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Calculating Your Advertising Budget 

rob • Feb 05, 2017

The following information is applicable to physical retail locations and mobile business services.

If you come from an accounting background, advertising is a necessary evil. If you think you can rest on the merits of your physical location alone to grow business think again. Over the many years of working with businesses I find it fascinating how many people calculate their ad spend or don't even think of requiring advertising until it is too late. Here's what I discovered. There are businesses who may not understand the value and residual value of advertising.

Opening a brand new business . So you have a dream and you've invested your blood sweat and tears or someone else's money to open up the most amazing shop in town. Your money has been tied up into rent, inventory, employees....the basic stuff to get you going but haven't put the money aside to let people know what an amazing business you have. I'm not kidding when I say that 7 out 10 new business people I meet with haven't mapped out and set aside an ad budget for their business. These businesses need to extrapolate their annual sales and calculate what they need to spend to build awareness.

The Old 3-5% Rule. This 3-5% rule of gross annual sales is a number financial analysts threw around in the 60's and 70's and it stuck with businesses and corporations as the norm. Here's the kicker. A ton has changed since the 60's with exponentially so many more advertising channels/outlets/streams which are available. It's harder for businesses to make noise in the market place with all the ongoing influx of distractions from news, information, entertainment delivered my digital technology. Businesses need to stand out and should be looking at a minimum of 7%-12% of annual gross sales blended with an intelligent strategy. See below how to calculate your ad budget.

Advertising Only During Certain Times Of The Year. Yes there are a minute group of businesses which don't require consistent advertising all year round(e.g. ski resorts), these account for 1% of the businesses out there. However whether you are a seasonal or year round business you still fall into 99% of businesses who need to be advertising ALL THE TIME. Advertising by branding all year round is essential and is the lifeline to maintain and build your business's presence in the marketplace.

The goal for all businesses whether you want to maintain or grow market share is to stay and remain at the top of the consumers mental shopping list of options. People like to do business with names that they recognize, businesses which fit their needs, and products or services which fulfill an emotional need. It's important to push your businesses presence on a light level all year round and during your seasonal peak periods to increase the frequency of your advertising to win more market share by call to action. Watch How To Advertise - 7 Factors and Formula.

Advertising Your Business Based On A Physical Location. Watch How To Calculate Your Ad Budget.
If you are looking to maintain business then consider the lower end of the budget scale because you will always have attrition. Attrition is part of every business and you need to maintain a flow of new customers to offset customers who drop off, repatriate the old ones and maintain touch points and connectivity with existing ones. Other factors in play determining aggressiveness of budget are product/service margins and hard fixed expenses including wages and other operating expenses. If staff wages account for 50% of your gross sales and margins are 50% then your business may not be in a position for a higher ad budget of 9-12% of gross sales. Of course there are plenty of other factors determining sales including supply, demand, competition, services, existing brand loyalty/goodwill, location and more.

Use this spreadsheet: Ad Budget Calculator Adjust fields B2 (gross sales) B8 (Annual Lease or Cost Of Occupancy) to come up with a recommended range budget to work with.

Non-Physical Locations.
Let's say you work out of your home and you want to grow your business. You now have less overhead and more margin to build business.

Selling Products / Services On-Line:
There is a totally different approach and formula to selling products on-line. You should not use the above calculator to determine your budget for e-commerce or on-line conversions from your google campaign. There is a whole other formula of metric based selling and it is determined by ROAS (Return on ad spend) and CPA (Cost Per Acquisition). In many cases it's not as simple as the above calculator as there are many more variables for driving on-line sales conversions whether it's forms, sales or phone calls. Your going to be looking at Conversion Rates, Average Order Of Value and CPC. You can utilize the following formula for calculating your on-line goals/conversions and budget which is incorporated into your overall ad budget from the Ad Budget Calculator Spreadsheet. Check out View Google's Metric Based Selling Formula Here .

Advertising - An Exciting Investment. That's right. It's an investment and it needs to approached in a way that you know it's one of your most important tools in your business's journey of growth. To not advertise is like winking at a beautiful woman in a pitch dark room.

