We would like to
thank the local libraries, schools, and universities for recommending students
to visit us when doing research on any of our information topics.
Q: I've never really done much advertising for my business; I've always relied on networking and word-of-mouth. Now I'd like to launch a small campaign, but I'm frightened it will cost a lot of money. How can I figure out where to start?
A: The first thing you must do is calculate your minimum and maximum allowable ad budgets:
· Step 1: Take 10 percent and 12 percent of your projected annual, gross sales and multiply each by the markup made on your average transaction. In this first step, it's important to remember that we're talking about gross markup here, not margin. Markup is gross profit above cost, expressed as a percentage of cost. Margin is gross profit expressed as a percentage of the selling price. Sell an item for $150 when it only costs you $100, and your markup is 50 percent. Your margin, however, is only 33.3 percent. This is because the same $50 gross profit represents 50 percent of your cost (markup,) but only 33.3 percent of the selling price (margin.) Most retail stores in America (carpet, jewelry and so on) operate on an average markup of approximately 100 percent, some operate on as little as 50 percent markup and others add as much as 200. More expensive items, such as cars, recreational vehicles and houses, typically carry a markup of only 10 to 15 percent.
· Step 2: Deduct your annual cost of occupancy (rent) from the adjusted 10 percent of sales number and the adjusted 12 percent number.
· Step 3: The remaining balances represent your minimum and maximum allowable ad budgets for the year. At this point in the calculation, you may learn that you've already spent your ad budget on expensive rent, or you might also learn that you should be doing a lot more advertising than you had previously suspected.
Now let's calculate an ad budget. Assume that my business is projected to do $1 million in sales this year, I have a profit margin of 48 percent, and my rent is $36,000 per year. The first thing to do is calculate 10 percent of sales and 12 percent of sales ($100,000 and $120,000, respectively).
Second, we must convert my 48 percent profit margin into markup, because markup is what we've got to have to make this formula work. Most business owners know their margin by heart, but never their markup. To make the conversion from margin to markup, simply divide gross profits by cost. Dividing $480,000 (gross profits) by $520,000 (hard cost) shows us that a 48 percent margin represents a markup of 92.3 percent. Bingo.
Now we multiply $100,000 times 92.3 percent to see that our adjusted low budget for total cost of exposure is $92,300. Likewise, we multiply $120,000 times 92.3 percent to get an adjusted high budget for total cost of exposure of $110,760. From each of these two budgets, we must now deduct our $36,000 rent. This leaves us with a correctly calculated ad budget that ranges from $56,300 on the low side to a maximum of $74,760 on the high side.
Most advertising salespeople will tell you that "5 to 7 percent of gross sales" is the correct amount to budget for advertising, but don't you believe it. It simply isn't possible to designate a percentage of gross sales for advertising without taking into consideration the markup on your average sale and your rent. Yes, expensive rent for a high-visibility location is often the best advertising your money can buy, since a business with a good sign in a high-visibility location will need to advertise significantly less than a similar business in an affordable location.
To prove this, just look at the example above and change the rent to $75,000 per year. In this case, the ad budget would range from $17,300 to $35,760, representing just 1.7 to 3.5 percent of sales. The formula I've given you is the only one that reconciles your ad budget with your rent as well as the profitability of your average sale. Good luck!
Steve Moundzouris, 423-653-2201 BigWater Media Group, Bigwater Media Group is a full service advertising and marketing agency.
Yahoo and Tumblr CEOs Talk Acquisition, Adult Content and Advertising
Meanwhile, 26-year-old Tumblr CEO and co-founder David Karp will stay on and he's growing more comfortable with the notion of advertising on his mostly ad-free site, though not being referred to as a "hipster CEO." Mayer and Karp made the comments ...
Yahoo's challenge to be building Tumblr's advertising business
There's Not Much Tumblr Advertising for Yahoo to Screw Up - Mashable
Why Tumblr's Sale is Worrisome for Native Advertising
We Can Change the World -- Really
At this point, I think we can all agree that advertising is going through a revolution. Search, social, mobile and ad avoidance technologies have disrupted this industry. The notion of building a brand through interruptive messaging is antiquated ...
ESPN Begins Hundreds of Layoffs
ESPN is axing a single-digit percentage of its global workforce, a move that could pink-slip 300-plus employees around the world. With revenue streams from advertisers and subscribers, the self-proclaimed "Worldwide Leader in Sports" rarely lays off ...
