“Management wants sales to improve before freeing up more money for advertising.”
Does this sound familiar?
Its something the Lessiter Media team’s heard a lot lately from marketers. In some cases, the marketing manager acknowledges that Lessiter Media audiences, whether subscribers, website visitors or event attendees, is precisely the audience their company needs to reach, but they seem to have their hands tied. But think about the contradiction…
** If advertising exists to generate demand, create leads, build brands and ultimately improve sales, why wait for sales to improve before investing in it? **
It can become a costly merry-go-round: Sales decline, advertising gets cut and visibility with prospective customers falls. Sales remain soft, so advertising gets cut again, and the cycle continues.
At some point, you have to get off the merry-go-round and invest in creating the sales growth you’re expecting.
What’s Advertising For, Anyway?
Benjamin Franklin’s publication carried America’s first magazine advertisement for a ferry service in 1741. Since then, marketers have used advertising for essentially the same purposes: to inform, persuade and remind targeted buyers.
Advertising isn’t something a company earns the right to do after a good sales year. It’s an investment made to help create the next good sales year.
That distinction is particularly important right now, as companies establish their upcoming marketing budgets.
Instead of asking: “How much can we afford to spend based on last year’s sales?”
Consider asking: “What do we need to accomplish next year, and what marketing investment will help us get there?”
Guidelines for Advertising Spend
There’s no universal advertising-to-sales ratio. Industry, margins, competitive pressure and growth objectives all matter.
Thomas Minieri, writing for Forbes, suggests businesses looking to maintain current revenue might allocate 5%-10% of sales to advertising, while companies pursuing rapid growth may need to invest 20% or more, depending on their industry and objectives.
MAINTAIN VS. GROW
5%-10% = MAINTAIN
Support current revenue and market presence.
12%-20%+ = GROW
Greater investment may be needed when pursuing aggressive growth, entering new markets or launching products.
The percentage isn’t the strategy. Your business objective should determine the investment.
“The most successful companies view marketing not as an expense, but as an investment in growth.” — Harvard Business Review
Every marketing expenditure deserves scrutiny. Advertisers should demand accountability from their media partners, including Lessiter Media.
But there’s a difference between eliminating ineffective spending and eliminating marketing because sales are soft.
Before cutting the advertising budget, ask one more question:
“If we reduce our visibility with the customers we need to reach, what’s our plan for generating the sales improvement we’re waiting for?”
Advertising shouldn’t be the reward for improved sales. Done strategically, it’s an investment in producing them. Take a look at the infographic below to see what steps you can take now to improve sales instead of waiting.
AS YOU SET YOUR NEXT BUDGET, ASK:
- Who do we need to reach?
- What do we need them to do?
- Where can we reach them most effectively?
- How will we measure whether it’s working?
Then build the investment around the answers.
Lessiter Media is here to help you reach your goals. Contact us to see how you can leverage Lessiter Media’s trusted print and digital channels to build demand, strengthen credibility and stay in front of buyers throughout the entire buying journey.
