spend quite a lot, about £20k per week.

It sounds and feels like a lot when you're signing the cheques or the Insertion Orders, but do consider it as a direct cost. In my chart of accounts it's a direct cost. Every penny is counted and every week I know what business it's brought in.

I know a few businesses who link their advertising spend directly with sales. Whatever sales were last week - take 20% and spend that on advertising next week. Although I find the logic a bit creepy, it's got to be safer than that other adage "Half of my advertising spend is wasted - I just don't know which half".

vangogh
08-07-2008, 03:52 PM
It does sound like a lot, but as long as the return is more than the spend it's really not costing you anything.


Half of my advertising spend is wasted - I just don't know which half

I've always like that quote.

One other thing to consider is you can't exactly measure every bit of return. A certain amount of ad spend goes into branding, which is hard to measure directly when it comes to sales.

It can also be hard to measure when you make a sale after someone saw several of your ads. Maybe the third one led directly to the buy, but only because the customer happened to see ads #1 and #2.

orion_joel
08-08-2008, 12:55 AM
SteveB, I do agree that spending hundreds and making thousands is fantastic. However the issue is being able to replicate it. This i think comes down to a large part the product you are offering and the market you are targeting. Which in my case, i do not beleive it would have been gaurenteed to replicate if i had spent twice as much, as the customers i did get were completly random and out of the blue through email enquires, which may or may not have come from the adwords links.

Leatherneck
08-08-2008, 12:10 PM
I'm kind of in the same senerio as Steve B, I don't get much if any in repeat business, Unless a hurricane comes through and does damage. Most wood fences last for 20 years or so. I do get word of mouth jobs from customers that refer me too someone else.

I did spend several dollars my first two years on good size phone adds in Yellow book and Verizon. I also had a quarter page add in a upscale magazine that was done for local companies by better homes and garden. That cost 2300.00 which only got me 2 leads. The sales person wanted me too do it for a year in order for it too work. Coarse they never mentioned that when I opted to try the first season. (It comes out every 3 month.)

All in all I spent alot of money that I feel with the economy that took a down turn in my start up years, really has hurt me considerably. I have learned a bit on what seems too work the best and spend my money wiser to get the best return for the dollar.

I feel the internet, for my type of business is starting too grow. I have more and more people all the time finding me through my web site. I'm going too try and use the internet more, and cut back on the phone adds that are so costly.

Ad-Vice_Man
08-08-2008, 04:17 PM
I have clients that spend $1000 per month, I have clients that spend $100,000 per month. The difference being the scale of their business.

The client that spends $1,000 per month does less volume in sales than the client that spends $100,000.

The client that spends $1000 per month has lower overhead, and few employees. The client that spends $100,000 Has multiple buildings sitting on expensive realestate, with Millions of dollars in inventory and hundreds of employees.

What do these two have in common? They are seeing a positive return on their money. At the end of the day... if you've made more than you spent... then it doesn't matter what you spent. It was an investment not and expense.

vangogh
08-08-2008, 05:19 PM
Having the positive ROI is really the key. I know for many small businesses including my own it can be hard to pay the costs in the beginning, because you aren't sure if the ROI will be positive. It can be scary to risk the money without knowing the return.

But ultimately if you can spend $1,000 and turn it into $1,200 you've done good. If you can then take the next $1,000 and earn another $1,200 then it makes sense to up your spend to $2,000.

Aaron Hats
08-09-2008, 12:37 PM
When we first opened I advertised everywhere. I did radio, tv, newspaper, tourist maps. You name I did it. Over time I found what actually worked and what didn't. Funny enough, usually the least expensive advertising worked best for us.

Aaron

vangogh
08-09-2008, 12:54 PM
I'm not surprised that the least expensive advertising paid off the best. Just a guess, but because it's less expensive did you take out more ads on a more consistent basis?

I think some try to put too much advertising budget into one big ad to make a big splash, when really the smaller ad that you can repeat over time will generally have the greater success.

Aaron Hats
08-09-2008, 01:18 PM
Just a guess, but because it's less expensive did you take out more ads on a more consistent basis?


I didn't buy more ads but I do stay consistent with the ads and I think that can be more helpful than anything. Our tv commercial runs at least twice a day, every day and only costs me $120/month. Then I do a very small newspaper ad that's on the front page of every Saturdays paper and that runs me $35/Saturday. Also, since we're in a tourist town I chose one tourist map (there are about 4 or 5) and have had an ad in that for a few years that runs me $50/month. There are a couple times of year when I'll do something special in the newspaper but for the most part what I just mentioned is all I do. That doesn't include my Adwords campaign though...what I spend on that is not for public knowledge. :D

Aaron

vangogh
08-09-2008, 02:54 PM
I can see where your advertising would work. I bet the newspaper ad on the front reinforces your name for everyone making any other ad more likely to stand out. Makes sense to be on the tourist map given your store.

What are some of the things that didn't work?

It sounds like you're doing everything right. Trying different things and seeing what works then dropping what doesn't to invest more in what does.

Aaron Hats
08-09-2008, 03:03 PM
What are some of the things that didn't work?


Radio didn't really work. You need frequency with radio and the more frequent you play your spot the more it costs. You have to sell a lot of hats just to break even. I'm sure it helped get our name out in the long run but it can be a big pill (or bill) to swallow. We have also done ads in theatre/concert programs and those never work. I finally learned that if I want to support the event or charity I can place an ad as a donation but it doesn't work as advertising. I've also done lots of newspaper advertising but find the tiny ad we do on the front page can be just as effective as a 1/4 or 1/2 page ad.

Aaron

vangogh
08-09-2008, 05:41 PM
I've heard that about radio. I've read about a few tricks with radio advertising such as never going for their price and waiting till it's closer when you want the spot to air. They need to fill the spots so at the right time you can get the price down in half. Or so I've heard. I never thought my business lent itself to radio advertising.

I wonder if you just kept supporting events and charities without it being an add if over time people would notice and you'd see more business.

I remember reading in the original Guerilla Marketing book that small ads repeated consistently were much better than larger ads that appeared less frequently.

Ad-Vice_Man
08-09-2008, 08:35 PM
I've heard that about radio. I've read about a few tricks with radio advertising such as never going for their price and waiting till it's closer when you want the spot to air. They need to fill the spots so at the right time you can get the price down in half. Or so I've heard. I never thought my business lent itself to radio advertising.

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Your absolutely right... but this can be a double edged sword in times when you absolutely have to advertise something and the best station is sold out.

This is where having an expert(ahem: shameless plug) that keeps relationships open with the media and knows how to negotiate the best deals. People who do this for a living are able to get deals the average business owner will never be able to, because the media knows we're representing multiple clients(more lines of business). Good media buyers can get deals for their client that (even with the cost of hire) will be more efficient than what a business owner can do on their own.

BTW a honest media buyer will walk away from a deal where he or she can't do a better job than their client.