New Advocate for Video in Elevators, Taxis and More Takes Aim at TV
The Digital Place-Based Advertising Association, which represents the companies behind video screens in locations such as elevators to taxi cabs, has named media-industry veteran Barry Frey president and CEO. He succeeds Susan Danaher, now the chief ...
Barry Frey Named President And CEO Of Digital Place-based Advertising ...
Microsoft Announces Live Action 'Halo' Series Produced by Steven Spielberg
Baseball advertising breakdown: Summer Shandy
Bless You Boys (blog)
Baseball advertising breakdown: Summer Shandy. By Phil Coke's Brain on May 21 2013, 8:00a 19. Stay connected for news and updates Follow @blessyouboys. USA TODAY Sports. We take a look at one of the most familiar commercials appearing during ...
San Francisco Chronicle (press release)
Experience Advertising Releases Infographic on the Growth of Social Media ...
San Francisco Chronicle (press release)
Experience Advertising, Inc., a leading online marketing agency, has released their latest infographic on the growth of social media advertising. Social media advertising has increasingly become central to the online marketing budgets and strategies of ...
Fighting Big Food With Social Media
Slate Magazine (blog)
Old Spice Man. Kraft Zesty Guy. Have We Reached Peak Ad Hunk?
Slate Magazine (blog)
Hunks are now such a well-worn advertising trope that “the 'surprise' factor is kind of used up for now," ad consultant Allison Cohen told USA Today. “Seems like it's time for a break from this approach.” But marketers have been ramping up the use of ...
News From the Advertising Industry
New York Times
Spending was estimated at $50 million. The agencies are McCann Erickson Worldwide, for advertising aimed at the general market; Casanova Pendrill, for advertising aimed at Hispanic consumers; and GolinHarris, for public relations. McCann Erickson will ...
Porsche Keeps Creative at Cramer-Krasselt After Six-Month Pitch
Porsche spent about $23 million on advertising in 2012, according to Kantar Media. But Porsche targets an elite, upscale audiences in its ads. Porsche cars range in price from $50,000 to over $200,000. Porsche sold 35,043 cars in the U.S. during 2012, ...
Porsche to keep US ad account with Cramer-Krasselt
Cramer-Krasselt Beats the Odds to Keep Porsche
ADVERTISING RELATED ARTICLES:
Information To Include On Your Business Card
The logo and graphic elements that you include on your business card are quite important, but having the right text and contact information on the card is equally important. Here are our tips about the elements to include: Your name - Consider whether you want to include your middle name or initial, degrees or professional credentials that are unique to your field.
Tips for Using Paid Advertising
Quite a few business out there can't survive without some type of advertising and/or brand recognition, so advertising your business is one of the most important aspects in running certain types of business. It's also one of the most frequently asked questions for "how to".
How To Track Your Advertising Like A Hawk
Tired of pouring endless money into advertising? Do you wonder which ads are "REALLY" working for the business you manage? Would you like a bullet-proof system for capturing the results from your advertising and marketing? Below are three concepts that will enable you to track your advertising and marketing like a hawk! Really, it's that simple! Developing a tracking system: As a business owner/executive/manager, you need an efficient way to record and evaluate the results from your advertising and marketing programs. To get started, you will need a "prospect card" which includes a list of ALL the places you advertise and market your company.
Is Your Yellow Pages Ad Putting Cash in Your Pocket... or Sucking Cash Out?
Any idea? It's a question that more than a few Yellow Page advertisers ponder. If you are currently spending money every month to run an ad in your local directory, you don't want to wrestle with that question.
Non-profit Coupon Books and Coupon Mailers for Small Businesses
Many groups like the Chamber of Commerce, ASB at the local high school, etc. will ask if their members can get a discount if they shop in your store or use your service.
If You Invest Money on Advertising, then You could Save Thousands through this Simple Little Secret
A few years ago, I analyzed the statistics of where one of my clients, M & M Pest Control in Sydney, generated all their leads from. As a result of this, Ray Milton, the director of the company said: "Scott measured the results we were getting from our advertising, and as a result, this confirmed my decision to eliminate over $42,000.
LED Score Boards
LED scoreboards can be utilized in most of the sporting event for eye-catching effects replace traditional scoreboards. This high- tech lighting system is both energy - efficient and able to produce a very bright light.
What the Newspaper Ad Person Won't Tell You
Newspapers are considered the PRIMARY advertising medium by 99.4% of all retailers.
Effective Promotions Through Local Classified Sites
Today's online marketplace is extremely competitive. People want to market their products and services with the most cost effective manner possible.
