Advertising Budgets

[mc_blue]

Hi all, does anyone know what sort of percentage of t/o a company should spend on advertising? I am aware that it is not an exact science but you are usually given indications of how much certain factor inputs should cost. For example total wages approx 30% of t/o IIRC.

[elster]

Surely it depends on the business and what advertising?

There is no point throwing money away.

[sinizter]

No fixed percentage or budget.

Depends on the company, the type of marketing you are trying to do, what you want to achieve with it, who you want to target ... and so on.

What you feel will do the job you want it do is the right amount to spend on it, provided the company can afford it.

[richyb]

Length of a piece of string. As above its totally dependent on what the business does/sells. Tell us a bit more about it and how large your target market is? its its just a local gardener no need to advertise on TV for example.

[mc_blue]

Yeah I thought those would be the type of answers, bit of a stupid question with hindsight. Looking at promoting garage services and was thinking about devoting about 5% of t/o to various forms of advertising and marketing?

[thisislife]

remember t/o and profit are not the same thing.

If you working out a % to spend I would work it out based on your profit not turnover.

Advertising is incredibly hard to gauge as to whether it will be successful or not and blowing a % of your t/o on it could be foolish.

Work out how much of your profits you can afford to loose and you will be in the ballpark of what you can spend

[mc_blue]

Hi, thanks for that sounds like good advice.

[StevieBee]

Advertising is also a function of marketing so the question should really be "how much to spend on marketing?" - the answers would be the same though!

[Lastinclass]

Some motor manufacturers insist through mandatory minimum standards (after sales) that 1% of turnover is spent on marketing/promotions.
Bear in mind that in after sales the most effective (IMHO) method of promotion is from direct mail/service/MOT reminders that's not a lot of spend in those channels.

[nsa]

I have a friend who runs a medium sized business and he allocates 20% of profit to advertising. Sorry can't be more specific.

[bramley]

5-10% is generally considered the norm, but as others have said can vary a lot depending on industry.

[escargot]

'Marketing' costs equate to 11% of my total annual overheads if that helps.

[DonnyMac]

ROI is a good measure - 'Return On Investment'

If you spend £1 on marketing and get £10 in return, you're on to a winner - increase spend.

£9 spent for £10 returned - I'd dump the activity.

You'll need to factor in ongoing client revenue (if there is any) as you may look at the revenue produced by the client over the course of a year against the initial cost of conversion or a single sale or both.

My marketing spend fluctuates between 9-11%, this is not through design, merely keeping a close eye on the ROI of each activity and pruning the least successful whilst using this 'pruned' budget to try new opportunities.

Best,
D

[sa_20v]

It completely depends on your business - one of my businesses sees advertising account for roughly 90% of total expenditure.

[mc_blue]

Thanks all, very helpful.