It's not what it costs, it's what it returns

It's not what it costs, it's what it returns

A mistake often made by small business owners with little marketing experience is in how they budget for advertising.

Some have a pre-set budget for advertising and once the budget has been spent the advertising stops. Others insist on only using established means of advertising such as the major paper directories, local magazines, local radio, bill boards and other traditional means of advertising, without even considering some of the new cheaper options.

What these business owners should be doing is, ignoring the cost of the advertising and looking at the ROI (Retun on Investment) instead.

Take the first example;
Business A has a marketing budget of £12,000 per annum, they set up their advertising campaign, without proper monitoring and at the start of Q4 their budget has been met so the advertising campaigns are stopped.

Business B has a more flexible marketing budget, they monitor their advertising campaign well and realise that for every £10.00 spent on advertising the ROI is £20.00. They enter Q4 having spent the same as company B, but because they have a more flexible budget, and are monitoring properly, they increase their spend on advertising at the same time when Company A has stopped. This results in them spending twice as much on advertising, but the ROI means profits are vastly improved.

With the 2nd example;
Company A has always used traditional top quality means of advertising, they always want prime positions in directories, magazines, often appear on local radio advertising and basically want the best of what is going, the price isn't considered, if it costs £1000 for that top spot they pay it.

Company B researches new means of advertising and rather than splashing out on just 3 or 4 expensive means of advertising they spread their advertyising about more, they have ads in local free pamphlets where company A would never dream of appearing, they submit to online business directories, they list themselves in all the paper directories, but with just smaller blocks, they engage in local networking clubs, they online business forums and online social networking websites, they do leaflet distribution, hand out flyers in local car parks and generaly just take advantage of all means of local advertising.

The first example demonstrates that it is not important how much you spend on advertising, the important fact is the Return of the investment.
The 2nd example demonstrates that it is not important how inexpensive the advertising is, it is how effective it is that counts.

Basically,
It's not what it costs, it's what it returns!


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