5 key factors to setting your advertising budget
June 15, 2023
Effective advertising is vital to the success of your business. It’s how you create awareness of your products and services, educate customers about the value of your brand and generate leads to earn new customers. Well-executed advertising campaigns are a key element of your overall marketing strategy.
While advertising is an essential business expense, the challenge is knowing how much to invest. Establishing an ad budget is a bit like piecing together a puzzle. At the outset, it may feel overwhelming, but as we add each new piece the total picture starts to quickly come into focus. Ultimately, you don’t want to overspend to achieve your goals, so let’s take a closer look at the steps of developing a realistic advertising budget that meets your financial and marketing needs.
Your business goals
Increasing brand awareness, driving website traffic, generating leads, boosting sales…while it may seem obvious, you need to define your specific business goals first. Setting goals lets us know what to measure and how to define success. It also determines the best tactics and distribution channels to employ.
Clear goals also keep you from falling into the trap of “everyone else is doing it so we should, too” mentality that often fails to deliver results tailored to your business needs. It’s easy to open an Adwords account or start publishing Facebook ads without really defining what you hope to achieve. Yes, you need to advertise, but having clear goals determines when, where, who and how to effectively use your advertising budget.
Market competition
Understanding your competition is important not only for budgeting, but also for creating effective campaigns that make your brand stand out from the crowd. This knowledge lets you highlight your unique products, services, benefits and advantages so your customers take notice.
Researching your competitors will also show where they are advertising and approximately how much they’re spending. Most importantly, it will help you see potential opportunities of where your business and advertising can be most effective.
Customer behavior
Much like knowing your competition, you need to understand your customers and their needs. This is a step many businesses rush or skip in a hasty attempt to “get something out there,” but you need to know what your customers are looking for, where they’re looking, how they use your products and services…etc. in order to build an advertising budget to effectively connect with them.
There are many ways to research your existing and potential customers, but it can take time and some specialized knowledge. As your advertising partner, we can analyze customer demographics, trends and behavior to supply you with:
- The lifetime value of a customer so you evaluate how much to spend on acquiring new customers
- Market research to understand your customers’ buying habits
- Customer personas to develop creative assets that increase sales and brand loyalty
- Marketing and advertising strategies to best target your most profitable customers
Tracking & optimizing
Setting a budget and launching an advertising campaign is just the beginning. You must continually measure and evaluate the effectiveness of your advertising, including each channel and each tactic. This allows you to refine and optimize performance over time to get the most out of your investment.
Too often, businesses approach advertising budgets with a “set it and forget it” mindset, resulting in wasted time and money. By testing the messages, creative and placement of your advertising, you can see what works better for targeting your customers and achieving your goals. Our team can offer you a full set of analytics with key insights to further refine your advertising and marketing elements for the best results.
Buying cycles
Many businesses see sales and profits rise and fall in a predictable way throughout the year. By looking at these cycles in your sales history, you can identify when customers are most likely to buy.
This information helps you determine when your advertising spend needs to be the highest to capitalize on your peak sales seasons. You can also work to even out sales to be more steady by increasing spends during slow times to get the attention of potential customers who haven’t previously purchased your product or service.
Advertising costs can also vary depending on demand, so planning ahead can help you save money before prices increase for various types of media.
Ready to set your budget?
Every business has unique and specific needs, target markets and products. By partnering with our experienced team of local advertising experts, determining the right budget is much more manageable, allowing you to achieve your goals and increase ROI with effective, targeted advertising.
Put our advertising experience to work for your business. Email us now with your ad budget questions: advertise@forumcomm.com.
