Advertising is very important to the growth and sustainability of any business; however, exactly how much money should you put towards marketing and advertising? It’s recommended that small businesses spend only 7 to 8 percent of your gross revenue for marketing and advertising efforts; however, it is highly dependent on the size of your company as well as the industry.
If you would like to take a like to research how much other small businesses are spending on advertising, you can look at the BIA’s U.S. SAM Survey of Advertising and Marketing. It not only tracks how much businesses are spending how they are spending their money as well.
With the emergence of technology and social media, many companies are actually able to spend less money on advertising thanks to having the working knowledge of how to promote their business online without paying someone for help. Although creating content can prove to be costly, hiring someone on staff that manages your business’ social media and content can prove to be extremely beneficial.
Even with all of the readily available information, small businesses are spending more and more on advertising and marketing. Small businesses, between 1-19 employees, spend around $6,400 per year in advertising; whereas larger small business spends a little more than $47,600 per year on advertising. Smaller businesses tend to use eight different forms of media to advertise whereas larger businesses use around fifteen different platforms for marketing.
While the majority of companies plan to increase their annual advertising budget, many smaller businesses are not. Instead, they are choosing to invest their efforts more efficiently, focusing on social media, location-based advertising, and platforms that provide analyses on their preferred customer. Many companies are also increasing their efforts in direct email and direct mail marketing.
With all of the changes in the marketing and business world, it’s more important to study what has worked for your business, what has not and make the necessary adjustments. Start with a budget and a plan for effective advertising and then go from there.