What Should Your Advertising Budget Be?
Friday, July 1st, 2011How much money should you spend on advertising? What is normal? Advertising costs are a completely controllable expense but they should create a return on your investment. How much advertising is enough?
Each industry will tend to spend a different amount of their sales revenue on advertising. To stay competitive, you tend to follow what is typical for your industry. Companies with higher profit margins will tend to spend more. New start-up companies will need to spend more to get noticed.
Schoenfeld & Associates consultants of Lincolnwood, Illinois published their study on typical advertising by industry. Numbers are a percent of sales revenue.
1.3 % Grocery stores
4.0 % Lawn/garden
5.0 % Education
5.1 % Computers
5.3 % TV, radio, electronics
5.7 % Catalog, mail order
5.8 % Retail stores
8.6 % Investment advice
10.4 % Cosmetics
11.0 % Memberships
14.2 % Toys
14.5 % Cleaning supplies
To battle rising advertising costs, many companies are shifting their marketing efforts over to the Internet. According to a Forrester Research study 60% of marketers surveyed will increase their Internet advertising budgets by shifting funds from traditional media. Direct mail was cited by 40% of marketers as being one being cut, outranking newspapers (35%), magazines (28%) and television (12%).