How To Create Instantly Compelling Ads Every Time
Use This Quick 3-Question Evaluation Process, So You Can Be Sure Your Message Will Sell!EVALUATION #1: "Well, I Would Hope So!" When you make a claim, don't think about it in terms of words coming out of your mouth. Think of it in terms of words entering your prospects ears.
Electronic Display Signs
Electronic display signs are used nowadays in great extent to display important information instantly all over the world, which uses LED technology, which stands for light- emitting diodes. These are widely used in the worlds of commerce, government and even non-profit organizations.
Attention-Grabbing Fixes that Make Your Yellow Page Ad Leap Off the Page
Stand Out in Ways that Matter to Directory Users A Yellow Page directory presents a difficult challenge for advertisers. All the competitors are packed together, within the space of a few pages.
The Secrets To Successful Radio Advertising
Ask some businesses about radio advertising and they'll tell you it's the greatest investment they ever made while others will tell you it was a complete waste of time and money. So why does radio work for some and not for others? What's the secret to successful radio advertising? Know this: Radio can be a major player in your advertising mix if you know how to do it and I'm about to give you the secrets to successful radio advertising so read on.
Go Ahead Im Listening
In today's fast paced environment, interaction with family and friends is often relegated to a few left over minutes here and there, leaving many people feeling isolated. Radio fills the gap.
Increase Business By Being Nice
I have been reading articles on increasing sales using search engine optimisation as well as writing them for a very long time and I have not seen many which point out the best way to increase sales.The answer is obvious yet often overlooked; you just have to be as good to your customers as you would expect any other site owner to treat you.
Why Your Ad Failed
So you spent good money on an ad, put it in a magazine or newspaper, and waited patiently for phone calls that didn't materialize. You're upset: you feel that you've wasted money and time, and now you're convinced that advertising doesn't work.
Successful Print Advertising Designs
Do you often see print advertisements outdoors, as much as you see Web advertisements when you surf through the Web? I'm pretty sure that you have entirely different views and reactions upon seeing and actually taking notice to these two different kinds of advertising. The differences may vary in their use of color, typefaces, and space.
Is Your Advertising... Sexy?
Ever hear the term 'sexy' advertising? It's not necessarily what you think. Sure, some people's idea of sexy advertising is hot babes in bikinis spraying beer all over each other, but that's overtly sexual and not what we're about to discuss here.
5 Tips for Hot Yellow Pages Ads
Yellow Pages advertising is one of the most popular forms of advertising in the country today. Almost every home in America (96.
Imaging Isn't Everything
Many home improvement contractors attempt to use advertising to expand their client base and increase profits. Whether it be yellow pages, mailers, ads, or valpak; for many it's a total waste of time and money.
Find used office equipment in Ohio at www.OfficeJax.Has.It
Find the best fleamarkets at www.FleaMarketWorld.Has.It
Find electric powered vehicles at www.NoGas.Drives.It
Find homes for rent
advertising agency advertising supply and services marketing and advertising internet advertising pay per click advertising newspaper advertising promotion online advertising free advertising business marketing and advertising promotional advertising specialty print advertising banner advertising agency promotional product advertising radio advertising company classified advertising web advertising outdoor advertising ppc advertising advertising agency and services local advertising art layout production service advertising direct internet marketing advertising web site advertising business advertising television advertising jobs advertising services restaurant advertising yellow page advertising agency tv advertising web banner advertising directory advertising services advertising slogan advertising photographer adsense advertising adwords apis cashing billboard advertising advertising balloon pay per click banner advertising gambling online magazine advertising yahoo advertising email advertising free internet advertising internet online marketing advertising business search engine advertising direct mail advertising services advertising design advertising age creative advertising targeted advertising advertising campaign media advertising career free online advertising mobile advertising ogilvy vintage advertising pen internet advertising agency car advertising subliminal advertising idea advertising and marketing employment cheap advertising pen advertising space online advertising company advertising sign career in advertising direct mail advertising small business advertising history of advertising internet marketing online advertising advertising card communication content integrated marketing perspective premium promotion internet banner advertising advertising outdoor billboard affiliate advertising advertising art advertising display advertising product advertising copy advertising affiliate program free web site advertising real estate advertising brand advertising advertising brand communication guerrilla unconventional advertising business internet online internet marketing promotion advertising advertising firm contemporary advertising coroplast akron ohio custom signs and advertising solutions at OfficeJax online flea market