Rob Balla







working hard on laptop coffee cup and wallet

Balla Media - Industry Insights

By Chelsey Smith 20 Mar, 2024
A digital marketing agency can propel your business to new heights by effectively leveraging various online platforms to enhance your brand's visibility and engage with a broader audience. With expertise in search engine optimization (SEO), social media marketing, email marketing, and content creation, these agencies craft tailored strategies that drive traffic, generate leads, and convert visitors into loyal customers. By analyzing your business's unique needs and market dynamics, they can implement targeted campaigns that maximize return on investment and foster sustainable growth. Furthermore, a competent digital marketing agency brings to the table advanced analytics and insights, offering a deep understanding of customer behavior and preferences. This data-driven approach enables businesses to fine-tune their strategies, ensuring that marketing efforts are precisely aligned with user expectations and trends. Additionally, agencies keep abreast of the latest digital tools and technologies, allowing them to adapt strategies in real-time and stay ahead of the competitive curve. Partnering with a digital marketing agency not only amplifies your online presence but also allows you to focus on core business operations while experts handle the complexities of the digital landscape. Choosing the right digital marketing agency is paramount for achieving your business’s goals. Seek out an agency that not only has a proven track record of success but also understands your industry's unique challenges and opportunities. A good agency will act as an extension of your team, working closely with you to craft and implement a comprehensive digital strategy that resonates with your target audience. They should offer regular, transparent reporting that clearly demonstrates the impact of their efforts on your business's bottom line. By forming a strategic partnership with a digital marketing agency that genuinely cares about your success, you can unlock new avenues for growth and innovation. Asking for references from a potential digital marketing agency is a wise step in your due diligence process. It allows you to hear directly from their past or current clients about the effectiveness of their strategies, the responsiveness of their team, and their overall satisfaction with the services provided.  When speaking with references, inquire about specific results the agency achieved for their business, such as increased website traffic, higher conversion rates, or improved search engine rankings. Also, ask about the agency's communication style and project management capabilities, as these aspects are crucial for a successful, collaborative partner. in evaluating the effectiveness of a digital marketing strategy. Balla Media will provide clear, comprehensive reporting that outlines the metrics and achievements of your marketing efforts. These reports should not only highlight the successes but also identify areas for improvement, offering actionable insights for strategy optimization. Additionally, open dialogue about campaign performance, budget allocation, and future planning is essential. This level of transparency ensures that you are consistently informed about how your investment is being utilized and what results are being produced, fostering trust and facilitating more informed decision-making for your business's marketing strategies. An experienced digital marketing agency wants your business to be the best it can be. Balla Media and their experienced team will be your partner! 905-572-7474
By Chelsey Smith 04 Mar, 2024
Marketing agencies are important partners in a company's overall marketing strategy. They provide expertise, resources, and support to help businesses reach their target audience and achieve their marketing goals. However, not all marketing agencies are the same. There are two main types of marketing agencies: traditional and digital. Traditional Marketing Agencies: Traditional marketing agencies have been around for decades and focus on more traditional Traditional marketing agencies focus more on conventional channels such as print advertisements in newspapers and magazines, television and radio spots, and direct mail campaigns. These agencies excel in crafting compelling messages for a broad audience and have a strong command over utilizing long-standing, proven marketing techniques to build brand awareness and reach consumers in a tangible way. Digital Marketing Agencies: On the other hand, digital marketing agencies, like Balla Media in Hamilton, specialize in the vast ecosystem of the internet. They leverage tools and strategies tailored for the digital realm, including search engine optimization (SEO), content marketing, social media campaigns, email marketing, and pay-per-click (PPC) advertising. These agencies have the expertise to analyze data, track consumer behaviors, and target niches in the virtual space. With the ability to offer measurable and timely results, digital marketing agencies are increasingly favored by businesses aiming to establish a strong online presence and engage directly with their audience online. While both digital and traditional marketing agencies offer unique advantages, the current market trend points towards a blend of both strategies for a holistic marketing approach. This integrated strategy utilizes the brand-building strength of traditional marketing while combining it with the targeted and interactive capabilities of digital marketing. It allows businesses to cast a wide net while also engaging with specific audiences at a more personal level. The key lies in understanding the target audience's preferences and behavior, which dictates the right mix of traditional and digital tactics to achieve the desired marketing outcomes. The question of whether a traditional or digital marketing agency is better does not have a one-size-fits-all answer. The optimal choice depends on a business's specific goals, the nature of its target audience, and the market environment. Traditional marketing might be better suited for products requiring a high level of trust or targeted towards demographics less inclined to use the internet. On the other hand, digital marketing offers precision and versatility that is crucial for businesses targeting a tech-savvy audience or operating on a global scale. In today's market, the most successful businesses often engage in synergy between both types, reaping the cumulative benefits to build a robust, multifaceted marketing strategy. If you and business need help with your digital marketing needs, know that the award winning team at Balla Media in Hamilton is in your corner and a phone call away, Call 905-572-7474 or complete the convenient online form!
By Dawn Sherwin 29 Jan, 2024
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