Question

Topic: Advertising/PR

Ad Budget Guidlines....

Posted by Anonymous on 9/25/2010 at 11:11 PM ET 250 Points
We run a year round sports training facility and a rather large summer sports camp. We have never set an ad budget and after 18 years we figure now is a good time to start. A few of our competitors are going out of busieness so we want to amp up our advertising. Is ther a typical percentage based ok gross or net revenues? If so does anyone have a guidline for what percentage should go towards print ads, google ads, direct mail etc? Thanks in advance. -Jim
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RESPONSES

  • Posted on 9/26/2010 at 7:53 PM Accepted
    The percentage is a result, not a guideline. It depends on your specific objectives and how you will measure success. The budget is whatever it will take to accomplish the objective. And the percentage of sales will be whatever percentage that amount is when compared to your revenues.

    I know that's not very satisfactory, but it's the right answer. It's possible that an experienced consultant could ask you some high-gain questions about your situation and use your responses to recommend an appropriate marketing mix and budget that makes sense for you.

    Let me know if you want to discuss further.
  • Posted by matthewmnex on 9/28/2010 at 10:01 PM Accepted
    You mention hta you have been successful for 18 years but that you never 'defined' a budget.

    However, I am certain that your accountants prepared financial statements so you therefore know each quarter and each year how much was spent for advertising and you can easily convert that to a percentage.

    You say that you want to ramp up advertising.

    Why? are sales dropping? are more competitirs coming into the market? (no you already mentioned that they are falling away). Are you expanding facilities or adding new services?

    Don't just talk in a generic manner about 'spending more'.

    Make sure that you have clearly defined goals for your campaigns and then decide; is it an 'Ad' campaign or a 'marketing' campaign ? (This is marketingprofs afterall not AdProfs).

    Once you have set your business objective:

    Boost revenue per member, sign new members, sella one day event to boost first time revenues. Expand reach with a new sport or service. Expand territory with a new facility. etc. etc. What are you aiiming for.

    Then decide on a marketing/ ad strategy that supports that activity.

    Calculate your ROI based on money spent to acquire a new customer over income generated.

    eg:

    You win 1000 new clients who spend $100 each = income of 100,000

    You spend $50,000 on marketing and advertising.

    You have an ROI of 200%

    So you know that the cost to acquire a new client is $50 per client.

    Job well done.

    Good luck.

    Matthew
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